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For Private Circulation onlyVOL : 02/2017-2018 April 2018

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ACAE

Work is Worship

ESTD. 1960

H O U S E J O U R N A LH O U S E J O U R N A L

Finance Bill, 2018Discussion on certain proposed

Income-tax Amendments

CA Sanjay Bhattacharya

Budget analysis :Highlights of the

Finance Bill, 2018

Advocate Narayan Jain

Long Term Lease - Whether Sale or Renting of

Immovable Property?

CA Ramesh Kumar Patodia

Beneficial interest under Companies Act, 2013

CA Mohit Bhuteria

Group photographs of ACAE Members

Cross-section of the audience

ET Bengal Corporate Awards presented by ACAE celebrated its sixth year on 16th March, 2018 at The Taj Bengal, Kolkata

ACAE HOUSE JOURNAL l APRIL 2018

VOL : 02/2017-2018 April 2018

C O N T E N T S

Finance Bill, 2018Discussion on certain proposed Income-tax Amendments–

Budget analysis :Highlights of the Finance Bill, 2018– Advocate Narayan Jain

Long Term Lease - Whether Sale or Renting of Immovable Property?– CA Ramesh Kumar Patodia

Beneficial Interest under Companies Act, 2013– CA Mohit Bhuteria

GST on Transportation of Goods – CA Sushil Kr Goyal

Cross Charge under GST Regime– CA Ankit Kanodia

Impact of GST Valuation on Sharing of Cost Between Group Companies– CA Shubham Khaitan

GST in 2018- What’s in Store?– Anita Baid


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Companies Act

H O U S E J O U R N A L

Editorial

President Speaks

Editorial Board

Executive Committee : 2017 - 2018

Sub-Committees : 2017-2018

Income Tax

GST

VOL : 02/2017-2018 April 2018



Dear Members,

To begin with, I would like to quote a famous Ghanaian Diplomat, Kofi Annan, “Knowledge is power, information is liberating, education is the premise of progress – in every society, in every family.” With immense delight and happiness, we present you with the issue of ACAE Journal for the month of April, 2018, inaugurating the New Financial Year.

This Journal shall cover the major changes, reforms and applicability of the recent laws and regulations. We are delighted to present before you, our new issue on the recent amendments related to Beneficial Interest under Companies Act, 2013, impact of GST valuation on sharing of cost between group companies, GST on transportation of goods & highlights of the Finance Bill, 2018.

The applicability of GST has brought a bundle of changes in the accounting atmosphere, which shall hence form a major part of this Journal. The Journal comprises of the several developments in the GST law so far and expectations from GST front in 2018. As a whole, more revenue to the Government and benefits to the business, industry and consumers is expected because of a more transparent and tax compliant structure of GST.

The Journal shall cover the highlights of the Finance Bill, 2018. It contains the major changes in the tax rates and definitions. The focus of Union Budget 2018 was on the rural sector, but there was also something for other stakeholders. For example, a Standard Deduction of ? 40,000 for salaried taxpayers and increase in exemption on interest income for senior citizens will help increase their disposable income. Bringing more micro, small and medium enterprises into the ambit of the lower 25% corporate tax rate which will help boost their profitability and ability to invest.

Our focus is on new ideas and facts which would help enlighten all of us. We hope that this Journal will be able to cover the relevant matters and provide valuable knowledge on the same. The copy of the Journal shall also be available on our website.

It is rightly quoted by Swami Vivekananda, "All knowledge that the world has ever received comes from the mind; the infinite library of the universe is in our own mind". In the light of this Quote, we request Members to share their observations and feedback on their experience with this Journal, helping us work on the improvement in the construction and contents of the Journal and will also serve as a tool for continuous learning.

We wish to encourage more contributions/ suggestions/feedback from the Members to ensure continued success of the Journal.

Thank you. We hope you will find this Issue informative.

From

Editorial Board

April, 2018


Pre

sid

ent

Sp

eak

sDear Members,

To begin with, I would like to quote L. Frank Baum, an American Author, “No thief, however skilful, can rob one of knowledge, and that is why knowledge is the best and safest treasure to acquire.”

I hope the past year has been prosperous and fruitful to you all. I, on behalf of Team ACAE, extend our warmest wishes, and hope this New Year brings you greater success in your endeavour.

Recent discomforting acts and frauds in the financial sector indicates towards a certain need to enlighten ourselves on the related topic of forensic audit

which was conducted by us in January, deliberated by CA Veena Hingarh & CA Vivek Agarwal.

In view of the Government's highly claimed efforts on curbing benami transactions and zero tolerance to black money, a lecture meeting was conducted on “Examining Benami Transactions in the backdrop of Zero Tolerance to Black Money”, deliberated by none other than CA (Dr.) Girish Ahuja.

A panel discussion on “Swift Transactions – Cause, Effect, Risks and Audit” was addressed by various heads of major banks and eminent Chartered Accountants.

Like a mother carrying her child in her womb, the nation has been carrying the wonder child GST for more than nine months now. To explain the various technical aspects, a series of seminars/ workshops/ lecture meetings/ panel discussions were organised. A seminar on the Union Budget was also organised with a great success.

The sixth year of the Award Ceremony “ET Bengal Corporate Awards” presented by ACAE reflected inspiration and enthusiasm on the part of The Economic Times. The Jury comprised of personalities from various fields viz. Mr. T. V. Mohandas Pai, Chairman - Manipal Global Education, Mr. P. R. Ramesh, Chairman - Deloitte India, Mr. Ashok Banerjee, Professor of Finance - IIM Calcutta, Mr. Pulak Ghose, Professor of Decision Sciences and Information Systems - IIM Bangalore and Mr. Javed Sayed, Deputy Executive Editor - The Economic Times. Indian Visionary Award was conferred to Mr. Kishore Biyani, Founder & amp; Group CEO - Future Group and Lifetime Achievement Award was presented to Mr. S. K. Roy, Managing Director - Peerless General Finance & amp; Investment Co. Ltd. Dr. Amit Mitra, Minister-in- Charge of Finance, Industry and Commerce - Govt. of West Bengal, was the Guest of Honour.

As the early proverb goes “All work and no play, makes Jack a dull boy”, the ACAE had organised a corporate stress buster dance session at SanghVi Camac Street Studio and a Inter CA Study Circle Cricket Tournament to lighten the pressure and work load faced by the students, Professionals & Executives. It has been observed and noted that alongwith excellent preparations a student also needs to master his emotional intelligence in order to achieve a superior work life balance and hence programme on mastering emotional intelligence was conducted alongwith a Workshop on Stress Management which dealt with counselling and new techniques & life skills by reputed Psychologists to help the Members and Students.

I convey my special thanks to the Editorial Board, and specially CA Niraj Harodia for their untiring efforts in bringing out the Journal, and I congratulate them for such a wonderful collection. We hope to continue publishing Journals on significant topics which will be highly beneficial to all Members. I sincerely hope this Issue will be appreciated by our Members. Suggestions are most welcome.

Warm Regards,

CA Arun Kumar AgarwalPresident

27th April, 2018


VOL : 02/2018-2019 April 2018

EDITORIAL BOARD

Co-Chairman :

CA Niraj Harodia

Chairman :

CA Vivek Newatia

Members :

Ex-Officio Members :

CA Anup Kumar Sanghai CS Aditi Jhunjhunwala


CA Jitendra LohiaGeneral Secretary


Views expressed in the articles of this journal are contributor's personal views and ACAE and its Journal Sub-Committee do not accept any responsibility in this regard. Although every effort has been made to avoid any error or omission in the Journal, the ACAE and its journal Sub-Committee shall not be responsible for any kind of loss or damage caused to any one on account of any error or omission which might have occurred.

SPECIAL INVITEES

CA Netai Bandyopadhyay CA Nitesh More CA Kamal Bagrodia CA Pramod Dayal Rungta CA Vivek Newatia

OFFICE-BEARERS


CA Vasudeo AgarwalVice President

CA (Dr.) Debashis MitraVice President

CA Jitendra LohiaGeneral Secretary

CA Anup Kumar SanghaiJoint Secretary

CA Vivek AgarwalTreasurer

CA Anup Kumar Banka CA Niraj Agrawal CA Pramod Kumar Mundra CA Ranjeet Kumar Agarwal CA Sumantra Guha

CA Sumit Binani CA Sunil Kumar Dokania CA Sushil Kumar Goyal CA Tarun Kr. Gupta

MEMBERS

EX-OFFICIO CA Ram Ratan Modi

EXECUTIVE COMMITTEE : 2017 - 2018

ASSOCIATION OF CORPORATE ADVISERS & EXECUTIVESSUB-COMMITTEES FOR THE YEAR 2017-2018

S.No SUB-COMMITTEES CHAIRPERSON CO-CHAIRPERSON

1 Direct Tax CA R R Modi CA B L Gang

2 GST/Indirect Tax CA Tarun Kr Gupta CA Rajeev Kr. Agarwal

3 Corporate Laws CA Sumit Binani CS Ghanshyam Saraf

4 Accounts & Audit CA Vivek Agarwal CA Naresh Kr. Agarwala

5 ACAE CA Study Circle CA Anup Kr Sanghai CA Beena Jajodia

(CONVENOR) (DY. CONVENOR)

6 ACAE CS Study Circle CS S M Gupta CS Ghanshyam Saraf

7 Group Discussions CA Anup Kr Banka CA Samya Sengupta

8 Annual Conference CA Madhav Prasad Sureka CA Kamal Nayan Jain

9 Corporate Executive Programmes CA Niraj Agrawal CA Bharat Kr. Baid

10 Residential Seminar Mr. Arvind Agrawal CA Pulak Kr. Saha

11 Prof. Sukumar Bhattacharya Memorial Lecture VP- CA Vasudeo Agarwal CA Jitendra Lohia

12 Students & New Members CA Pramod Kr Mundra CA Sonu Jain

13 Sports CA Pramod K Mundra CA Priyank Singhi

14 Membership Growth CA Sumantra Guha CA Sunil Kr Dokania

15 Information Technology CA Vivek Agarwal CA Sanjib Sanghi

16 House Journal CA Vivek Newatia CA Niraj Harodia

17 Library CA Sunil Kr Dokania CA Pankaj Kumar Verma

18 Legal Compliances CA Pawan Kr. Agrawal CA Sanjay Bhattacharya

19 Infrastructure CA Anand Chopra CA Sunil Kr Dokania

20 Finance CA R S Jhawar CA R R Modi

21 Research & Publications CA H K Agrawal (1) CA Nitesh More

- (2)CA Pramod Dayal Rungta

- (3) CA Ramesh Kr. Patodia

22 Website and Mobile App. development CA Ranjeet Kr. Agarwal CA Manisha Sharaf

23 Public Relations CA Nitesh More Mr. Pawan Kr. Paharia

24 Press & Media CA Kamal Bagrodia CA Netai Bandyopadhyay

25 Vision Development CA Jinesh S Vanzara CA Santosh K Roongtaa

26 Ladies Wing CA Manisha Sharaf (1) CA Beena Jajodia

(2) CA Anshuma Rustagi

27 Theme Conclave [Real Estate] CA Rishi Khator CA Girja K Choudhary

28 ET Bengal Corporate Awards CA Jinesh S Vanzara (1) CA Anand Chopra

- (2) CA Kamal Nayan Jain

- (3) Mr. Arvind Agrawal

29 Members- Co-ordination & Service CA Ketan Satnalia CA Chirajit Goswami

30 Fellowship CA Sunil Kr. Dokania CA Dilip Kr. Agrawal

31 Corporate Social Responsibility CA (Dr.) Debashis Mitra CA Ratan Lal Sethia

32 Department Co-ordination Committee :

33 Direct Tax CA Madhav Prasad Sureka CA Anup Kr. Sanghai

34 Indirect Tax / GST CA Sushil Kr Goyal CA Narayan Kr. Agarwal

35 SEBI, NCLT, MCA-ROC CA Jitendra Lohia -

36 Insolvency & Bankruptcy Study Group CA Kamal Nayan Jain CA Arun Kr. Gupta

ACAE HOUSE JOURNAL APRIL 2018 1

Finance Bill, 2018Discussion on certain proposedIncome-tax Amendments

On going through the Finance Bill, 2018 it isobserved that almost one hundred amendmentshave been proposed by way of insertions,amendments or omissions of various provisionsof the Income-tax Act, 1961. Some of theproposed amendments will have substantial effectin the computation of income-tax liability of anassessee. These proposals can be segregated intocertain categories like – (1) Individuals includingSalary earners, Pensioners and Senior citizens, (2)Capital gains, (3) Computation of Businessincome, (4) Company taxation, (5) Deductionsfrom Gross Total income, (6) Dividend/Incomeand Dividend distribution/Income distributionTax, (7) Computation of Applications of Incomefor Charitable/Religious Trusts/Institutions, (8)Penalty and Prosecution, (9) Processing andAssessment of income and (10) Applicability ofspecific requirements under the IncomeComputation and Disclosure Standards (ICDS).In this write up an attempt is being made todiscuss some of the proposed amendments inIncome-tax.

1. Indiv idualsIndiv idualsIndiv idualsIndiv idualsIndiv iduals

(a) Income chareable under the head‘Salaries’ – In relation to incomechargeable under the head“Salaries” a straightway deduction ofRs.40,000 in computing the taxableSalary, has been proposed byinserting clause (ia) in section 16 witheffect from the Assessment Year2019-20. If the concerned employeeis in receipt of Conveyance Allowancefor which presently am exemption ofRs.1,600 per month is available, thensuch exemption will no more beavailable. However, the existingexemption of Rs.3,200 per month outof the Conveyance Allowance

granted to any physically challengedperson, is not being withdrawn.Presently, medical reimbursementsagainst actually incurred medicalexpenses aggregating to Rs.15,000are not considered as taxableperquisite in the hands of the recipientemployee. This non-taxability willalso be withdrawn. It appears thatthose employees who have beenreceiving the above two benefits, viz.,Conveyance Allowance and MedicalReimbursement, will get the extradeduction of Rs.5,800 [Rs.40,000 –(19,200+15,000]. However, all otheremployees who are not presentlyreceiving the above-mentioned twobenefits, will be able to save tax onRs.40,000. Further, all the Pensionerswill get the benefit of deduction ofRs.40,000 from their respectiveincomes chargeable under the head“Salaries”. It is felt that this newprovision for allowing StandardDeduction of Rs.40,000 should beconsidered as a very welcome step forthe persons having incomechargeable under the head“Salaries”.

(b) Senior Citizens – The deduction u/s80D for Medical premium has beenproposed to be increased from thepresent limit of Rs.30,000 toRs.50,000 w.e.f. Assessment Year2019-20. In relation to the Interestincome, instead of the presentlyavailable deduction upto Rs.10,000u/s 80TTA in respect of interest earnedfrom Saving Bank Accounts, intereston all types of deposits with banksincluding co-operative banks as well


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ACAE HOUSE JOURNAL APRIL 20182

as Post offices, will be deductible uptoRs.50,000 u/s 80TTB w.e.f. AssessmentYear 2019-20. Further, the relevantTDS provisions u/s 194A are alsobeing proposed to be amended sothat in case of a senior citizen therewill be no TDS on interest to themaximum limit of Rs.50,000 payablein relation to the deposits. No doubt,the above two proposals are reallybeneficial for the senior citizens byway of reduction in their Tax liabilities.The amendment proposed in the TDSprovisions will save a senior citizenfrom facing difficulties in obtainingthe refund of TDS.

2. Capital gainsCapital gainsCapital gainsCapital gainsCapital gains

(a) Equity Shares and Units of EquityOriented Mutual Funds (EOMF) – Oneof the most discussed proposal is inrelation to the amendments proposedin the matter of computing the Long-term Capital Gain (LTCG) arisingfrom transfer of Equity Shares andUnits of EOMF w.e.f. Assessment Year2019-20. Presently, if SecuritiesTransaction Tax (STT) is paid at thetime of transfer of any equity share ora Unit of EOMF, then LTCG arisingtherefrom is exempt from taxability u/s 10(38). The proposal is for omissionof the above-mentioned exemptionu/s 10(38). At the same time by wayof insertion of a new section 112A, itis proposed to tax @10% of the LTCGexceeding Rs.1 lakh in a year wherethe relevant transfer of equity sharesand/or Units of EOMF are subjectedto STT. It has also been proposed thatif the concerned equity share or theUnit of EOMF has been acquiredbefore 1st February, 2018, then thehigher of the Fair Market Value (FMV)of such share or unit as on 31st

January, 2018 and the actual cost ofacquisition, will be deemed to be thecost of acquisition for the purpose ofdetermining the LTCG when the saidshare or Unit will be transferred infuture. However, it has beenmentioned that no indexation benefitwill be considered for determining theLTCG. It has already been clarified by

the Central Board of Direct Taxes(CBDT) that if there occurs a loss ontransfer of any equity share or unit ofEOMF, by taking into account the saleconsideration and the actual cost ofacquisition, then the resulting loss willbe allowed to be set off against anyother LTCG or the said loss will beallowed to be carried forward for setoff. It is felt that the proposal foromission of the existing section 10(38)and the insertion of a new section112A are having adverse effect on thecapital market. However, keeping inview of the fact that there will not bemany persons who will be havingLTCG exceeding Rs.1 lakh from thetransfer of Equity shares or Units ofEOMF, most of the people will beunaffected by these proposals.

(b) Deduction on Investments – Presently,section 54EC allows deduction fromLTCG arising from the transfer of anycapital asset if within a period of sixmonths from the date of transfer,investments are made in bonds issuedby National Highway Authority ofIndia and/or Rural ElectrificationCorporation Ltd. A new proposal hasbeen made for restricting this benefitof deduction w.e.f. Assessment Year2019-20 only in relation to transferof immovable properties, i.e.,building or land or both. Further, thebond to be issued on or after 1st April,2018, will be redeemable after fiveyears instead of the presentrequirement of three years.

3. Business IncomeBusiness IncomeBusiness IncomeBusiness IncomeBusiness Income

(a) Conversion of an Inventory item intoa Capital asset – The Income-tax Act,1961 presently contains theprovisions in section 45(2) providingfor the procedure to be followed indetermining the tax liability when aCapital asset is converted intoInventory. However, there has not beenany provision for the reverse situation,i.e., conversion of an Inventory iteminto a Capital asset. Now, by way ofinsertion of a new Clause (via) insection 28 w.e.f. Assessment Year2019-20, a specific procedure has

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been proposed for dealing with asituation where an Inventory item isconverted into a Capital asset. Onconversion of the Inventory into aCapital asset on a particular date, theFMV of that particular item has to bedetermined in a manner to beprescribed. This FMV will beconsidered as a Business income inthe hands of the concerned assesseefor the year of conversion. Thereafterwhen the converted item will betransferred, there will arise capitalgain which is to be computed byreducing the sale consideration by theFMV determined on the date ofconversion. The holding period of theconverted Capital asset will bedetermined by considering the dateof conversion as the deemed date ofacquisition. So, if the actual disposalof the converted Capital asset occurswithin a period of twelve months ortwenty-four months, depending uponthe nature of the concerned Capitalasset as per section 2(42A), it has tobe found out whether there hasoccurred a transfer of a Short-termCapital asset or a Long-term Capitalasset. It is felt that this particularprocedure in case of a conversion ofan Inventory item into a Capitalasset, has been overdue for beingspecifically inserted in the Income-taxAct, 1961. It appears that now thespecified procedure will clarify thisparticular issue whereby litigationswill be minimised.

(b) Presumptive Taxation in case of aTransporter – As per section 44AE aperson owning not more than tengoods vehicles can offer presumptiveincome @Rs.7,500 per goods vehicleper month. Now it is proposed tobifurcate the goods vehicles on thebasis of their respective gross vehicleweights. If a goods vehicle is havinggross vehicle weight or unladenweight exceeding 12 Metric ton thenthe presumptive income will beRs.1,000 per ton per month. So agoods vehicle having the weight of 13Metric ton will have to offer thepresumptive income of Rs.13,000 per

month. In the case of a goods vehiclenot having gross vehicle weight orunladen weight exceeding 12 Metricton, the present procedure of offeringRs.7,500 per month per goodsvehicle, will continue. The proposedbifurcation straightway increases thetax liability in relation to a goodsvehicle having gross vehicle weight orunladen weight exceeding 12 Metricton. In fact, till the Assessment Year2014-15 there had existed twoseparate rates for the goods vehicleon the basis of their weight and witheffect from the Assessment Year2015-16 that bifurcation wasabolished. Now again the proposalhas come for charging more tax onheavy goods vehicle, i.e., goodsvehicles weighing more than 12Metric ton.

4. CompaniesCompaniesCompaniesCompaniesCompanies

(a) Rate of tax – In pursuance of theFinance Minister’s statement madeearlier that tax rate for theCompanies would be brought downfrom 30% to 25%, in the Finance Bill,2018 specific proposals has beenmade in this regard. For theAssessment Year 2017-18 the rate oftax for Companies which hadturnover not exceeding Rs.5 croreduring the Financial Year 2014-15,was brought down from 30% to 29%.For the subsequent Assessment Year,viz., 2018-19 in respect of theCompanies having annual turnovernot exceeding Rs.50 crore during theFinancial Year 2015-16, the rate oftax had been fixed at 25%. Now forthe Assessment Year 2019-20 for acompany whose annual turnover hadnot exceeded Rs.250 crore during theFinancial Year 2016-17, the rate oftax will be 25%. The Finance Ministerin his Speech stated that 99% of theexisting companies will fall in thiscategory and only around 7,000companies would still be charged Tax@30%. This appears to be a bigbenefit for the Corporate sector.However, MAT rate (presently 18.5%)has not been proposed to bereduced.

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(b) Companies undergoing CorporateInsolvency Resolution Process –

(i) In respect of companies fallingunder the above-mentionedcategory, for the purpose ofcomputing the Book Profit u/s115JB(MAT) w.e.f. AssessmentYear 2018-19, the aggregateBrought forward Business Lossand Unabsorbed Depreciationas per the Books of Accounts,would be allowed to bereduced. Presently, only lower ofthe Brought forward Business lossand Unabsorbed depreciationas per the Books of Accounts areallowed to be reduced and thesame will be continued for anycompany other than those whichfall under the above-mentionedcategory.

(ii) The restrictions contained insection 79 for determining theeligibility to carry forward theBusiness loss and certain otherlosses to subsequent yearsdepending upon the changesoccurred in the shareholding,will not be applicable in case ofthe companies falling under theabove-mentioned category.

(c) Foreign Companies-MAT applica-bility – It has been proposed to inserta new Explanation 4A in section115JB with retrospective effect fromthe Assessment Year 2001-02, toprovide that there would be no MATapplicability in case of a Foreigncompany where the said company’stotal income would comprise solelyof profits and gains from Businessreferred to in section 44B or 44BB or44BBA or 44BBB and such income isbeing offered to tax at the ratesspecified in those sections. This meansthat if a foreign company follows theprocedure of presumptive taxation asspecified in the above-mentionedfour sections, such a company will notattract MAT applicability.

5. Deduction under Chapter VIADeduction under Chapter VIADeduction under Chapter VIADeduction under Chapter VIADeduction under Chapter VIA

(a) Deduction in respect of employmentof new employees –

(i) There exists only one section inthe Income-tax Act, 1961 whichprovides deduction in respect ofemployment of new employeesand the said section is 80JJAA.According to section 80JJAA if anew employee is employed byan assessee to whom the TaxAudit provisions u/s 44AB apply,subject to the compliance ofcertain conditions, 30% of theadditional employee cost wouldbe deductible for threeAssessment Years commencingfrom the year of such newemployments. One of theconditions is that the employmentshould not be less than 240 daysduring the yea in which theemployment commenced. Byway of a proviso it has beenprovided that in case of anassessee which is engaged in thebusiness of manufacturing ofapparel, the limit of 240 dayswould be reduced to 150 days.Now it is proposed that w.e.f. theAssessment Year 2019-20 thisrelaxation to 150 days ofemployment will also beapplicable in case of a personwho is engaged in the businessof manufacturing of footwear orleather products.

(ii) It has further been proposed toprovide w.e.f. Assessment Year2019-20 that where anemployee is newly employed inthe year of employment for aperiod less than 240 days or 150days, as the case may be, but isemployed in the immediatelysucceeding year for a period of240 days or 150 days, as the casemay be, then that particularemployee shall be deemed tohave been employed in thesucceeding year and theprovisions of section 80JJAA shallapply accordingly.

(b) Eligibility of deduction vis-à-visfurnishing of Return – Section80AC provides that unless the

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return of income is furnishedbefore the due date as specifiedu/s 139(1), deduction will not beallowable u/s 80-IA or 80-IAB or 80-IB or 80-IC or 80-ID or80-IE. The above-mentioned sixsections are contained in Part-Cof Chapter VIA of the Income-taxAct, 1961. It has now beenproposed that with effect from theAssessment Year 2018-19 thatunless the return is furnishedwithin the due date specified u/s139(1), no deduction under anyof the 15 specified sections underPart-C of Chapter VIA, will beallowed. It is to be noted thatsection 80JJAA which has beendiscussed hereinabove, also fallsin this category. Further, inrespect of a co-operative societywhere 100% deduction of profitfrom business is allowable u/s80P, the eligibility for suchdeduction will be lost if theconcerned co-operative societydoes not furnish its return ofincome within the due datespecified u/s 139(1).

6. Dividend/Income and Dividend/Dividend/Income and Dividend/Dividend/Income and Dividend/Dividend/Income and Dividend/Dividend/Income and Dividend/Income Distribution TIncome Distribution TIncome Distribution TIncome Distribution TIncome Distribution Taxaxaxaxax

(a) Deemed Dividend u/s 2(22)(e) – Asper the existing provisions if acompany in which the public are notsubstantially interested, gives anyadvance or loan to any of itsshareholders holding more than 10%shareholding or to a concern wheresuch shareholder is having 20%interest then the amount of loan oradvance, to the extent it does notexceed the accumulated profit of theconcerned company, is considered asdeemed dividend in the hands of thesaid shareholder. Chapter XII-Dcontaining sections 115-O, 115P and115Q, deals with the DividendDistribution Tax payable by acompany on declaration, distributionor payment of any dividend. As perthe Explanation given in section115Q the deemed Dividend u/s

2(22)(e) is not considered within themeaning of “Dividends” for thepurpose of the above-mentionedChapter XII-D. In view of the fact thatdeemed Dividend u/s 2(22)(e) isoutside the purview of section 115-O(Dividend Distribution Tax), theexemption provided in respect ofDividend by section 10(34) is notavailable to the shareholder who ischarged to tax on deemed Dividend.Now it is proposed w.e.f. AssessmentYear 2018-19 by way of omitting theExplanation in section 115Q andinserting Provisos in sub-sections (1)and (1B) of section 115-O thathenceforth if a company givesadvance or loan to a shareholderhaving more than 10% shareholdingthe resulting deemed Dividend u/s 2(22)(e) would attract DividendDistribution Tax @30% withoutgrossing up and the concernedcompany will have to pay suchDividend Distribution Tax.Consequently, it is also understoodthat the tax liability on the deemedDividend in the hands of theconcerned shareholder would nomore be there in view of the coverageof Dividend u/s 2(22)(e) under theexemption clause of section 10(34).It appears that since the taxability ofdeemed Dividend in the hands of theshareholder and/or any otherconcern, have been creatingdifficulties in lit igations, theGovernment has decided to take aneasy route for charging tax ondeemed Dividend by way of DividendDistribution Tax.

(b) UTI/Mutual Fund distributing Income– Presently, section 115R is containingprovisions for Income Distribution Taxby UTI or Mutual Funds. Theprovisions of this section relating toIncome Distribution Tax are notapplicable in case of IncomeDistribution by any Equity OrientedFund. It is now proposed that witheffect from the Assessment Year2018-19 an Equity Oriented Fundwill have the responsibility to pay

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Income Distribution Tax @10% on theIncome distributed by it to any of itsUnitholders. Further the IncomeDistribution Tax will have to begrossed up because of which theactual tax will be 13.184% of theDistributed income. It is felt thatbecause of this new charge of tax,there may be proportionate reductionin the income to be distributed by UTIor any Mutual Fund in relation toEquity Oriented Fund.

7. Charitable/Religious TCharitable/Religious TCharitable/Religious TCharitable/Religious TCharitable/Religious Trusts/rusts/rusts/rusts/rusts/Insti tut ionsInsti tut ionsInsti tut ionsInsti tut ionsInsti tut ions

(a) Applicability of section 40(a)(ia) – Incase of an assessee being of theabove-mentioned categories theexpenditure incurred by it for itsobjects is considered as Applicationof Income and to the extent of suchApplications exemption is available.It is now proposed that with effect fromthe Assessment Year 2019-20, theprovisions of section 40(a)(ia) willapply in determining the Applications.Section 40(a)(ia) provides that therewill be a 30% disallowance of anyexpense in respect of which theapplicable TDS provisions have notduly been complied with. Hence, incase of a Charitable Trust/Institutionif there is any fault in complying withthe TDS provisions then 30% of therelevant amount of expenditure wouldnot form part of the “Applications” ofIncome during the relevant year.

(b) Applicability of section 40A(3)/(3A) –Similar to the applicability ofprovisions of section 40(a)(ia) asdiscussed hereinabove, theprovisions of section 40A(3)/(3A) willalso be applicable in determining theApplications of Income in case of aCharitable/Religious Trust/Institution.It means that with effect from theAssessment Year 2019-20 if anyexpenditure is incurred for which apayment exceeding Rs.10,000 ismade on a single day otherwise thanby Accounting Payee Cheque orthrough Account Payee Bank Draftthen the relevant expenses will not be

considered as forming part ofApplications.

8. PPPPPenalty and Penalty and Penalty and Penalty and Penalty and Prosecutionrosecutionrosecutionrosecutionrosecution

(a) Penalty for failure to furnish Statementof Financial Transactions orReportable Account u/s 285BA –Section 271FA provides that forfailure to furnish a Statement ofFinancial Transactions (SFT) orReportable Account (RA) u/s 285BAthere will be levying of penalty ofRs.100 for every day during whichsuch failure continues. It is furtherprovided that if in spite of a noticeissued u/s 285BA(5) for furnishing theSFT or RA, there occurs failure then thePenalty will be Rs.500 for every dayduring which the failure continues. Ithas now been proposed that witheffect from the Assessment Year2019-20 the existing leviableamounts of penalty of Rs.100 andRs.500 will be enhanced to Rs.500and 1,000 per day. It may be notedthat the STF that is being referred toin section 285BA, is required to befiled within 31st May following therelevant Financial Year. The Provisionsrelating to the requirement of the STFand RA to be furnished, are containedin Rules 114E to 114H and theprescribed Forms are 61A and 61B.Last year, i.e., in 2017 the Income-taxDepartment by holding variousmeetings at several places, tried tomake all the persons aware of therequirements of complying with theprovisions of section 285BA. Allpersons coming under the purview ofthe provisions of section 285BA,should take necessary care for beingsaved from the imposition of theseenhanced penalties.

(b) Penalty for furnishing incorrectinformation in Reports andCertificates u/s 271J – Section 271Jproviding for imposition of penalty ofRs.10,000 by the Assessing Officer orthe CIT(Appeals) in case of furnishingof any incorrect information by anAccountant or Merchant Banker orRegistered Valuer in any Report or

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Certificate under the Income-tax Act,1961 or Rules made thereunder, wasinserted with effect from theAssessment Year 2017-18. However,there had not been any provision inthe Act for filing of any Appeal againstsuch imposition of penalty. Now it isproposed to provide with effect fromthe Assessment Year 2018-19 that ina case of a penalty u/s 271J imposedby the CIT(Appeals), the concernedassessee will have to right to file anAppeal against such impositionbefore the ITAT. However, it is verysurprising that no provision has beenmade for filing of an Appeal againstthe Order of Penalty u/s 271J thatmay be passed by an AssessingOfficer. It appears to be a lacuna andso it is expected that it will be suitablycorrected at the time of enacting theprovisions of the Finance Bill, 2018.

(c) Prosecution for failure to furnish Returnof Income u/s 276CC – As per theexisting provisions, for initiating theprosecution proceedings a thresholdminimum limit of tax of Rs.3,000 isprovided. It is now proposed that witheffect from the Assessment Year2018-19 in respect of a companythere will no more be any thresholdminimum limit of Rs.3,000 and soeven if there will be no tax payableby a company, the prosecutionproceedings u/s 276CC can beinitiated.

9. Processing of Return and AssessmentProcessing of Return and AssessmentProcessing of Return and AssessmentProcessing of Return and AssessmentProcessing of Return and Assessmentof Incomeof Incomeof Incomeof Incomeof Income

(a) Processing and Intimation u/s 143(1)– Presently as per section 143(1)(a)certain specified adjustments can bemade to the Returned Income forprocessing the Return and one ofthose adjustments is “Addition ofincome appearing in Form 26AS orForm 16A or Form 16 which has notbeen included in computing the totalincome in the return”. So, just on thebasis of variance of incomes as perthe return of income in comparisonto Form No.26AS, the ProcessingCentre of the Income-tax Department

is empowered to add incomes. Thishas been creating great difficulties forthe assessees since it is not always thecase where whatever credits orpayments are reflected in FormNo.26AS, has to be compulsorilyconsidered as any income taxable inthe relevant year. On appreciating thisproblem it is now proposed with effectfrom the Return to be filed for theAssessment Year 2018-19, to omitthis particular adjustment by theProcessing Centre of the Income-taxDepartment for the purpose ofprocessing and issuing Intimations u/s 143(1). It is felt that this a verycorrect step taken by the Ministry ofFinance to save the assessees fromundue harassments.

(b) e-Assessment proceeding – Byinserting w.e.f. Assessment Year2018-19, three new sub-sections (3A),(3B) and (3C) in section 143, it isproposed to make a Scheme for thepurpose of making assessment oftotal income/loss of the assessees u/s 143(3) so as to impart greaterefficiency, transparency andaccountability by eliminating theinterface between the AssessingOfficer and the assessee in the courseof proceedings to the extenttechnologically feasible, optimisingutilisation of the resources througheconomies of scale and functionalspecialisation and introducing ateam-based assessment with dynamicjurisdiction. It is understood that thisproposal is being made forexpanding the scope of e-assessmentthrough correspondences madeelectronically in between theAssessment Officers and theassessees. If this scheme is efficientlymade and appropriatelyimplemented, it is expected that therewill appear real transparency in thematter of assessments.

10. Income Computation and DisclosureIncome Computation and DisclosureIncome Computation and DisclosureIncome Computation and DisclosureIncome Computation and DisclosureStandards (ICDS)Standards (ICDS)Standards (ICDS)Standards (ICDS)Standards (ICDS)

It is expected to be known by all theassessees that by the Income

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Computation and Disclosure Standards(ICDSs) notified by the Government inpursuance of section 145(2) specificrequirements have been prescribed forcompliance in computing the incometaxable under the heads ‘Profits and gainsof Business or Profession’ and ‘Incomefrom Other Sources’ for the year. On goingthrough the ICDSs it has been observedthat in relation to certain issues there aresubstantial variances in the methods ofaccounting followed by different classesof assessees. There had been a challengein the Court against the validity of theGovernment’s notification for ICDSs. TheHon’ble Delhi High Court in the case ofChamber of Consultants and Another v.Union of India [400 ITR 178(Del)], heldthe ICDSs ultra vires. So there arose asituation where the Government’s desireof implementing the ICDSs wasobstructed. So, now the Ministry of Financehas proposed to insert all the ICDSsprovisions in the Act itself so that suchprovisions are backed by the statute itself.The proposed insertions and amendmentsmade by the Finance Bill, 2018, havebeen made retrospective from theAssessment Year 2017-18 so that theGovernment’s original desire ofimplementing the ICDSs provisions formthe said Assessment Year, is fulfilled.Details of the ICDSs provisions which areproposed to be incorporated for the Act,are not being discussed here since it willrequire item-wise deliberations. Just togive some examples of ICDSs provisions,a few instances are being mentionedhereunder.

In recognising the revenue for constructioncontract and/or any other service, it willbe required to follow the Percentage ofCompletion method. For recognising theincome, in case of a construction contractas well as service contract, RetentionMoney, if any, will have to be taken into

account. In relation to a construction or aservice contract as soon as 25% of therelevant work will be performed, it will becompulsorily required to recognise theproportionate income. Marked to Marketlosses or expected loss shall not berecognised unless recognition of suchlosses will be in accordance with anyparticular ICDS. Where shares are traded,in valuing the stock of shares a category-wise valuation will have to be made onthe basis of the lower of the aggregatecosts and aggregate net realisable values.Besides, these issues there are some otherissues also where differences in methodsare observed in comparison with theaccounting procedure followed. Sincenow all these ICDSs requirements will beas per the statute itself, it is felt that theseprovisions are to be re-looked by theassessees as well as their tax consultants.All assessees, who had not complied withthe provisions of ICDSs while filing theirReturns of Income for the Assessment Year2017-18, should consider whether itwould be advisable for them to fileRevised Returns of Income for the saidAssessment Year 2017-18.

ConclusionConclusionConclusionConclusionConclusion

There are certain others proposals also made in FinanceBill, 2018 Since it is not possible to discuss eachand every proposal, only some of the proposalsare being discussed. However, one particularproposal which affects all the assessees shouldalso be mentioned here. This is in regard to theincrease in the Cess payable by each assessee.As per the existing provisions, we now pay 3%Cess comprising of 2% Education Cess and 1%Secondary and Higher Education Cess. With effectfrom the Assessment Year 2019-20 there will bea new Cess under the name and style of Healthand Education Cess and the rate of the said Cesswill be 4% of the Income-tax liability includingthe applicable Surcharge.

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Satisfaction lies in the effort not the attainment.Full effort is full victory.

– Mahatma Gandhi– Mahatma Gandhi– Mahatma Gandhi– Mahatma Gandhi– Mahatma Gandhi


1 .1 .1 .1 .1 . TTTTTAX RAAX RAAX RAAX RAAX RATES :TES :TES :TES :TES :

1.11.11.11.11.1 Cess on Income TCess on Income TCess on Income TCess on Income TCess on Income Tax Increasedax Increasedax Increasedax Increasedax Increasedfrom 3% to 4%from 3% to 4%from 3% to 4%from 3% to 4%from 3% to 4%

Education and Higher education Cessof 3% on Income Tax and surchargehas been replaced by Health andHealth andHealth andHealth andHealth andEducation Cess of 4%.Education Cess of 4%.Education Cess of 4%.Education Cess of 4%.Education Cess of 4%.

The Comptroller and Auditor General(CAG) has highlighted the non-utilisation of cess collected forsecondary and higher education in itsreport on the financial audit of theaccounts of the Union government. Ithas pointed out :

“Against the total collectionof 83,497 crore as Secondary andHigher Education Cess (SHEC) in theConsolidated Fund of India during2007-2008 to 2016-2017, noamount could be transferred to theearmarked fund in public account,”.

The CAG report said that wasbecause neither the schemes onneither the schemes onneither the schemes onneither the schemes onneither the schemes onwhich the cess proceeds were towhich the cess proceeds were towhich the cess proceeds were towhich the cess proceeds were towhich the cess proceeds were tobe spent were identifiedbe spent were identifiedbe spent were identifiedbe spent were identifiedbe spent were identified nor wasnor wasnor wasnor wasnor wasthe designated fund opened inthe designated fund opened inthe designated fund opened inthe designated fund opened inthe designated fund opened inthe public account to deposit thethe public account to deposit thethe public account to deposit thethe public account to deposit thethe public account to deposit theproceeds of the SHECproceeds of the SHECproceeds of the SHECproceeds of the SHECproceeds of the SHEC.

Divisible PDivisible PDivisible PDivisible PDivisible Pooloolooloolool : It may be notedthat Cess is not part of divisible poolso the States are not given any sharefrom collection of Cess. The FM hasestimated collection from Cess at Rs.44000 Cr in Finance Bill 2018.

Give chance to a simple taxGive chance to a simple taxGive chance to a simple taxGive chance to a simple taxGive chance to a simple taxRegimeRegimeRegimeRegimeRegime : Various kind of CessCessCessCessCess andlevy of Surchargelevy of Surchargelevy of Surchargelevy of Surchargelevy of Surcharge tend tocomplicate the tax system. It is hightime that we say good bye to thesame.

Highlights of the Finance Bill, 2018

Narayan JainLL.M. Advocate and Dilip LoyalkaDilip LoyalkaDilip LoyalkaDilip LoyalkaDilip Loyalka, FCA

1.21.21.21.21.2 LLLLLong Tong Tong Tong Tong Term Capital Gainerm Capital Gainerm Capital Gainerm Capital Gainerm Capital Gain

Exemption of Long Term Capital Gainon Listed Shares or Units of an EquityOriented Mutual Fund or Unit of abusiness Trust U/s 10(38) has beenwithdrawn w.e.f. AY 2019-20.

However for computing Long TermCapital Gain on transfer of equityShares or units of equity orientedmutual fund or unit of business truston which STT is paidon which STT is paidon which STT is paidon which STT is paidon which STT is paid on suchtransfer shall be computed by takingFFFFFair Market Vair Market Vair Market Vair Market Vair Market Value of the asset asalue of the asset asalue of the asset asalue of the asset asalue of the asset ason 31on 31on 31on 31on 31ststststst January January January January January, 2018, 2018, 2018, 2018, 2018 or salesalesalesalesaleprice of the shareprice of the shareprice of the shareprice of the shareprice of the share, whichever islower, as cost of acquisitioncost of acquisitioncost of acquisitioncost of acquisitioncost of acquisition and incase the actual cost of acquisition ishigher than such price, the actual costshall be taken as cost of acquisition.No benefit of indexation will beallowed on such transfer.

However the Long term Capital gainon these assets shall remain exemptto the extent of Rs. 1,00,000/- andshall be charged to tax @ 10% onbalance of LTCG as per new sectionnew sectionnew sectionnew sectionnew section112A112A112A112A112A.

Share market has adversely reacted toLEVY OF TAX ON LTCG.

LTCG shall be payable in respect oflisted shares and Units of EquityOriented funds sold on or after1.4.2018.

On sale of Equity shares and units theconcessional rate of 10% will applyonly if STT has been paid on purchaseas well as on sale of such assets.However some people might haveacquired such shares by way of Public

Budget analysis :

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Issue. Proposed Section 112A(4)empowers the Central Government tonotify the nature of acquisition inrespect of which it will not be necessaryto make payment of STT in case ofacquisition of shares.

On sale of Units of Equity shares it willbe required to pay STT on its transferotherwise benefit of concessional rateof 10% will not be available apply onlyif STT

Relevance of FMV as onRelevance of FMV as onRelevance of FMV as onRelevance of FMV as onRelevance of FMV as on31.01.2018 :31.01.2018 :31.01.2018 :31.01.2018 :31.01.2018 :

If any share is sold on or afterIf any share is sold on or afterIf any share is sold on or afterIf any share is sold on or afterIf any share is sold on or after1.4.2018, the FMV ( highest price1.4.2018, the FMV ( highest price1.4.2018, the FMV ( highest price1.4.2018, the FMV ( highest price1.4.2018, the FMV ( highest priceon the stock exchange) as onon the stock exchange) as onon the stock exchange) as onon the stock exchange) as onon the stock exchange) as on31.1.2018 or actual cost31.1.2018 or actual cost31.1.2018 or actual cost31.1.2018 or actual cost31.1.2018 or actual costwhichever is higher will bewhichever is higher will bewhichever is higher will bewhichever is higher will bewhichever is higher will bededucted from sale considerationdeducted from sale considerationdeducted from sale considerationdeducted from sale considerationdeducted from sale considerationand on the balance Land on the balance Land on the balance Land on the balance Land on the balance LTTTTTCG tax shallCG tax shallCG tax shallCG tax shallCG tax shallbe payable @10%.be payable @10%.be payable @10%.be payable @10%.be payable @10%.

In case any share is lot listed, theIn case any share is lot listed, theIn case any share is lot listed, theIn case any share is lot listed, theIn case any share is lot listed, theFMV shall be based on the netFMV shall be based on the netFMV shall be based on the netFMV shall be based on the netFMV shall be based on the netasset value of such asset as onasset value of such asset as onasset value of such asset as onasset value of such asset as onasset value of such asset as on31.1.2018.31.1.2018.31.1.2018.31.1.2018.31.1.2018.

For Example If an assessee haspurchased shares of X Ltd and sold thesame as per undermentioned details,the gain shall be computed as under:

1.31.31.31.31.3 TTTTTax on Certain Companiesax on Certain Companiesax on Certain Companiesax on Certain Companiesax on Certain Companies

Companies having turnover notCompanies having turnover notCompanies having turnover notCompanies having turnover notCompanies having turnover notexceeding Rs. 250 crores for FYexceeding Rs. 250 crores for FYexceeding Rs. 250 crores for FYexceeding Rs. 250 crores for FYexceeding Rs. 250 crores for FY2016-17 shall be taxed @ 25%2016-17 shall be taxed @ 25%2016-17 shall be taxed @ 25%2016-17 shall be taxed @ 25%2016-17 shall be taxed @ 25%for Afor Afor Afor Afor AY 2019-20. The concessionalY 2019-20. The concessionalY 2019-20. The concessionalY 2019-20. The concessionalY 2019-20. The concessionalrate of 25% was available torate of 25% was available torate of 25% was available torate of 25% was available torate of 25% was available tocompanies for Acompanies for Acompanies for Acompanies for Acompanies for AY 2018-19 ifY 2018-19 ifY 2018-19 ifY 2018-19 ifY 2018-19 ifturnover did not exceed Rs 50turnover did not exceed Rs 50turnover did not exceed Rs 50turnover did not exceed Rs 50turnover did not exceed Rs 50crores in FY 2015-16. This is acrores in FY 2015-16. This is acrores in FY 2015-16. This is acrores in FY 2015-16. This is acrores in FY 2015-16. This is awelcome step.welcome step.welcome step.welcome step.welcome step.

1.41.41.41.41.4 The concessional rate of AlternateMinimum Tax of 9% has beenextended to Unit located inInternational Financial Service Centre

1.51.51.51.51.5 The tax on Deemed dividend Deemed dividend Deemed dividend Deemed dividend Deemed dividend u/s2(22)(e) will now be paid by thecompanies u/s 115-O

1.61.61.61.61.6 The equity oriented mutual fund alsoto pay Income distribution tax @ 10%

All other TAll other TAll other TAll other TAll other Tax rates remain unchanged.ax rates remain unchanged.ax rates remain unchanged.ax rates remain unchanged.ax rates remain unchanged.

2 .2 .2 .2 .2 . Changes in DefinitionsChanges in DefinitionsChanges in DefinitionsChanges in DefinitionsChanges in Definitions

2.12.12.12.12.1 Accumulated profit ofAccumulated profit ofAccumulated profit ofAccumulated profit ofAccumulated profit ofamalgamated company shallamalgamated company shallamalgamated company shallamalgamated company shallamalgamated company shallinclude Accumulated profit ofinclude Accumulated profit ofinclude Accumulated profit ofinclude Accumulated profit ofinclude Accumulated profit ofamalgamating company in caseamalgamating company in caseamalgamating company in caseamalgamating company in caseamalgamating company in caseof merger [(Sec 2(22)]of merger [(Sec 2(22)]of merger [(Sec 2(22)]of merger [(Sec 2(22)]of merger [(Sec 2(22)]

For the purpose of computing deemeddividend accumulated profit ofamalgamated company shall includeAccumulated profit of amalgamating

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new section

112A

Share market has adversely reacted to LEVY OF TAX ON LTCG.

LTCG shall be payable in respect of listed shares and Units of Equity Oriented funds sold

on or after 1.4.2018.

On sale of Equity shares and units the concessional rate of 10% will apply only if STT has

been paid on purchase as well as on sale of such assets. However some people might have

acquired such shares by way of Public Issue. Proposed Section 112A(4) empowers the

Central Government to notify the nature of acquisition in respect of which it will not be

necessary to make payment of STT in case of acquisition of shares.

On sale of Units of Equity shares it will be required to pay STT on its transfer otherwise

benefit of concessional rate of 10% will not be available apply only if STT

Relevance of FMV as on 31.01.2018 :

If any share is sold on or after 1.4.2018, the FMV ( highest price on the stock exchange) as

on 31.1.2018 or actual cost whichever is higher will be deducted from sale consideration

and on the balance LTCG tax shall be payable @10%.

In case any share is lot listed, the FMV shall be based on the net asset value of such asset

as on 31.1.2018.

Situation 1 Situation 2 Situation 3

Date and Cost of

Acquisition

01.04.2007,

Rs. 1,00,00,000

01.04.2007,

Rs. 2,00,00,000

01.04.2007,

Rs. 7,00,00,000

Fair market Value

as on 31.01.2018

Rs. 5,00,00,000 Rs. 5,00,00,000 Rs. 5,00,00,000

Sale of shares on or

after 01.04.2018

Rs 4,00,00,000 Rs 5,50,00,000 Rs 6,00,00,000

Cost of Acquisition

for Computing

Capital Gain

Rs 4,00,00,000 Rs 5,00,00,000 Rs. 7,00,00,000

Capital Gain Nil 50,00,000

minus exempts Rs. 1 Lakhs u/s 112A

Loss

(1,00,00,000)

Tax Nil 4,90,000 Nil

Particulars


company in case of merger whetheror not the said profit is capitalised bythe amalgamated company.

2.22.22.22.22.2 Income on conversion of stockIncome on conversion of stockIncome on conversion of stockIncome on conversion of stockIncome on conversion of stockinto capital asset into capital asset into capital asset into capital asset into capital asset - where anwhere anwhere anwhere anwhere aninventory is converted intoinventory is converted intoinventory is converted intoinventory is converted intoinventory is converted intocapital asset, the fair marketcapital asset, the fair marketcapital asset, the fair marketcapital asset, the fair marketcapital asset, the fair marketvalue determined in the mannervalue determined in the mannervalue determined in the mannervalue determined in the mannervalue determined in the mannerto be prescribed shall be incometo be prescribed shall be incometo be prescribed shall be incometo be prescribed shall be incometo be prescribed shall be incomeunder the head business andunder the head business andunder the head business andunder the head business andunder the head business andprofession – profession – profession – profession – profession – Sec 2(24)(xiia) & Sec28(via). The fair market value on thedate of conversion of stock intocapital asset will be treated asdeemed income in the year of suchconversion.

Any profit or gain arising fromconversion of Inventory into capitalasset shall be charged as businessincome under amended sec. 28(via)on the basis of market value on thedate of such conversion. [The issue ofcharging tax on the date of conversionshould be revisited and tax should becharged in the year of ultimate saleor transfer].

At present there is no specific provisionto charge tax in case of conversion ofstock into capital asset

It may be noted that in case ofconversion of Capital Asset into Stockin trade the tax treatment is as perexisting section 45(2), which providesthat tax will be payable in the year ofactual sale and not in the year ofconversion. In such cases Income iscomputed firstly from date ofacquisition to date of conversion (ascapital gain) and then on the basis ofdifference between date of conversionto date of sale (as business profit).

2 .32.32.32.32.3 CompensationCompensationCompensationCompensationCompensation - AnyAnyAnyAnyAnycompensation received forcompensation received forcompensation received forcompensation received forcompensation received fortermination of employment ortermination of employment ortermination of employment ortermination of employment ortermination of employment ormodification of terms ofmodification of terms ofmodification of terms ofmodification of terms ofmodification of terms ofemployment shall be taxed underemployment shall be taxed underemployment shall be taxed underemployment shall be taxed underemployment shall be taxed underhead other sources -Sec 56(2)(xi)head other sources -Sec 56(2)(xi)head other sources -Sec 56(2)(xi)head other sources -Sec 56(2)(xi)head other sources -Sec 56(2)(xi)& Sec 2(24)(xviib)& Sec 2(24)(xviib)& Sec 2(24)(xviib)& Sec 2(24)(xviib)& Sec 2(24)(xviib)

2.42.42.42.42.4 Short TShort TShort TShort TShort Term Capital Asseterm Capital Asseterm Capital Asseterm Capital Asseterm Capital Asset

Where an inventory has beenconverted into capital asset the periodof holding of such capital asset shallbe reckoned from the date of itsconversion into capital asset. Sec2(42A).

3 .3 .3 .3 .3 . Business Connection Section 9 -Business Connection Section 9 -Business Connection Section 9 -Business Connection Section 9 -Business Connection Section 9 -

Currently section 9(1)(i) provides that“business connection” shall include anybusiness activity carried out through aperson who, acting on behalf of the non-resident, has and habitually exercises inIndia, an authority to conclude contracts onbehalf of the non-resident, unless hisactivities are limited to the purchase ofgoods or merchandise for the non-resident;or has no such authority, but habituallymaintains in India a stock of goods ormerchandise from which he regularlydelivers goods or merchandise on behalfof the non-resident; or habitually securesorders in India, mainly or wholly for the non-resident or for that non-resident and othernon-residents controlling, controlled by, orsubject to the same common control, as thatnon-resident. The proviso to the saidExplanation provides that such businessconnection shall not include any businessactivity specified therein.

W.e.f. AY – 2019-20, it is proposed to amendso as to provide that “business connection”shall include any business activity carriedthrough a person who, acting on behalf ofthe non-resident, has and habituallyexercises in India, an authority to concludecontracts on behalf of the non-resident orhabitually concludes contracts or habituallyplays the principal role leading toconclusion of contracts by the non-residentand the contracts are—

(i) in the name of the non-resident; or

(ii) for the transfer of the ownership of, orfor the granting of the right to use,property owned by that non-residentor that non-resident has the right touse; or

(iii) for the provision of services by thatnon-resident.

It is further proposed to insert a new

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Explanation 2A in clause (i) of sub-section(1) of the said section so as to provide thatthe significant economic presence of a non-resident in India shall constitute “businessconnection” of the non-resident in India andthe “significant economic presence”“significant economic presence”“significant economic presence”“significant economic presence”“significant economic presence” forthis purpose, shall mean—

(a) any transaction in respect of anygoods, services or property carriedout by a non-resident in Indiaincluding provision of download ofdata or software in India, if theaggregate of payments arising fromsuch transaction or transactionsduring the previous year exceeds suchamount as may be prescribed; or

(b) systematic and continuous soliciting ofits business activities or engaging ininteraction with such number of usersas may be prescribed, in Indiathrough digital means.

It is further proposed to provide that thetransactions or activities shall constitutesignificant economic presence in India,whether or not the non-resident has aresidence or place of business in India orrenders services in India.

It is also proposed to provide that only somuch of income as is attributable to thetransactions or activities referred to in clause(a) or clause (b) shall be deemed to accrueor arise in India.

4 .4 .4 .4 .4 . Income exempt from TIncome exempt from TIncome exempt from TIncome exempt from TIncome exempt from Taxaxaxaxax

4.1 Exemption granted for Royalty ortechnical fees received by a Non-Resident from National TNational TNational TNational TNational TechnicalechnicalechnicalechnicalechnicalResearch OrganisationResearch OrganisationResearch OrganisationResearch OrganisationResearch Organisation –

W.e.f. AY 2018-19, It is proposed toexempt that income arising to a non-resident, not being a company, or aforeign company, by way of royaltyfrom or fees for technical servicesrendered in or outside India to theNational Technical ResearchOrganisation.

4.2 Exemption at the time of withdrawalfrom NPS available to employees hasbeen extended to other assesseesalso –

At present any payment from the

National Pension System Trust to anemployee on closure of his account oron his opting out of the pensionscheme referred to in section 80CCD,to the extent it does not exceed fortyper cent. of the total amount payableto him at the time of such closure orhis opting out of the scheme shall notbe included in his total income.

It is proposed to amend the saidclause so as to extend the aforesaidexemption to all the assessees whohave subscribed to the NationalPension System Trust.

5 .5 .5 .5 .5 . Educational Institutions, Hospital andEducational Institutions, Hospital andEducational Institutions, Hospital andEducational Institutions, Hospital andEducational Institutions, Hospital andCharitable TCharitable TCharitable TCharitable TCharitable Trustsrustsrustsrustsrusts

5.1 Provisions of 40A(3) and 40(a)(ia) madeapplicable to EducationalEducationalEducationalEducationalEducationalInstitutions and Hospital enjoyingInstitutions and Hospital enjoyingInstitutions and Hospital enjoyingInstitutions and Hospital enjoyingInstitutions and Hospital enjoyingexemption u/s 10(23C)exemption u/s 10(23C)exemption u/s 10(23C)exemption u/s 10(23C)exemption u/s 10(23C)

The income of Educational Institutionswere exempt u/s 10(23C) and theprovisions of section 40A(3) and40A(3A) relating to payment in cashexceeding Rs. 10,000/- and 40(a)(ia)relating to disallowance on accountof non deduction of TDS were notapplicable.

W.e.f. AY 2019-20, it is proposed forthe purposes of determining theamount of application under item (a)of the said third proviso, theprovisions of sub-clause (ia) of clause(a) of section 40 and sub-sections (3)and (3A) of section 40A shall, mutatismutandis, apply as they apply incomputing the income chargeableunder the head “Profits and gains ofbusiness or profession”.

5.2 Exemption of Long Term Capital Gainof Listed Shares or Units of an EquityOriented Mutual Fund or Unit of abusiness Trust U/s 10(38) has beenwithdrawn w.e.f. AY 2019-20. Section10(38)

5.35.35.35.35.3 Charitable TCharitable TCharitable TCharitable TCharitable Trustsrustsrustsrustsrusts

Provision of 40A(3) and 40(a)(ia) madeapplicable to charitable trust also –

The provisions of section 40A(3) and40A(3A) relating to payment in cash

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exceeding Rs. 10,000/- and 40(a)(ia)relating to disallowance on account of nondeduction of TDS were not applicable tocharitable trust.

W.e.f. AY 2019-20, It is proposed for thepurposes of determining the amount ofapplication under item (a) of the said thirdproviso, the provisions of sub-clause (ia) ofclause (a) of section 40 and sub-sections(3) and (3A) of section 40A shall, mutatismutandis, apply as they apply in computingthe income chargeable under the head“Profits and gains of business or profession”.

6 .6 .6 .6 .6 . Sa larySa larySa larySa larySa lary

6.16.16.16.16.1 Standard deduction of Rs.Standard deduction of Rs.Standard deduction of Rs.Standard deduction of Rs.Standard deduction of Rs.40,000/- introduced [(Section40,000/- introduced [(Section40,000/- introduced [(Section40,000/- introduced [(Section40,000/- introduced [(Section16(ia)]–16(ia)]–16(ia)]–16(ia)]–16(ia)]–

WWWWW.e.f.e.f.e.f.e.f.e.f. A. A. A. A. AY – 2019-20, it isY – 2019-20, it isY – 2019-20, it isY – 2019-20, it isY – 2019-20, it isproposed to provide forproposed to provide forproposed to provide forproposed to provide forproposed to provide fordeduction of Rs. 40,000 or thededuction of Rs. 40,000 or thededuction of Rs. 40,000 or thededuction of Rs. 40,000 or thededuction of Rs. 40,000 or theamount of the salaryamount of the salaryamount of the salaryamount of the salaryamount of the salary, whichever, whichever, whichever, whichever, whicheveris less, for the purpose ofis less, for the purpose ofis less, for the purpose ofis less, for the purpose ofis less, for the purpose ofcomputing the incomecomputing the incomecomputing the incomecomputing the incomecomputing the incomechargeable under the head-chargeable under the head-chargeable under the head-chargeable under the head-chargeable under the head-salarysalarysalarysalarysalary.....

6 .26.26.26.26.2 Exemption with respect toExemption with respect toExemption with respect toExemption with respect toExemption with respect toReimbursement of MedicalReimbursement of MedicalReimbursement of MedicalReimbursement of MedicalReimbursement of Medicalexpenses of Rs. 15,000/- hasexpenses of Rs. 15,000/- hasexpenses of Rs. 15,000/- hasexpenses of Rs. 15,000/- hasexpenses of Rs. 15,000/- hasbeen withdrawn –been withdrawn –been withdrawn –been withdrawn –been withdrawn –

CurrentlyCurrentlyCurrentlyCurrentlyCurrently, any sum paid by the, any sum paid by the, any sum paid by the, any sum paid by the, any sum paid by theemployer in respect of anyemployer in respect of anyemployer in respect of anyemployer in respect of anyemployer in respect of anyexpenditure actually incurred byexpenditure actually incurred byexpenditure actually incurred byexpenditure actually incurred byexpenditure actually incurred bythe employee on his medicalthe employee on his medicalthe employee on his medicalthe employee on his medicalthe employee on his medicaltreatment or treatment of anytreatment or treatment of anytreatment or treatment of anytreatment or treatment of anytreatment or treatment of anymember of his family notmember of his family notmember of his family notmember of his family notmember of his family notexceeding Rs. 15,000 in theexceeding Rs. 15,000 in theexceeding Rs. 15,000 in theexceeding Rs. 15,000 in theexceeding Rs. 15,000 in theprevious year is not treated asprevious year is not treated asprevious year is not treated asprevious year is not treated asprevious year is not treated asperquisite in the hands of theperquisite in the hands of theperquisite in the hands of theperquisite in the hands of theperquisite in the hands of theemployee.employee.employee.employee.employee.

WWWWW.e.f.e.f.e.f.e.f.e.f. A. A. A. A. AY 2019-20, the aforesaidY 2019-20, the aforesaidY 2019-20, the aforesaidY 2019-20, the aforesaidY 2019-20, the aforesaidexemption as per proviso beforeexemption as per proviso beforeexemption as per proviso beforeexemption as per proviso beforeexemption as per proviso beforesection 17(2)(viii) is withdrawn.section 17(2)(viii) is withdrawn.section 17(2)(viii) is withdrawn.section 17(2)(viii) is withdrawn.section 17(2)(viii) is withdrawn.

7 .7 .7 .7 .7 . Business and Profession –Business and Profession –Business and Profession –Business and Profession –Business and Profession –

7.17.17.17.17.1 Compensation received forCompensation received forCompensation received forCompensation received forCompensation received formodification or termination ofmodification or termination ofmodification or termination ofmodification or termination ofmodification or termination ofagreement made taxableagreement made taxableagreement made taxableagreement made taxableagreement made taxable[(Section 28(ii)][(Section 28(ii)][(Section 28(ii)][(Section 28(ii)][(Section 28(ii)]

W.e.f. AY 2019-20, it is proposed thatany compensation due or received by

any person, by whatever name called,at or in connection with the terminationor the modification of the terms andconditions, as the case may be, of anycontract relating to his business shallbe chargeable to tax under the head“Profits and gains of business orprofession”.

7.27.27.27.27.2 Conversion of Inventory intoConversion of Inventory intoConversion of Inventory intoConversion of Inventory intoConversion of Inventory intocapital assetcapital assetcapital assetcapital assetcapital asset

W.e.f. AY 2019-20, where an inventoryis converted into capital asset, the fairmarket value determined in themanner to be prescribed shall beincome under the business andprofession – Sec 2(24)(xiia) & Sec28(via).

7 .37.37.37.37.3 Marked to market Loss madeMarked to market Loss madeMarked to market Loss madeMarked to market Loss madeMarked to market Loss madeal lowableal lowableal lowableal lowableal lowable

W.e.f. AY – 2017-18, deduction inrespect of any marked to market lossor other expected loss shall beallowed, if computed in accordancewith the income computation anddisclosure standards notified undersub-section (2) of section 145.

The above amendment has beenmade in view of the Delhi High Courtdecision in the case of “The chamberof Tax Consultants and Anr vs Union ofIndia and Ors”

It is further proposed that nodeduction or allowance shall beallowed in respect of any marked tomarket loss or other expected lossexcept as allowable under section 36(1) (xviii) mentioned above.

7.4 Agriculture commodity derivativeAgriculture commodity derivativeAgriculture commodity derivativeAgriculture commodity derivativeAgriculture commodity derivativetransactions shall not betransactions shall not betransactions shall not betransactions shall not betransactions shall not beconsidered as speculativeconsidered as speculativeconsidered as speculativeconsidered as speculativeconsidered as speculativetransactions (Section 43B)transactions (Section 43B)transactions (Section 43B)transactions (Section 43B)transactions (Section 43B)

At present, commodity derivativetransaction subject to CTT were notconsidered as speculativetransactions. Agriculture derivativetransaction are not subject to CTT,hence were not considered as non-speculative transactions.

W.e.f. AY 2019-20, it is purposedtoconsider trading in agricultural

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commodity derivatives as nonspeculative transactions.

7.5 Loss or Profit on account of ForeignExchange fluctuation (Section 43AA)

W.e.f. AY 2017-18, it is proposed toinsert section 43AA which providesthat subject to the provisions ofsection 43A, any gain or loss arisingon account of any change in foreignexchange rates shall be treated asincome or loss, as the case may be,and such gain or loss shall becomputed in accordance with theincome computation and disclosurestandards notified under sub-section(2) of section 145.

It is further proposed to provide thatgain or loss arising on account of thechange in foreign exchange ratesshall be in respect of all foreigncurrency transactions including thoserelating to monetary items and non-monetary items or translation offinancial statements of foreignoperations or forward exchangecontracts or foreign currencytranslation reserves.

The above amendment has beenmade with retrospective effect from AY2017-18 in view of decision of DelhiHigh Court in case of “The chamberof Tax Consultants and anr vs Unionof India and ors”

8 .8 .8 .8 .8 . Difference of 5% between transactionDifference of 5% between transactionDifference of 5% between transactionDifference of 5% between transactionDifference of 5% between transactionvalue and Stamp duty value to bevalue and Stamp duty value to bevalue and Stamp duty value to bevalue and Stamp duty value to bevalue and Stamp duty value to beignored for Section 43CAignored for Section 43CAignored for Section 43CAignored for Section 43CAignored for Section 43CA

W.e.f. AY 2019-20 it is proposed that wherethe value adopted or assessed orassessable by the stamp valuation authoritydoes not exceed 105 and five per cent. ofthe consideration received or accruing asa result of the transfer, the consideration soreceived or accruing as a result of thetransfer shall, for the purposes of computingprofits and gains from transfer of such asset,be deemed to be the full value of theconsideration.

It is further proposed to amend sub-section(4) of the said section so as to provide thatwhere the date of agreement fixing the

value of consideration for transfer of theasset and the date of registration of suchtransfer of asset are not the same, the valuereferred to in sub-section (1) may be takenas the value assessable by the authority forthe purpose of payment of stamp duty inrespect of such transfer on the date of theagreement where the

amount of consideration or a part thereofhas been received by way of an accountpayee cheque or an account payee bankdraft or by use of electronic clearing systemthrough a bank account on or before thedate of agreement for transfer of the asset.

The difference permitted to the extent of 5per cent is inadequate and it should beallowed upto 15% as it is a matter ofcommon knowledge that Stamp Duty Valueis determined at high figure in an arbitrarymanner. The Registrar or Addl Registrar arenot Qualified Engineers or Valuers. They goby street-wise rates prescribed by StateGovernment.

9. Section 47 vis-a vis Section 56(2) (x)9. Section 47 vis-a vis Section 56(2) (x)9. Section 47 vis-a vis Section 56(2) (x)9. Section 47 vis-a vis Section 56(2) (x)9. Section 47 vis-a vis Section 56(2) (x)

9.1 Section 47 contains a list of Transactionsnot regarded as Transfer. Naturally thatshould imply that in case of transfer ofassets in such cases, there will be no tax.

However section 56 (2)(x) provides for levyof tax in case of transfer of an immovableproperty aggregate value of which exceedsRs.50,000 or in case the considerationshown is less than stamp duty value of suchproperty by an amount exceeding Rs.50000either if the consideration.

There is a proviso below section 56(2)(x)(c)which provided certain transactions whichshall be outside the purview of tax as persection 56(2)(x). Some of the items are thosewhich are covered by section 47 like transferof assets in case of amalgamation ordemerger etc. In Finance Bill 2018 itemscovered by sec. 47 clause (iv), (v) and (xiib)have been added to provide that suchtransfers will not be taxed. It may be noted

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that transfer of capital asset to LLP onconversion if value of capital assets is uptoRs. 5 crore in 3 years preceding the previousyear in which conversion takes place.

Similarly sec. 47(xiii) deals with transfer ofcapital assets by a frm to a company as aresult of succession AND sec. 47(xiv) dealswith transfer of capital assets by a soleproprietory concern if succeeded by acompany.

Going by the basic legal principles, atransaction which is not a transfer undersection 47 cannot be taxed under section56(2) or any other section, unless the sectionstarts with a non- obsentee clause. Section56(2)(x) does not say ‘notwithstanding theprovisions of section 47, tax will be payableon transfer of immovable property undersection 56(2)’.

Further taxing such transactions undersection 56(2), will defeat the Government’spurpose of promoting LLPs as alsoconversion of proprietary concern andpartnership firms into companies.

It is suggested that for REMOVAL OFCONFUSION, THE EXCEPTIONMENTIONED IN PROVISO BELOWSECTION 56(2)(X)c) should cover the entiretransactions not treated as TRANSFER asmentioned in section47.

9.2 T9.2 T9.2 T9.2 T9.2 Transfer of asset between holdingransfer of asset between holdingransfer of asset between holdingransfer of asset between holdingransfer of asset between holdingcompany and its wholly owned Indiancompany and its wholly owned Indiancompany and its wholly owned Indiancompany and its wholly owned Indiancompany and its wholly owned Indiansubsidiary company and betweensubsidiary company and betweensubsidiary company and betweensubsidiary company and betweensubsidiary company and betweensubsidiary company and its Indiansubsidiary company and its Indiansubsidiary company and its Indiansubsidiary company and its Indiansubsidiary company and its Indianholding company to be outside theholding company to be outside theholding company to be outside theholding company to be outside theholding company to be outside thepreview of Section 56(2)(x)preview of Section 56(2)(x)preview of Section 56(2)(x)preview of Section 56(2)(x)preview of Section 56(2)(x)

W.e.f AY 2018-19 transfer of capital assetbetween holding company and its whollyowned Indian subsidiary company andbetween subsidiary company and its Indianholding company, which are not regardedas transfer under clause (iv) or clause (v) ofsection 47, shall be outside from the scopeof Section 56(2)(x)

10. L10. L10. L10. L10. Lockockockockock-in period raised from 3 Y-in period raised from 3 Y-in period raised from 3 Y-in period raised from 3 Y-in period raised from 3 Yearsearsearsearsearsto 5 Yto 5 Yto 5 Yto 5 Yto 5 Years for availing exemptionears for availing exemptionears for availing exemptionears for availing exemptionears for availing exemptionu/s 54ECu/s 54ECu/s 54ECu/s 54ECu/s 54EC

WWWWW.e.f.e.f.e.f.e.f.e.f. A. A. A. A. AY 2019-20, it is proposed toY 2019-20, it is proposed toY 2019-20, it is proposed toY 2019-20, it is proposed toY 2019-20, it is proposed toincrease the Lincrease the Lincrease the Lincrease the Lincrease the Lock in period for 5 Yock in period for 5 Yock in period for 5 Yock in period for 5 Yock in period for 5 Yearsearsearsearsearsby making amendment to theby making amendment to theby making amendment to theby making amendment to theby making amendment to thedefinit ion of Ldefinit ion of Ldefinit ion of Ldefinit ion of Ldefinit ion of Long Tong Tong Tong Tong Term Specifiederm Specifiederm Specifiederm Specifiederm SpecifiedAsset, which shall mean any bond,Asset, which shall mean any bond,Asset, which shall mean any bond,Asset, which shall mean any bond,Asset, which shall mean any bond,redeemable after 5 years and issuedredeemable after 5 years and issuedredeemable after 5 years and issuedredeemable after 5 years and issuedredeemable after 5 years and issuedon or after the 1st day of April, 2018on or after the 1st day of April, 2018on or after the 1st day of April, 2018on or after the 1st day of April, 2018on or after the 1st day of April, 2018by the National Highways Authority ofby the National Highways Authority ofby the National Highways Authority ofby the National Highways Authority ofby the National Highways Authority ofIndia or by the Rural Electrif icationIndia or by the Rural Electrif icationIndia or by the Rural Electrif icationIndia or by the Rural Electrif icationIndia or by the Rural Electrif icationCorporation Limited or any otherCorporation Limited or any otherCorporation Limited or any otherCorporation Limited or any otherCorporation Limited or any otherbond notif ied by the Centralbond notif ied by the Centralbond notif ied by the Centralbond notif ied by the Centralbond notif ied by the CentralGovernment in this behalfGovernment in this behalfGovernment in this behalfGovernment in this behalfGovernment in this behalf.....

The increase of Lock in period of 3The increase of Lock in period of 3The increase of Lock in period of 3The increase of Lock in period of 3The increase of Lock in period of 3years to 5 years will adversely affectyears to 5 years will adversely affectyears to 5 years will adversely affectyears to 5 years will adversely affectyears to 5 years will adversely affectthe taxpayers andthe taxpayers andthe taxpayers andthe taxpayers andthe taxpayers anda) they will face firstly l iquiditya) they will face firstly l iquiditya) they will face firstly l iquiditya) they will face firstly l iquiditya) they will face firstly l iquidityproblem andproblem andproblem andproblem andproblem andb) secondly loss of income of almostb) secondly loss of income of almostb) secondly loss of income of almostb) secondly loss of income of almostb) secondly loss of income of almostupto 5% for as many as 5 years i.e.upto 5% for as many as 5 years i.e.upto 5% for as many as 5 years i.e.upto 5% for as many as 5 years i.e.upto 5% for as many as 5 years i.e.25% in aggregate as the general25% in aggregate as the general25% in aggregate as the general25% in aggregate as the general25% in aggregate as the generalreturn is 10% and the interest on suchreturn is 10% and the interest on suchreturn is 10% and the interest on suchreturn is 10% and the interest on suchreturn is 10% and the interest on suchBonds is 5%.Bonds is 5%.Bonds is 5%.Bonds is 5%.Bonds is 5%.

It wil l make investment in BondsIt wil l make investment in BondsIt wil l make investment in BondsIt wil l make investment in BondsIt wil l make investment in Bondsunattract ive.unattract ive.unattract ive.unattract ive.unattract ive.

11.11.11.11.11. Computation of Income fromComputation of Income fromComputation of Income fromComputation of Income fromComputation of Income fromConstruction and Service Contract-Construction and Service Contract-Construction and Service Contract-Construction and Service Contract-Construction and Service Contract-Sec 43CBSec 43CBSec 43CBSec 43CBSec 43CB

W.e.f. AY 2017-18 a new section 43CBa new section 43CBa new section 43CBa new section 43CBa new section 43CBhas been inserted which provides thathas been inserted which provides thathas been inserted which provides thathas been inserted which provides thathas been inserted which provides thatprofits and gains of a construction contractor a contract for providing services shall bedetermined on the basis of percentage ofcompletion method in accordance with theincome computation and disclosurestandards notified under sub-section (2) ofsection 145. It is further proposed to providethat in the case of a contract for providingservices with duration less than 90 days, theprofits and gains shall be determined onthe basis of project completion method. Itis also proposed to provide that in the caseof a contract for provision of servicesinvolving indeterminate number of acts overa specific period of time, the profits andgains arising from such contract shall bedetermined on the basis of a straight linemethod.

It is also proposed to provide that for this

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purpose the contract revenue shall includeretention money and the contract costs shallnot be reduced by any incidental incomein the nature of interest, dividends or capitalgains.

12.12.12.12.12. Presumptive income from heavyPresumptive income from heavyPresumptive income from heavyPresumptive income from heavyPresumptive income from heavygoods vehicle raised from Rs. 7500goods vehicle raised from Rs. 7500goods vehicle raised from Rs. 7500goods vehicle raised from Rs. 7500goods vehicle raised from Rs. 7500per month to Rs 1000 per tonneper month to Rs 1000 per tonneper month to Rs 1000 per tonneper month to Rs 1000 per tonneper month to Rs 1000 per tonne(Section 44AE)(Section 44AE)(Section 44AE)(Section 44AE)(Section 44AE)

At present for the purpose of computingprofits and gains of business of plying,hiring or leasing goods carriages anamount Rs. 7,500 for every month or partof a month or an amount claimed to beactually earned by the assessee, whicheveris higher, shall be deemed to be theaggregate income.

W.e.f. AY 2019-20, it is proposed tosubstitute the said sub-section so as toprovide that for a heavy goods vehicle, theprofits and gains shall be an amount equalto Rs. 1,000 per ton of gross vehicle weightor unladen weight, as the case may be, forevery month or part of a month duringwhich the heavy goods vehicle is owned bythe assessee in the previous year or anamount claimed to have been actuallyearned from such vehicle, whichever ishigher.

It is further proposed to provide that in thecase of a goods carriage other than heavyvehicle, the profits and gains shall be anamount equal to Rs. 7,500 for every monthor part of a month during which the goodscarriage is owned by the assessee in theprevious year or an amount claimed tohave been actually earned from such goodscarriage, whichever is higher.

13.13.13.13.13. Capital GainsCapital GainsCapital GainsCapital GainsCapital Gains

13.113.113.113.113.1Gain from any transfer of aGain from any transfer of aGain from any transfer of aGain from any transfer of aGain from any transfer of acapital asset, being bond orcapital asset, being bond orcapital asset, being bond orcapital asset, being bond orcapital asset, being bond orGlobal Depository Receipt madeGlobal Depository Receipt madeGlobal Depository Receipt madeGlobal Depository Receipt madeGlobal Depository Receipt madeby a non-resident on aby a non-resident on aby a non-resident on aby a non-resident on aby a non-resident on arecognised stock exchangerecognised stock exchangerecognised stock exchangerecognised stock exchangerecognised stock exchangelocated in any Internationallocated in any Internationallocated in any Internationallocated in any Internationallocated in any InternationalFinancial Services Centre not toFinancial Services Centre not toFinancial Services Centre not toFinancial Services Centre not toFinancial Services Centre not tobe considered as transferbe considered as transferbe considered as transferbe considered as transferbe considered as transfer[(Section 47(viiab)][(Section 47(viiab)][(Section 47(viiab)][(Section 47(viiab)][(Section 47(viiab)]

W.e.f. AY 2019-20, it is proposed thatany transfer of a capital asset, beingbond or Global Depository Receiptreferred to in sub-section (1) of section115AC or rupee denominated bondof an Indian company or derivative,made by a non-resident on arecognised stock exchange located inany International Financial ServicesCentre and where the considerationfor such transaction is paid or payablein foreign currency, shall not beregarded as transfer.

13.2 Fair market value on date of13.2 Fair market value on date of13.2 Fair market value on date of13.2 Fair market value on date of13.2 Fair market value on date ofconversion shall be Cost ofconversion shall be Cost ofconversion shall be Cost ofconversion shall be Cost ofconversion shall be Cost ofacquisit ion for the convertedacquisit ion for the convertedacquisit ion for the convertedacquisit ion for the convertedacquisit ion for the convertedcapital asset [(Section 49(9)]capital asset [(Section 49(9)]capital asset [(Section 49(9)]capital asset [(Section 49(9)]capital asset [(Section 49(9)]

W.e.f. AY 2019-20 where the inventoryhas been converted into capital assetand at the time of transfer of suchcapital asset, the cost of acquisitionof such asset shall be deemed to bethe fair market value which has beentaken into account for the purposes ofcomputing profit u/s 28(via)

13.3 Difference of 5% between Stamp13.3 Difference of 5% between Stamp13.3 Difference of 5% between Stamp13.3 Difference of 5% between Stamp13.3 Difference of 5% between StampDuty VDuty VDuty VDuty VDuty Value and actualalue and actualalue and actualalue and actualalue and actualconsideration to be ignored .consideration to be ignored .consideration to be ignored .consideration to be ignored .consideration to be ignored .(Section 50C)(Section 50C)(Section 50C)(Section 50C)(Section 50C)

W.e.f. AY 2019-20 where the valueadopted or assessed or assessable bythe stamp valuation authority does notexceed one hundred and five per cent.of the consideration received oraccruing as a result of the transfer, theconsideration so received or accruingas a result of the transfer shall, for thepurposes of section 48, be deemed tobe the full value of the consideration.Also see para 8 above.

14.14.14.14.14. Income from Other SourcesIncome from Other SourcesIncome from Other SourcesIncome from Other SourcesIncome from Other Sources

14.114.114.114.114.1Difference upto 5% betweenDifference upto 5% betweenDifference upto 5% betweenDifference upto 5% betweenDifference upto 5% betweenStamp Duty VStamp Duty VStamp Duty VStamp Duty VStamp Duty Value and actualalue and actualalue and actualalue and actualalue and actualconsideration in case ofconsideration in case ofconsideration in case ofconsideration in case ofconsideration in case ofimmoveable property to beimmoveable property to beimmoveable property to beimmoveable property to beimmoveable property to beignored . Sec 56(2)(x)ignored . Sec 56(2)(x)ignored . Sec 56(2)(x)ignored . Sec 56(2)(x)ignored . Sec 56(2)(x)

W.e.f. AY 2019-20 where any personreceives any immovable property fora consideration, the stamp duty valueof the property as exceeds such

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consideration, if the amount of suchexcess is more than Rs. 50,000 or theamount equal to 5 per cent. of theconsideration, whichever is higher,shall be charged to tax under the head“Income from other sources”.

14.214.214.214.214.2TTTTTransfer of asset between holdingransfer of asset between holdingransfer of asset between holdingransfer of asset between holdingransfer of asset between holdingcompany and its wholly ownedcompany and its wholly ownedcompany and its wholly ownedcompany and its wholly ownedcompany and its wholly ownedIndian subsidiary company andIndian subsidiary company andIndian subsidiary company andIndian subsidiary company andIndian subsidiary company andbetween subsidiary company andbetween subsidiary company andbetween subsidiary company andbetween subsidiary company andbetween subsidiary company andits Indian holding company to beits Indian holding company to beits Indian holding company to beits Indian holding company to beits Indian holding company to beoutside the preview of Sectionoutside the preview of Sectionoutside the preview of Sectionoutside the preview of Sectionoutside the preview of Section56(2)(x)56(2)(x)56(2)(x)56(2)(x)56(2)(x)

W.e.f AY 2018-19 transfer of capitalasset between holding company andits wholly owned Indian subsidiarycompany and between subsidiarycompany and its Indian holdingcompany, which are not regarded astransfer under clause (iv) or clause (v)of section 47, shall be outside fromthe scope of Section 56(2)(x)

14.3 W.e.f. AY 2019-20, any compensationreceived for termination ofemployment or modification of termsof employment shall be taxed underthe head other sources - Section56(2)(xi)

15.15.15.15.15. Setoff And Carry FSetoff And Carry FSetoff And Carry FSetoff And Carry FSetoff And Carry Forward of Lorward of Lorward of Lorward of Lorward of LossesossesossesossesossesThe restriction for Set off of losses notThe restriction for Set off of losses notThe restriction for Set off of losses notThe restriction for Set off of losses notThe restriction for Set off of losses notto apply to a company whereto apply to a company whereto apply to a company whereto apply to a company whereto apply to a company whereshareholding has changed pursuantshareholding has changed pursuantshareholding has changed pursuantshareholding has changed pursuantshareholding has changed pursuantto approved resolution under theto approved resolution under theto approved resolution under theto approved resolution under theto approved resolution under theInsolvency and Bankruptcy Code,Insolvency and Bankruptcy Code,Insolvency and Bankruptcy Code,Insolvency and Bankruptcy Code,Insolvency and Bankruptcy Code,2016 (Section 79)2016 (Section 79)2016 (Section 79)2016 (Section 79)2016 (Section 79)

At present where a change in shareholdinghas taken place in a previous year in thecase of a company, not being a companyin which the public are substantiallyinterested, no loss incurred in any year priorto the previous year shall be carriedforward and set off against the income ofthe previous year unless on the last day ofthe previous year the shares of the companycarrying not less than fifty-one per cent. ofthe voting power were beneficially held bypersons who beneficially held shares of thecompany carrying not less than fifty-one percent. of the voting power on the last day ofthe year or years in which the loss wasincurred.

W.e.f. AY 2018-19, it is proposed to providethat nothing contained section 79 shallapply to a company where a change in theshareholding takes place in a previous yearpursuant to approved resolution plan underthe Insolvency and Bankruptcy Code, 2016,after affording a reasonable opportunity ofbeing heard to the jurisdictional PrincipalCommissioner or Commissioner.

16.16.16.16.16. Deduct ionsDeduct ionsDeduct ionsDeduct ionsDeduct ions

16.1 Delayed return will disentitle to16.1 Delayed return will disentitle to16.1 Delayed return will disentitle to16.1 Delayed return will disentitle to16.1 Delayed return will disentitle tothe deductions u/s 80H to 80TTthe deductions u/s 80H to 80TTthe deductions u/s 80H to 80TTthe deductions u/s 80H to 80TTthe deductions u/s 80H to 80TT-----(Section 80AC)(Section 80AC)(Section 80AC)(Section 80AC)(Section 80AC)

At present as per section 80AC where,in computing the total income of anassessee of the previous year relevantto the assessment year commencingon the 1st day of April, 2006 or anysubsequent assessment year, anydeduction admissible under section80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-IDor section 80-IE, shall be allowed tohim only if he furnishes a return of hisincome for such assessment year onor before the due date specified undersub-section (1) of section 139.

W.e.f AY 2018-19 It is proposed tosubstitute section 80AC so as toprovide that in computing the totalincome of an assessee, deductiondeductiondeductiondeductiondeductionunder Section 80H to 80TTunder Section 80H to 80TTunder Section 80H to 80TTunder Section 80H to 80TTunder Section 80H to 80TT(Chapter VIA- P(Chapter VIA- P(Chapter VIA- P(Chapter VIA- P(Chapter VIA- Part C) shall beart C) shall beart C) shall beart C) shall beart C) shall beallowed only if the return is filedallowed only if the return is filedallowed only if the return is filedallowed only if the return is filedallowed only if the return is filedwithin the due date specifiedwithin the due date specifiedwithin the due date specifiedwithin the due date specifiedwithin the due date specifiedunder sub-section (1) of sectionunder sub-section (1) of sectionunder sub-section (1) of sectionunder sub-section (1) of sectionunder sub-section (1) of section139139139139139 .

16.216.216.216.216.2Limit for medical insurance andLimit for medical insurance andLimit for medical insurance andLimit for medical insurance andLimit for medical insurance andpreventive check up for Seniorpreventive check up for Seniorpreventive check up for Seniorpreventive check up for Seniorpreventive check up for Seniorcitizen has been raised from Rscitizen has been raised from Rscitizen has been raised from Rscitizen has been raised from Rscitizen has been raised from Rs30,000 to Rs 50,000 (Section30,000 to Rs 50,000 (Section30,000 to Rs 50,000 (Section30,000 to Rs 50,000 (Section30,000 to Rs 50,000 (Section80D)80D)80D)80D)80D)

At present for medical insurance orpreventive health check-up of a seniorcitizen, deduction of thirty thousandrupees is allowed. Further, in the caseof very senior citizens, the said sectionalso provides for a deduction ofmedical expenditure within the overalllimits of thirty thousand rupees.

W.e.f. AY 2019-20 It is proposed that

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the deduction of fifty thousand rupeesin aggregate shall be allowed tosenior citizens in respect of medicalinsurance or preventive health check-up or medical expenditure.

It is further proposed to provide thatwhere an amount is paid in lump sumin the previous year to effect or to keepin force an insurance on the health ofa person specified therein for morethan a year, then, subject to theprovisions of this section, there shallbe allowed for each of the relevantprevious years, a deduction equal tothe appropriate fraction of theamount.

16.3 The deduction for expenses of16.3 The deduction for expenses of16.3 The deduction for expenses of16.3 The deduction for expenses of16.3 The deduction for expenses ofspecified disease of seniorspecified disease of seniorspecified disease of seniorspecified disease of seniorspecified disease of seniorcit izen/ very senior cit izen hascit izen/ very senior cit izen hascit izen/ very senior cit izen hascit izen/ very senior cit izen hascit izen/ very senior cit izen hasbeen raised to Rs 1,00,000-been raised to Rs 1,00,000-been raised to Rs 1,00,000-been raised to Rs 1,00,000-been raised to Rs 1,00,000-(Section 80DDB)(Section 80DDB)(Section 80DDB)(Section 80DDB)(Section 80DDB)

At present a deduction is available toan individual and Hindu undividedfamily with regard to amount paid formedical treatment of specifieddiseases in respect of very seniorcitizen upto Rs. 80,000 and in case ofsenior citizens Rs. 60,000 subject toother conditions.

W.e.f AY 2019-20 It is proposed toincrease the limit to Rs. 1,00,000 incase expenditure is incurred for seniorcitizen or very senior citizen.

16.416.416.416.416.4Scope for deduction to Start UpScope for deduction to Start UpScope for deduction to Start UpScope for deduction to Start UpScope for deduction to Start Upbusiness enhanced-(Section 80-business enhanced-(Section 80-business enhanced-(Section 80-business enhanced-(Section 80-business enhanced-(Section 80-IAC)IAC)IAC)IAC)IAC)

At present deduction is available toan eligible start-up, if it isincorporated on or after the 1st dayof April, 2016 but before the 1st dayof April, 2019; the total turnover of itsbusiness does not exceed Rs. 25 crorerupees in any of the previous yearsbeginning on or after the 1st day ofApril, 2016 and ending on the 31stday of March, 2021; and it is engagedin the eligible business.

W.e.f. AY 2018-19 It is proposed toprovide that deduction under the saidsection shall be available to aneligible start-up, if it is incorporated

on or after the 1st day of April, 2016but before the 1st day of April, 2021;the total turnover of its business doesnot exceed Rs. 25 crore rupees in anyof the seven previous years beginningfrom the year in which it isincorporated.

It is also proposed to amend thedefinition of “eligible business”eligible business”eligible business”eligible business”eligible business” tomean a business carried out by aneligible start up engaged ininnovation, development orimprovement of products or processesor services or a scalable businessmodel with a high potential ofemployment generation or wealthcreation.

16.516.516.516.516.5Condition for deduction for newCondition for deduction for newCondition for deduction for newCondition for deduction for newCondition for deduction for newemployment relaxed-(Sectionemployment relaxed-(Sectionemployment relaxed-(Sectionemployment relaxed-(Sectionemployment relaxed-(Section80JJAA)80JJAA)80JJAA)80JJAA)80JJAA)

At present a deduction of 30 per cent.of emoluments paid to a newemployee for three years is available.In order to claim the deduction, thenew employee must be employed formore than two hundred and forty daysin the year of employment or onehundred and fifty days in case ofbusiness of manufacturing of apparel,subject to certain conditions.

W.e.f AY 2019-20, it is proposed toprovide that where a new employeeis employed during the previous yearfor a period of less than 240 days or150 days, as the case may be, but isemployed for a period of 240 daysor 150 days, as the case may be, inthe immediately succeeding year, heshall be deemed to have beenemployed in the succeeding year andthe provisions of this section shallapply accordingly.

(This amendment should have beenmade retrospectively as number ofappeals are pending before differentappellate forums on the issue)

Further the benefit of employing for150 days only has been extended tobusiness of manufacturing of footwearor leather products.

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16.6 The benefit available to Co-16.6 The benefit available to Co-16.6 The benefit available to Co-16.6 The benefit available to Co-16.6 The benefit available to Co-operative society engaged inoperative society engaged inoperative society engaged inoperative society engaged inoperative society engaged inmarketing of agriculturalmarketing of agriculturalmarketing of agriculturalmarketing of agriculturalmarketing of agriculturalproduce grown by its memberproduce grown by its memberproduce grown by its memberproduce grown by its memberproduce grown by its memberextended to Producerextended to Producerextended to Producerextended to Producerextended to ProducerCompaniesCompaniesCompaniesCompaniesCompanies- (Section 80P- (Section 80P- (Section 80P- (Section 80P- (Section 80PA)A)A)A)A)

W.e.f. AY 2019-20 It is proposed toinsert section 80PA so as to providethat in case of an assessee, being aProducer Company, having a totalturnover of one hundred crore rupeesor less in any previous year, the grosstotal income includes any incomefrom the marketing of agriculturalproduce grown by its members, or thepurchase of agricultural implements,seeds, livestock or other articlesintended for agriculture for thepurpose of supplying them to itsmembers, or the processing of theagricultural produce of its members,the whole of the amount of income orprofits and gains and businessattributable to any one or more ofsuch activities shall be deducted incomputing the total income of theassessee for the previous year relevantto any assessment year commencingon or after the 1st day of April, 2019,but before the 1st day of April, 2025.

It is further proposed to provide thatwhere the assessee is entitled also todeduction under any other provisionor provisions of Chapter VIA, thededuction under this section shall beallowed from the gross total incomeas reduced by the deductions undersuch other provision or provisions ofthe said Chapter.

16.716.716.716.716.7Deduction of Rs. 50,000 ofDeduction of Rs. 50,000 ofDeduction of Rs. 50,000 ofDeduction of Rs. 50,000 ofDeduction of Rs. 50,000 ofInterest Income of Senior CitizenInterest Income of Senior CitizenInterest Income of Senior CitizenInterest Income of Senior CitizenInterest Income of Senior Citizenintroduced –(Section 80TTB)introduced –(Section 80TTB)introduced –(Section 80TTB)introduced –(Section 80TTB)introduced –(Section 80TTB)

W.e.f. AY 2019-20 Senior citizen shallbe entitled to a deduction upto Rs.50,000 out of its interest income ondeposits with a banking company towhich the Banking Regulation Act,1949, applies (including any bank orbanking institution referred to insection 51 of that Act) or a co-operative society engaged in the

business of banking (including a co-operative land mortgage bank or aco-operative land development bank)or a Post Office as defined in clause(A) of section 2 of the Indian Post OfficeAct, 1898.

It is further provided that senior citizenwill not be entitled to deduction of Rs.10,000 u/s 80TTA. In such a situationthe benefit of section 80TTB should beextended to Interest form Saving Bankaccount as well as Post Offices.

17 Special T17 Special T17 Special T17 Special T17 Special Tax Ratesax Ratesax Ratesax Ratesax Rates

17.1 Exemption of L17.1 Exemption of L17.1 Exemption of L17.1 Exemption of L17.1 Exemption of Long Tong Tong Tong Tong Term Capitalerm Capitalerm Capitalerm Capitalerm CapitalGain of Listed Shares or Unit ofGain of Listed Shares or Unit ofGain of Listed Shares or Unit ofGain of Listed Shares or Unit ofGain of Listed Shares or Unit ofan Equity Oriented Mutual Fundan Equity Oriented Mutual Fundan Equity Oriented Mutual Fundan Equity Oriented Mutual Fundan Equity Oriented Mutual Fundor Unit of a business Tor Unit of a business Tor Unit of a business Tor Unit of a business Tor Unit of a business Trust U/srust U/srust U/srust U/srust U/s10(38) has been withdrawn w10(38) has been withdrawn w10(38) has been withdrawn w10(38) has been withdrawn w10(38) has been withdrawn w.e.f.e.f.e.f.e.f.e.f.....AAAAAY 2019-20.Y 2019-20.Y 2019-20.Y 2019-20.Y 2019-20.

For computing Long Term CapitalGain on transfer of equity Shares orequity oriented mutual fund or unit ofbusiness trust on which STT is paid onsuch transfer shall be computed bytaking Fair Market Value of the assetas on 31st January, 2018 or sale priceof the share whichever is lower as costof acquisition and in case the actualcost of acquisition is higher than suchprice the same shall be taken as costof acquisition. No benefit ofindexation will be allowed on suchtransfer.

However the Long term Capital gainon these assets shall remain exemptto the extent of Rs. 1,00,000/- andshall be charged to tax @ 10% onbalance of LTCG.

However these provisions shall notapply to Equity shares which havebeen acquired on or after 01.10.2004and no STT has been paid at the timeof acquisition.

FFFFFor Example see chart in para 1.2or Example see chart in para 1.2or Example see chart in para 1.2or Example see chart in para 1.2or Example see chart in para 1.2above.above.above.above.above.

17.217.217.217.217.2No expenditure will be allowedNo expenditure will be allowedNo expenditure will be allowedNo expenditure will be allowedNo expenditure will be allowedwith respect to Income assessedwith respect to Income assessedwith respect to Income assessedwith respect to Income assessedwith respect to Income assessedu/s 68, 69, 69A, 69B,69C oru/s 68, 69, 69A, 69B,69C oru/s 68, 69, 69A, 69B,69C oru/s 68, 69, 69A, 69B,69C oru/s 68, 69, 69A, 69B,69C or69D–(Section 115BBE)69D–(Section 115BBE)69D–(Section 115BBE)69D–(Section 115BBE)69D–(Section 115BBE)

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At present Section 115BBE(2) providesthat no deduction in respect of anyexpenditure or allowance or set-off ofany loss shallbe allowed with respectto income returned by assessee u/s68, 69, 69A, 69B,69C or 69D.

W.r.e.f. AY 2017-18 it is proposed thatno expenditure will be allowed withrespect to income assessed u/s u/s 68,69, 69A, 69B,69C or 69D even ifassessee has not returned the incomeunder these section.

17.317.317.317.317.3Aggregate unabsorbedAggregate unabsorbedAggregate unabsorbedAggregate unabsorbedAggregate unabsorbeddepreciation and loss broughtdepreciation and loss broughtdepreciation and loss broughtdepreciation and loss broughtdepreciation and loss broughtforward shall be allowed forforward shall be allowed forforward shall be allowed forforward shall be allowed forforward shall be allowed forcomputing book profit in case ofcomputing book profit in case ofcomputing book profit in case ofcomputing book profit in case ofcomputing book profit in case ofa companya companya companya companya company, against whom an, against whom an, against whom an, against whom an, against whom anapplication for corporateapplication for corporateapplication for corporateapplication for corporateapplication for corporateinsolvency resolution process hasinsolvency resolution process hasinsolvency resolution process hasinsolvency resolution process hasinsolvency resolution process hasbeen admitted-(Section 115JB)been admitted-(Section 115JB)been admitted-(Section 115JB)been admitted-(Section 115JB)been admitted-(Section 115JB)

W.e.f. AY 2018-19 it is proposed toamend Explanation 1 to section115JB so as to provide that in case ofa company, against whom anapplication for corporate insolvencyresolution process has been admittedby the Adjudicating Authority undersection 7 or section 9 or section 10 ofthe Insolvency and Bankruptcy Code,2016, the aggregate amount ofunabsorbed depreciation and lossbrought forward shall be allowed tobe reduced from the book profit andthe loss shall not include depreciation.

17.4 P17.4 P17.4 P17.4 P17.4 Provisions of MArovisions of MArovisions of MArovisions of MArovisions of MAT shall not applyT shall not applyT shall not applyT shall not applyT shall not applyto Fto Fto Fto Fto Foreign company on incomeoreign company on incomeoreign company on incomeoreign company on incomeoreign company on incomechargeable under section 44B orchargeable under section 44B orchargeable under section 44B orchargeable under section 44B orchargeable under section 44B orsection 44BB or section 44BBA orsection 44BB or section 44BBA orsection 44BB or section 44BBA orsection 44BB or section 44BBA orsection 44BB or section 44BBA orsection 44BBB-(Section 115JB)section 44BBB-(Section 115JB)section 44BBB-(Section 115JB)section 44BBB-(Section 115JB)section 44BBB-(Section 115JB)

W.r.e.f. AY 2001-02 it is proposed thatthe provisions of the section 115JBshall not be applicable and shall bedeemed never to have beenapplicable to an assessee, being aforeign company, where its totalincome comprises solely of profits andgains from business referred to insection 44B or section 44BB or section44BBA or section 44BBB and suchincome has been offered to tax at therates specified in the said sections.

17.517.517.517.517.5WWWWW.e.f.e.f.e.f.e.f.e.f. A. A. A. A. AY 2019-20 TheY 2019-20 TheY 2019-20 TheY 2019-20 TheY 2019-20 Theconcessional rate of Alternateconcessional rate of Alternateconcessional rate of Alternateconcessional rate of Alternateconcessional rate of AlternateMinimum TMinimum TMinimum TMinimum TMinimum Tax of 9% has beenax of 9% has beenax of 9% has beenax of 9% has beenax of 9% has beenextended to Unit located inextended to Unit located inextended to Unit located inextended to Unit located inextended to Unit located inInternational Financial ServiceInternational Financial ServiceInternational Financial ServiceInternational Financial ServiceInternational Financial ServiceCentre- (Section 115JC & 115JF)Centre- (Section 115JC & 115JF)Centre- (Section 115JC & 115JF)Centre- (Section 115JC & 115JF)Centre- (Section 115JC & 115JF)

17.617.617.617.617.6WWWWW.e.f.e.f.e.f.e.f.e.f. 01.04.2018Deemed. 01.04.2018Deemed. 01.04.2018Deemed. 01.04.2018Deemed. 01.04.2018Deemeddividend will now be paid by thedividend will now be paid by thedividend will now be paid by thedividend will now be paid by thedividend will now be paid by thecompanies u/s 115-companies u/s 115-companies u/s 115-companies u/s 115-companies u/s 115-O @ 30%O @ 30%O @ 30%O @ 30%O @ 30%(Section 115-(Section 115-(Section 115-(Section 115-(Section 115-O)O)O)O)O)

17.7 The equity oriented mutual fund17.7 The equity oriented mutual fund17.7 The equity oriented mutual fund17.7 The equity oriented mutual fund17.7 The equity oriented mutual fundalso to pay Income distributionalso to pay Income distributionalso to pay Income distributionalso to pay Income distributionalso to pay Income distributiontax @ 10%-Sec 115Rtax @ 10%-Sec 115Rtax @ 10%-Sec 115Rtax @ 10%-Sec 115Rtax @ 10%-Sec 115R

At present any amount of incomedistributed by the specified company or aMutual Fund to its unit holders ischargeable to tax and such specifiedcompany or Mutual Fund is liable to payadditional income-tax on such distributedincome at the rate specified in the saidsection. However, in respect of any incomedistributed to a unit holder of equityoriented funds in respect of any distributionmade from such funds is not chargeableto tax under the said section.

W.e.f 01.04.2018 It is proposed to amendthe section 115R so as to provide that whereany income is distributed to any person byan equity oriented fund, the fund shall beliable to pay additional income-tax at therate of ten per cent. on income sodistributed.

18.18.18.18.18. PPPPPANANANANAN

Application of PApplication of PApplication of PApplication of PApplication of PAN made mandatoryAN made mandatoryAN made mandatoryAN made mandatoryAN made mandatoryfor Certain persons-Sec 139Afor Certain persons-Sec 139Afor Certain persons-Sec 139Afor Certain persons-Sec 139Afor Certain persons-Sec 139A

W.e.f. 01st April 2018 it is proposed toinsert a new clause (v) and (vi) undersection 139A which provides that everyperson, not being an individual, whichenters into a financial transaction of anamount aggregating to two lakh fiftythousand rupees or more in a financialyear shall apply to the Assessing Officerfor allotment of a permanent accountnumber.

Further the managing director, director,partner, trustee, author, founder, karta,chief executive officer, principal officer oroffice bearer of the above mentionedentity or any person competent to act on

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behalf of the person referred to above,shall also apply to the Assessing Officerfor the allotment of permanent accountnumber.

19.19.19.19.19. Return of IncomeReturn of IncomeReturn of IncomeReturn of IncomeReturn of Income

Insolvency professional authorised toInsolvency professional authorised toInsolvency professional authorised toInsolvency professional authorised toInsolvency professional authorised toSign return of Income of companySign return of Income of companySign return of Income of companySign return of Income of companySign return of Income of companyunder Insolvency and Bankruptcyunder Insolvency and Bankruptcyunder Insolvency and Bankruptcyunder Insolvency and Bankruptcyunder Insolvency and BankruptcyCode, 2016 (Section 140)Code, 2016 (Section 140)Code, 2016 (Section 140)Code, 2016 (Section 140)Code, 2016 (Section 140)

W.e.f. 01.04.2018 in respect of a companywhere an application has been admittedby the Adjudicating Authority under section7 or section 9 or section 10 of the Insolvencyand Bankruptcy Code, 2016, the return shallbe verified by the insolvency professionalappointed by such Adjudicating Authority.

20.20.20.20.20. Scope of adjustment reduced forScope of adjustment reduced forScope of adjustment reduced forScope of adjustment reduced forScope of adjustment reduced forprocessing of return u/s 143(1)processing of return u/s 143(1)processing of return u/s 143(1)processing of return u/s 143(1)processing of return u/s 143(1)

At present section 143(1)(a) provides thatat the time of processing of return of incomemade under section 139, or in response toa notice under sub-section (1) of section142, the total income or loss shall becomputed after making the adjustmentsspecified in clauses (i) to (vi) therein.

Sub-clause (vi) of the said clause providesfor adjustment in respect of addition ofincome appearing in Form 26AS or Form16A or Form 16 which has not been includedin computing the total income in the return.

W.e.f.AY 2018-19 It is proposed to insert anew proviso to the said clause so as toprovide that no adjustment under sub-clause (vi) of the said clause shall be madein respect of any return furnished for theassessment year commencing on or afterthe 1st day of April, 2018.

21.21.21.21.21. Scheme of E Assessment [(SectionScheme of E Assessment [(SectionScheme of E Assessment [(SectionScheme of E Assessment [(SectionScheme of E Assessment [(Section143(3A),(3B) & 3(C) ]143(3A),(3B) & 3(C) ]143(3A),(3B) & 3(C) ]143(3A),(3B) & 3(C) ]143(3A),(3B) & 3(C) ]

A scheme for e-assessment eliminatinginterface between assessee and Assessingofficer and introduction of team basedassessment with dynamic jurisdiction will benotified in the official gazette.

22.22.22.22.22. Income Computation DisclosureIncome Computation DisclosureIncome Computation DisclosureIncome Computation DisclosureIncome Computation DisclosureStandardsStandardsStandardsStandardsStandards

22.122.122.122.122.1The struck down provisions ofThe struck down provisions ofThe struck down provisions ofThe struck down provisions ofThe struck down provisions ofICDS has been legalised-ICDS has been legalised-ICDS has been legalised-ICDS has been legalised-ICDS has been legalised-(Sect ion145A)(Sect ion145A)(Sect ion145A)(Sect ion145A)(Sect ion145A)

W.r.e.f. AY 2017-18 old Section 145Ahas been replaced with new section145A which provides for the purposeof determining the incomechargeable under the head “Profitsand gains of business or profession”as under,—

(i) the valuation of inventory shallbe made at lower of actual costor net realisable value inaccordance with the incomecomputation and disclosurestandards notified under sub-section (2) of section 145;

(ii) the valuation of purchase andsale of goods or services and ofinventory shall be adjusted toinclude the amount of any tax,duty, cess or fee (by whatevername called) actually paid orincurred by the assessee to bringthe goods or services to the placeof its location and condition ason the date of valuation;

(iii) the valuation of inventory beingsecurities not listed on arecognised stock exchange; orlisted but not quoted on arecognised stock exchange withregularity from time to time,shall be valued at actual costinitially recognised inaccordance with the incomecomputation and disclosurestandards notified under sub-section (2) of section 145;

(iv) inventory being securities otherthan those referred to in clause(iii), shall be valued at lower ofactual cost or net realisablevalue in accordance with theincome computation anddisclosure standards notifiedunder sub-section (2) of section145 and for this purpose thecomparison of actual cost andnet realisable value shall bedone category-wise.

It is also proposed to provide for anExplanation in the said section so as toprovide that any tax, duty, cess or fee, by

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whatever name called, under any law forthe time being in force, shall include all suchpayment notwithstanding any right arisingas a consequence to such payment for thepurposes of the said section.

23. P23. P23. P23. P23. Point of Toint of Toint of Toint of Toint of Taxationaxationaxationaxationaxation

23.1 Interest on any compensation or23.1 Interest on any compensation or23.1 Interest on any compensation or23.1 Interest on any compensation or23.1 Interest on any compensation oron enhanced compensation, ,on enhanced compensation, ,on enhanced compensation, ,on enhanced compensation, ,on enhanced compensation, ,shall be taxed in the year ofshall be taxed in the year ofshall be taxed in the year ofshall be taxed in the year ofshall be taxed in the year ofreceipt Section 145B(1)receipt Section 145B(1)receipt Section 145B(1)receipt Section 145B(1)receipt Section 145B(1)

W.r.e.f. AY 2017-18 Interest on anyInterest on anyInterest on anyInterest on anyInterest on anycompensation or on enhancedcompensation or on enhancedcompensation or on enhancedcompensation or on enhancedcompensation or on enhancedcompensation, , shall be taxedcompensation, , shall be taxedcompensation, , shall be taxedcompensation, , shall be taxedcompensation, , shall be taxedin the year of receiptin the year of receiptin the year of receiptin the year of receiptin the year of receipt

23.223.223.223.223.2Claim for escalation of price inClaim for escalation of price inClaim for escalation of price inClaim for escalation of price inClaim for escalation of price ina contract business or exporta contract business or exporta contract business or exporta contract business or exporta contract business or exportincentives shall be taxed onincentives shall be taxed onincentives shall be taxed onincentives shall be taxed onincentives shall be taxed onachieving reasonable certainty-achieving reasonable certainty-achieving reasonable certainty-achieving reasonable certainty-achieving reasonable certainty-Sec 145B(2)Sec 145B(2)Sec 145B(2)Sec 145B(2)Sec 145B(2)

W.e.f. AY 2017-18 The claim forescalation of price in a contract orexport incentives shall be deemed tobe the income of the previous year inwhich reasonable certainty of itsrealisation is achieved.

23.3 Subsidy or grant to be taxed in23.3 Subsidy or grant to be taxed in23.3 Subsidy or grant to be taxed in23.3 Subsidy or grant to be taxed in23.3 Subsidy or grant to be taxed inthe year of receipt - Sectionthe year of receipt - Sectionthe year of receipt - Sectionthe year of receipt - Sectionthe year of receipt - Section145B(3)145B(3)145B(3)145B(3)145B(3)

W.r.e.f. AY 2017-18 Subsidy referredto section 2(24)(xviii) shall be taxed inthe year in which it is received, if notcharged to income tax for any earlierprevious year.

24. T24. T24. T24. T24. Tax Deduction at Sourceax Deduction at Sourceax Deduction at Sourceax Deduction at Sourceax Deduction at Source

24.1 Interest on 7.75% Saving24.1 Interest on 7.75% Saving24.1 Interest on 7.75% Saving24.1 Interest on 7.75% Saving24.1 Interest on 7.75% Saving(T(T(T(T(Taxable) Bonds, 2018 madeaxable) Bonds, 2018 madeaxable) Bonds, 2018 madeaxable) Bonds, 2018 madeaxable) Bonds, 2018 madesubject to TDS-Section 193subject to TDS-Section 193subject to TDS-Section 193subject to TDS-Section 193subject to TDS-Section 193

W.e.f. 01.04.2018, it is proposed toprovide that the person responsiblefor paying to a resident any intereston 7.75% Savings (Taxable) Bonds,2018 shall deduct income-tax, if theinterest payable on such bondsexceeds Rs. 10,000 during thefinancial year.

24.2 No TDS on interest paid to senior24.2 No TDS on interest paid to senior24.2 No TDS on interest paid to senior24.2 No TDS on interest paid to senior24.2 No TDS on interest paid to seniorcitizen upto Rs 50,000-Sec 194Acitizen upto Rs 50,000-Sec 194Acitizen upto Rs 50,000-Sec 194Acitizen upto Rs 50,000-Sec 194Acitizen upto Rs 50,000-Sec 194A

At Present where the amount of

income or, as the case may be, theaggregate of the amounts of incomecredited or paid or likely to becredited or paid during the financialyear by the person, does not exceedRs. 10,000, where the payer is abanking company to which theBanking Regulation Act, 1949 applies(including any bank or bankinginstitution, referred to in section 51 ofthat Act); or co-operative societyengaged in carrying on the businessof banking; or on any deposit withpost office under any scheme framedby the Central Government andnotified by it in this behalf; or Rs.5,000 in any other case, no tax atsource is required to be deducted.

W.e.f 01-04-2018 it is proposed toamend the said section so as toprovide that in case of senior citizen,no TDS is to be deducted on interestincome upto Rs. 50,000.

25.25.25.25.25. PPPPPenal tyenal tyenal tyenal tyenal ty

PPPPPenalty for delayed reporting ofenalty for delayed reporting ofenalty for delayed reporting ofenalty for delayed reporting ofenalty for delayed reporting ofFinancial transactions has beenFinancial transactions has beenFinancial transactions has beenFinancial transactions has beenFinancial transactions has beenraised from Rs 100 per day to Rsraised from Rs 100 per day to Rsraised from Rs 100 per day to Rsraised from Rs 100 per day to Rsraised from Rs 100 per day to Rs500 per day and Rs 500 per day500 per day and Rs 500 per day500 per day and Rs 500 per day500 per day and Rs 500 per day500 per day and Rs 500 per dayto Rs 1000 per day(Sec 271Fto Rs 1000 per day(Sec 271Fto Rs 1000 per day(Sec 271Fto Rs 1000 per day(Sec 271Fto Rs 1000 per day(Sec 271FA)A)A)A)A)

At present if a person who is requiredto furnish the statement of financialtransaction or reportable accountunder sub-section (1) of section285BA, fails to furnish such statementwithin the prescribed time, he shall beliable to pay penalty of Rs. 100 forevery day of default. Section furtherprovides that in case such person failsto furnish the statement of financialtransaction or reportable accountwithin the period specified in thenotice issued under sub-section (5) ofsection 285BA, he shall be liable topay penalty of Rs. 500 for every dayof default.

W.e.f. 01.04.2018 It is proposed toamend the said section so as toincrease the penalty from Rs. 100 toRs. 500 and from Rs. 500 to Rs. 1000,for each day of continuing default.

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26.26.26.26.26. Prosecut ionProsecut ionProsecut ionProsecut ionProsecut ion

Exemption from prosecution for a taxExemption from prosecution for a taxExemption from prosecution for a taxExemption from prosecution for a taxExemption from prosecution for a taxliabil i ty not exceeding Rs 3000 notliabil i ty not exceeding Rs 3000 notliabil i ty not exceeding Rs 3000 notliabil i ty not exceeding Rs 3000 notliabil i ty not exceeding Rs 3000 notavailable to company (Sectionavailable to company (Sectionavailable to company (Sectionavailable to company (Sectionavailable to company (Section276CC)276CC)276CC)276CC)276CC)

At present a person shall not be proceededagainst under the said section for anyassessment year commencing on or afterthe 1st day of April, 1975, if the tax payableby him on the total income determined onregular assessment as reduced by theadvance tax, if any, paid and any taxdeducted at source, does not exceed Rs.3000.

W.e.f. 01.04.2018 it is proposed to amendthe provisions of the said sub-clause (b) soas to provide that the conditions specifiedtherein shall not be applicable in respectof a company.

27. Report in respect of International27. Report in respect of International27. Report in respect of International27. Report in respect of International27. Report in respect of InternationalGroup Sec 286Group Sec 286Group Sec 286Group Sec 286Group Sec 286

The said section, interalia, provides forspecific reporting regime containing revisedstandards for transfer pricingdocumentation and a template for country-by-country reporting.

Sub-section (2) of the said section providesthat the parent entity or the alternatereporting entity of an international groupwhich is resident in India shall furnish areport in respect of the international groupon or before the due date specified undersub-section (1) of section 139 for furnishingof return of income of the relevantaccounting year.

It is proposed to amend the said sub-section so as to provide that the said reportfor every reporting accounting year shall befurnished within a period of twelve monthsfrom the end of said reporting accountingyear.

It is further proposed to amend sub-section(3) to give reference therein of the report tobe furnished under sub-section (4).

It is also proposed to amend sub-section

(4) so as to provide in cae of a constituententity, resident in India, whose parent entityis outside India that,—

(a) report of the nature referred to in sub-section (2) shall be furnished within theperiod specified in sub-section (2);and

(b) an additional condition for filing ofreport by said entity in a case where acountry or territory, of which the parententity is resident, is not obligated tofile the report of the nature referred toin sub-section (2).

It is also proposed to amend sub-section (5) so as to provide that thedue date for furnishing of the reportof the nature referred to in sub-section(2) by said entity with the tax authorityof the country or territory of which suchentity is resident, would be the duedate specified by that country orterritory.

It is also proposed to consequentiallysubstitute clause (b) of sub-section (9)so as to provide that the term“agreement” would mean acombination of,—

(i) an agreement referred to in sub-section (1) of section 90 or sub-section (1) of section 90A; and

(ii) an agreement as may be notifiedby the Central Government forexchange of the report referred toin sub-section (2) and sub-section (4).

It is also proposed to consequentiallyamend clause j) of sub-section (9) soas to also make reference to the reportreferred to in sub-section (4).

These amendments are clarificatory innature.

These amendments will take effectretrospectively from 1st April, 2017and will, accordingly, apply in relationto the assessment year 2017-2018and subsequent years.

BUDGET

It does not matter how slowly you go as long as you do not stop. – Confucius Confucius Confucius Confucius Confucius


The transaction of immovable property has beenthe subject matter of litigation under the direct aswell as indirect taxes. The disputes are of variousnature like whether income from renting is incomefrom house property or business income underthe Income Tax Act?, whether renting income ischargeable to service tax?, taxability of incomefrom joint development agreements, the disputesrelating to stamp duty, etc. The issues are endless.One such issue is whether long term lease of anyimmovable property wherein lease premium ischarged from the lessee is a transfer by way ofsale or transfer by way of rent. The present articleseeks to examine the said issue in detail.

A person can acquire immovable property whichmay be either freehold or leasehold. Both themodes of acquisition of immovable property arerecognised under Transfer of Immovable Property,Act 1882. Section 54 of the Act defines Sale as‘Transfer of ownership in exchange for a price paidor promised or part paid and part promised’. Thesaid section encompasses transfer of freehold aswell as transfer of leasehold land with the onlycondition being that there should be transfer ofownership.

A common mode of transfer of immovableproperty by way of long term lease which can befor 99 years or more. Generally, the governmenttransfers land on leasehold basis only, though theprivate transactions also takes place onleasehold basis. A builder after acquisition ofland on leasehold basis can do the constructionand transfer the constructed property by way oflease. The leasehold agreement in such cases mayprovide for payment of lease premium with orwithout annual rent and in such cases the questionwhich arises is whether such cases of lease aretransfer by way of sale or not. The service taxauthorities have been taking a view that suchcases of transfer are not sale rather they are

Long Term Lease - Whether Sale orRenting of Immovable Property?

CA Ramesh Kumar Patodia,assisted by CA Ritika Lath

renting and consequently the provision of servicetax as applicable to renting are to be looked intofor the purpose of determination of taxability ofsuch type of transaction. In case of a sale of animmovable property the transaction is liable toservice tax after taking into account abatementon account of land.

In this regard, it is to be noted that under FinanceAct, 1994 vide Notification No. 26/2012-STdated 20-06-2012, under Entry No. 12, anabatement of seventy percent has been providedby the Government in case of ‘Construction of acomplex, building, civil structure or part thereof,intended for a sale to a buyer, wholly or partlyexcept where entire consideration is received afterissuance of completion certificate by thecompetent authority.

Thus, in case there is transfer of immovableproperty, then service tax is leviable only on thirtypercent of the value in case the consideration isreceived before the issuance of completioncertificate by the competent authority.

The transaction of immovable property by wayof sale are being seen by the revenue from adifferent angle and are being sought to be treatedas renting of immovable property on the pretextthat there cannot be any transfer of land by wayof lease agreement. The said wrong notion is onaccount of the word ‘lease’ which is included inthe definition of ‘renting’ as defined in Section 65B(41) of the Finance Act, 1994.

In this regard the issue has to be seen from variousangles to find out as to what is the legal status ofsuch transaction.

Generally, in a transaction of lease of immovableproperty by way of lease agreements to differentparties in consideration of a lump sum paymentknown as lease premium ,there may or may notbe a periodical rent in such transactions.

INCOME TAX


NowNowNowNowNow, the above facts have to be interpreted, the above facts have to be interpreted, the above facts have to be interpreted, the above facts have to be interpreted, the above facts have to be interpretedin its legal form and background:in its legal form and background:in its legal form and background:in its legal form and background:in its legal form and background:

In this regard it is imperative to take note of thedefinition of ‘Renting’ as defined under section65B (41) of the Finance Act, 1994 which read as:

“renting” means allowing, permitting or grantingaccess, entry, occupation, use or any such facility,wholly or partly, in an immovable property, withor without the transfer of possession or control ofthe said immovable property and includes letting,leasing, licensing or other similar arrangementsin respect of immovable property;

On reading the definition as aforesaid, it isobserved that the language used in the abovedefinition is ‘transfer of possession or controltransfer of possession or controltransfer of possession or controltransfer of possession or controltransfer of possession or controlof the said immovable property’of the said immovable property’of the said immovable property’of the said immovable property’of the said immovable property’ whichsignifies only the transfer of possession and notownership. In this regard, it is to be noted thatthere is a broad difference between the two termsviz. ‘possession’ and ‘ownership’. Renting signifiesonly the transfer of right to use any propertyagainst the payment of some periodical amountas against sale or lease where there is a transferof possession along with ownership and all rights.

In this regard, it is also imperative to take note ofthe meaning of the terms ‘Rent’ as well as ‘Sale’which has nowhere been defined under theFinance Act, 1994. Hence, recourse has to be hadto the dictionary meanings, definitions containedin other relevant Acts and the meaning assignedto the said terms in various judicial precedents:

Meaning of the term ‘Rent’Meaning of the term ‘Rent’Meaning of the term ‘Rent’Meaning of the term ‘Rent’Meaning of the term ‘Rent’

As given in the Black’s Law Dictionary-‘Consideration paid, usu. periodically, for the useor occupancy of property’

Rent generally denotes the periodical paymentto be given by the tenant to the landlord for whichthe landlord holds the power of eviction. Hence,under the rental service the landlord has thepower to force the tenants to cease the possessionon account of any kind of default on the part oftenant.

Meaning of the term ‘Sale’Meaning of the term ‘Sale’Meaning of the term ‘Sale’Meaning of the term ‘Sale’Meaning of the term ‘Sale’

In Transfer of property Act, 1882 ‘Sale’ has beendefined as: ‘Transfer of ownership in exchangefor a price paid or promised or part paid andpart promised’.

The above definition indicates that in order toconstitute a sale, there must be transfer of

ownership from one person to another i.e. allrights and interests in the properties which arepossessed by that person are transferred by himto another person. The transferor does not holdany interest and rights in the property in case ofsale.

Hence, in the context of interpretation of the twoterms viz. ‘Rent and Sale’ as stated hereinabove,the major difference can be construed as under:

In the case of rent the landlord does not transferthe whole right in relation to the property and carrywith himself the power of eviction at any time ofdefault on the part of the tenant whether it be fordefault in periodical payment of rent or nonfulfilment of any other conditions as may bethumped by the landlord.

On the contrary, in case of sale, the transferortransfers all rights related to property to thetransferee. Thereafter, the transferor does not carryany power of eviction against the transferee.

In view of the above, it can be construed sincethat in construction of immovable propertieswhich are being transferred to different buyers onexchange of consideration which is a onetimelump sum amount and no periodical rentwhatsoever is being collected from the buyers, itcannot be said to be a transaction of renting ofimmovable property.

Moreover, no such power of eviction can be keptby the builders in case of lease agreements whichis a substantive requirement of renting.

Although the agreements entered into withdifferent parties for this purpose may besometimes be nomenclated as Sub- leaseagreement but in substance the agreements aremerely for transfer of ownership of such propertyto the prospective buyers. Also, there is nocondition on the buyers that they cannot furthertransfer such property to any other buyer. Also, itis a deemed fact that even after the end of theterm as mentioned in the agreements, thepossession of such immovable properties will stillbe in the hands of respective buyers and the sameis transferred for perpetuity without involvementof any continuous periodical payment. Therefore,it is very apparent that these transactions haveall the attributes of sale. Therefore, it cannot beat all said that such service is ‘renting ofimmovable property’ in any manner whatsoever.The difference between sale and rent is very loudand clear.

INCOME TAX


The fact that whether the said transactions are inthe nature of rent or sale in the context of leasinghad been a subject matter of litigation and variousjudicial pronouncements and principles which arediscussed herein below are worth noting.

One time premium cannot be said to beOne time premium cannot be said to beOne time premium cannot be said to beOne time premium cannot be said to beOne time premium cannot be said to berent:rent:rent:rent:rent:

Rent means periodical payment for enjoying thepossession of any property. Onetime paymentcannot be said to be said to be the rent.

Transfer of Property Act brings out the differencebetween the price paid for transfer of a right toenjoy the property and the periodic payment ofrent to the lessor. When the interest of the lessor isparted with for a price, the price is said to bepremium or salami. But, the periodical paymentsfor continuous enjoyment of the benefits underthe lease are in the nature of rent. The former isin the nature of Capital Receipt and the latter isin the nature of Revenue Receipt.

In this regard, reference may be had to the caseof City and Industrial Development Corporationof Maharashtra Limited versus Commissioner ofService Tax, 2014 (11) TMI 127 (Bombay H.C.)wherein the Hon’ble Bombay High Court grantedstay on the view that Service tax under the head‘renting of immovable property’ could only belevied on the quantum of rent received on monthto month or year to year basis and not on thelease premium.

Further reference may be had to the case ofGreater Noida Industrial Development Authorityv. CCE & ST, Noida, [2014] 51 taxmann.com 73,wherein the Hon’ble Delhi CESTAT had clearlydistinguished two types of consideration viz. rentand lease premium. In this case reference wasmade to the case of CIT v. Panbari Tea Co. Ltd.[1965] 57 ITR 422(SC) wherein it was held by theApex court that when the interest of the lessor isparted with for a price, the price paid is premiumor salami, but the periodical payments forcontinuous enjoyment are in the nature of rent.The former is in the nature of capital income andthe latter is the revenue receipt. Service tax canonly be levied on the element of rent and not onthe premium or salami part.

In view of the detailed analysis hereinabove,following two situations emerge:

1. Lease agreement has been entered intowith the covenant that the considerationfor such lease would be paid periodically

on continuous basis till the period of usageof such property. In this case the lessorreserves a right of eviction i.e. in case ofdefault of non payment of periodicalamount, the lessor can force the tenant tovacate such property. Hence, service taxcan be levied on such periodical amountunder the heading renting of immovableproperty.

2. Long term lease agreement has beenentered into with the covenant that only aone time lease premium is to be paid fortaking the possession of such property.There is no question of further payment ofany rent periodically. In this case the lessordoes not hold any right with such property.Thereby, here the lessee is even allowedto transfer such leasehold right to anyfurther party. In this case, it is in the natureof capital receipt and service tax cannotbe levied on lease premium amount.

Interpretation in the context of Direct taxesInterpretation in the context of Direct taxesInterpretation in the context of Direct taxesInterpretation in the context of Direct taxesInterpretation in the context of Direct taxes

In the case of the Indian Newspaper Society (ATANo. 918 & 920/2015), the Hon’ble Delhi HighCourt has ruled that lease premium paid by theassessee for acquiring a plot of land on an 80years lease was in the nature of capital expenseand not falling within the ambit of Section 194Iof the Income Tax Act, 1961 (TDS on Rent). Thecourt reasoned that since all the rights, easementsand appurtenances in respect of the said landwere in effect transferred to the lessee for 80 yearsand since there was no provision in leaseagreement for adjustment of premium amountpaid against the annual rent payable, thepayment of lease premium was a capital expensenot requiring deduction of tax at source.

Similar view has been taken by other High Courtsas well.

In this regard, it is to be further noted that therehas been a lot of litigations with regard to thetreatment of one time lump sum lease paymentsin the case of long term lease of immovableproperty as to whether it is in the nature of capitalexpenditure or revenue expenditure.

In all of the cases in this regard, the Departmenthas accepted the decisions of the High Courts andhas not filed any SLP. In this regard, it has beenclarified by the Central Board of Direct Taxes, videCBDT Circular No. 35/2016, dated 13-10-2016,that lump sum lease premium or one time upfront

INCOME TAX


lease charges, which are not adjustable towardsperiodic rent, paid or payable for acquisition oflong term leasehold rights over land or any otherproperty are not payments in the nature of rent.

Therefore, in the light of the above clarificationmade by the CBDT, it can be construed that leasepremium for the long term lease is in the natureof capital expenditure and not revenue.

Interpretation in the context of AccountingInterpretation in the context of AccountingInterpretation in the context of AccountingInterpretation in the context of AccountingInterpretation in the context of AccountingStandards :Standards :Standards :Standards :Standards :

Indian Accounting Standards states the criteriafor classification of lease into Financial Lease andOperating Lease.

In this regard, Financial Lease and OperatingLease have been defined as under:

“A finance lease is a lease that transferssubstantially all the risks and rewards incidentalto ownership of an asset. Title may or may noteventually be transferred.

An operating lease is a lease other than a financelease.”

On analysis of the definitions as above, it isconstrued that Financial Lease substantiallyrepresents transfer of ownership of the property.

In this regard, some of the criteria forclassification of a lease into financial lease areas under:-

1. Lease term is for the major part of theeconomic life of the asset even if the titleis not transferred.

2. The lessee has the ability to continue thelease for a secondary period at a rent thatis substantially lower than the marketvalue.

Thus, it can be construed that if the constructedimmovable properties are being transferred tothe different parties for the period of 99 years ormore, in such a case, it can be said that suchimmovable properties are being transferred forits major part of the economic life.

Further, if the lease agreements clearly mentionsabout the extension of the lease term and ifnowhere in the agreements it has been statedabout further payment of any amount for suchextension, it can be assumed that lease agreementwill be renewed without involvement of any furtherconsideration in this regard. Hence, it can beconstrued that the lessee can continue the leasefor a secondary period at a rent that is

substantially lower than the market value.

Hence, in such a case if the lease agreements fulfilthe aforesaid conditions, it cannot be in anymanner said that such lease is not in the natureof financial lease, since, financial lease by itsdefinition stated above represents transfer ofownership with all rights.

Opinion by the Expert Advisory CommitteeOpinion by the Expert Advisory CommitteeOpinion by the Expert Advisory CommitteeOpinion by the Expert Advisory CommitteeOpinion by the Expert Advisory Committee :::::

It is also imperative to take note of the fact thatthe matter regarding the accounting treatment tobe given in the books of accounts in respect ofthe plots/land allotted by the corporation underthe lease premium scheme for the period of 99years was referred to the Expert AdvisoryCommittee of the Institute of CharteredAccountants of India and it was opined as under(Reference can be taken from ‘Compendium ofOpinions’ issued by ICAI-Volume No. XXVI):

“In respect of the lease agreements for longperiods, e.g., 60 years and 99 years, it isgenerally expected that on the expiry of the leaseterm, either the lease period would be extendedor the title will pass to the lessee at some agreedamount. This amounts to passing of thesignificant rights of ownership in the land to thelessee. Thus, it would be in the nature of sale ofplots and should be accounted for, accordingly.This requirement, according to the Committee,is recognition of the principle of ‘substance overform’ as per AS- 1 issued by ICAI- “Disclosure ofAccounting Policies” which read as:-Theaccounting treatment and presentation in thefinancial statements of transaction and eventsshould be governed by their substance and notmerely by the legal form.”

In this regard the committee also noted that thesame principle is also recognised in ScheduleVI to the Companies Act, 1956, which requiresleaseholds to be shown as the fixed asset of thelessee and not of the lessor.

Interpretation in the context of Stamp Act:Interpretation in the context of Stamp Act:Interpretation in the context of Stamp Act:Interpretation in the context of Stamp Act:Interpretation in the context of Stamp Act:

In the case of Gajepal Singh v. Board ofRevenue, [1976] 1976 taxmann.com 70, HighCourt of Allahabad held that the lease premiumcannot be said to be rent. The courts are not tobe guided by the nomenclature but to seewhether the document in question satisfied therequirement of a lease premium or rent. Hence,such lease premium is in the nature of capitalreceipt and not revenue receipt.

INCOME TAX


The U.P Stamp Act, 1962 also differentiatesbetween the lease granted for premium withoutreserving any further rent and lease premium inaddition to rent reserved and thereby differentrate of duty is applicable in both the cases.

Interpretation under the GST Law:Interpretation under the GST Law:Interpretation under the GST Law:Interpretation under the GST Law:Interpretation under the GST Law:

Under the GST regime as well it is observed thatin case of supply of construction serviceinvolving transfer of property in land orundivided share of land, as the case may be,an abatement has been prescribed for the valueof land included in the total consideration wherethe value of land or undivided share of land, asthe case may be, in such supply is deemed tobe one third of the total amount charged forsuch supply. In this regard, it is to be noted thatit has been specifically clarified that suchabatement of one third value shall apply evenif the supply of land or undivided share of landis by way of lease or sub lease. For this purposereference may be had to the Notification No.Notification No.Notification No.Notification No.Notification No.1/2018-1/2018-1/2018-1/2018-1/2018-Central TCentral TCentral TCentral TCentral Tax (Rate) dated 25-01-ax (Rate) dated 25-01-ax (Rate) dated 25-01-ax (Rate) dated 25-01-ax (Rate) dated 25-01-2018.2018.2018.2018.2018.

In this regard, it is to be noted that the provisionscontained in the Service Tax Laws and thatcontained in the GST laws with respect to thetaxability of construction service is pari materiawith the only difference that under the GSTregime abatement has been given only withrespect to the value of land unlike in service tax

regime where abatement was given for bothvalue of land and materials. Moreover, had itbeen the intention of the legislature to includelong term leasing of land as envisaged in theinstant case, under the category of rentingservices and to exclude the same from the ambitof construction service then there was no needto clarify upon the applicability of the benefit ofabatement even to “leasehold land”.

From the above it is to be absolutely clear thatfor the purpose of arriving at the value ofconstruction service by considering theapplicable abatements, even leasehold landshall be entitled for such benefit and it shouldbe construed as sale of land.

The clear intention of the legislature is that thevalue of any land cannot be made taxableunder both the laws whether it be service tax orGST.

Conclusion:Conclusion:Conclusion:Conclusion:Conclusion:

In view of the principles discussed hereinabove,it can be construed that the long term leasing ofany property substantially for whole of itseconomic life for a one time lump sumconsideration without involvement of any furtherperiodic payment can never be said to beRenting of Service in any manner whatsoeverand the transaction is in the nature of sale ofimmovable property.

INCOME TAX

Things can be viewed many different ways. Choosing to have apositive attitude regardless of circumstances will have thegreatest impact on your success.


Beneficial interest underCompanies Act, 2013

The passing of Companies (Amendment) Act,2017 (Act, 2017) has led to the genesis ofdiscussion regarding beneficial ownership.Herein we have put together some relevantquestions on this topic:

1 .1 .1 .1 .1 . What is the need for relooking at theWhat is the need for relooking at theWhat is the need for relooking at theWhat is the need for relooking at theWhat is the need for relooking at theprovision pertaining to beneficialprovision pertaining to beneficialprovision pertaining to beneficialprovision pertaining to beneficialprovision pertaining to beneficialownership?ownership?ownership?ownership?ownership?

One may argue that Act, 2013 was not devoid ofa provision pertaining to beneficial ownershipsince section 89 of Companies Act, 2013 (Act,2013) dealt with disclosures pertaining to thesame. However, the same was not enough due tothe following reasons:

i. No definition of beneficial owner /ownership. The same was left to generalunderstanding regarding the term(s);

ii. The onus was on the registered ownerand beneficial owner to disclose. Withno definition of beneficial owner in Act,2013, one was left wanting for a properguideline to follow.

These points necessitated the need to introducea provision regarding a definition andidentification of beneficial ownership in acompany. This suggestion was made in the Reportof The Companies Law Committee datedFebruary, 2016.

2 .2 .2 .2 .2 . WWWWWas the Indian legislation devoid ofas the Indian legislation devoid ofas the Indian legislation devoid ofas the Indian legislation devoid ofas the Indian legislation devoid ofany provision pertaining to beneficialany provision pertaining to beneficialany provision pertaining to beneficialany provision pertaining to beneficialany provision pertaining to beneficialownership earlier?ownership earlier?ownership earlier?ownership earlier?ownership earlier?

No. As mentioned earlier, the Act, 2013 or forthat matter even Companies Act, 1956 was notbereft of a provision pertaining to beneficialownership. However, the current provisions did notwarrant an active involvement on the part ofcompany to identify beneficial ownership. Theneed of the hour was also to deter a circuitous

routing of money through a maze of investments.In this endeavour, recently the MCA notified theCompanies (Restriction on number of layers)Rules, 20171 wherein the number of subsidiariesthat a company could have was limited to twobarring a few class of companies.

Apart from Companies Act, The Prevention ofMoney Laundering Act, 2012 (PMLA) definesbeneficial owner as follows:

Means an individual who ultimately owns orcontrols a client of a reporting entity or theperson on whose behalf a transaction isbeing conducted and includes a person whoexercises ultimate effective control over ajuridical person.

Further, SEBI has also issued Guidelines onIdentification of Beneficial Ownership (SEBIGuidelines)2 wherein beneficial ownership hasbeen defined as follows:

The beneficial owner is the natural personor persons who ultimately own, control orinfluence a client and/or persons on whosebehalf a transaction is being conducted. Italso incorporates those persons who exerciseultimate effective control over a legal personor arrangement.

3 .3 .3 .3 .3 . What is the definit ion of BeneficialWhat is the definit ion of BeneficialWhat is the definit ion of BeneficialWhat is the definit ion of BeneficialWhat is the definit ion of BeneficialInterest in Act, 2013?Interest in Act, 2013?Interest in Act, 2013?Interest in Act, 2013?Interest in Act, 2013?

The Act, 2017 has introduced the definition ofBeneficial Interest as follows for the purpose ofsection 89 (Declaration in respect of beneficialinterest in any share) and section 90 (Register ofsignificant beneficial owners in a company):

For the purposes of this section and section90, beneficial interest in a share includes,directly or indirectly, through any contract,arrangement or otherwiseotherwiseotherwiseotherwiseotherwise, the right orright orright orright orright orentitlemententitlemententitlemententitlemententitlement of a personpersonpersonpersonperson alone or togetheror togetheror togetheror togetheror together

CA Mohit Bhuteria

COMPANIES ACT


with any other personwith any other personwith any other personwith any other personwith any other person to—

(i) exercise or cause to be exercised any orall of the rights attached to such share; or

(ii) receive or participate in any dividend orother distribution in respect of suchshare.(emphasis supplied)

Some noteworthy points are:

i. The definition is not exhaustive by nature.Hence any change or novel method ofsignifying beneficial interest will also becovered by the sweep of the definition;

ii. The methods for determining beneficialinterest are open ended. Hence apartfrom the usual methods of identifyingbeneficial interest such as through anycontract / arrangement, any othermethod such as pledge with usufructs /exercise of any option or right / exerciseof any warrant / conversion of security /will also be covered3;

iii. Beneficial interest has not been limitedto only one person. The interest can alsoarise together with any person. Hence itis not necessary that the interest has toarise only with say relatives as in section2(76)(v). It can also be with unrelatedparties;

iv. The interest has to be of a ‘person’, notan individual.

4 .4 .4 .4 .4 . Who would be a ‘personWho would be a ‘personWho would be a ‘personWho would be a ‘personWho would be a ‘person’?’?’?’?’?

Since the Act, 2013 does not define ‘person’ welook at the definition in General Clauses Act,1860:

“person” shall include any company orassociation or body of individuals, whetherincorporated or not;

Hence for the purpose of section 89, beneficialinterest can be held by an individual or acompany. The relevance of this definition forsection 90 has been dealt with later.

5 .5 .5 .5 .5 . Is the definition of beneficial interestIs the definition of beneficial interestIs the definition of beneficial interestIs the definition of beneficial interestIs the definition of beneficial interestrelevant to debentures?relevant to debentures?relevant to debentures?relevant to debentures?relevant to debentures?

The definition clearly talks about interest in a shareand understandably so. It does not differentiatebetween equity and preference shares. However,it talks about direct and indirect interest. Henceinterest in convertible debentures whetherpartially, fully, compulsorily or not will be covered

by the definition.

6 .6 .6 .6 .6 . Is the use of the word ‘personIs the use of the word ‘personIs the use of the word ‘personIs the use of the word ‘personIs the use of the word ‘person’’’’’appropr iate?appropr iate?appropr iate?appropr iate?appropr iate?

As is understandable from the definition ofbeneficial interest, the aim is to establish theultimate owner of the shares, whether anindividual or a corporate. The definition is similarto the definition in United States SecuritiesExchange Act of 19344.

However, if one was to see the definition ofbeneficial interest in PMLA or in SEBI Guidelines,the same has been defined with respect to anindividual.

Hence the scope of the definition of beneficialinterest under Act, 2013 is broader. However, thedefinition falls short of explaining that the processof look through should be adopted till which pointi.e. if it is determined that A Ltd is the beneficialowner of B Ltd will the shareholding of A Ltd alsobe relevant? This query is answered by section90(1).

7 .7 .7 .7 .7 . What does section 90(1) envisage?What does section 90(1) envisage?What does section 90(1) envisage?What does section 90(1) envisage?What does section 90(1) envisage?

Section 90(1) reads as follows:

Every individual, who acting alone ortogether, or through one or more persons ortrust, including a trust and persons residentoutside India, holds beneficial interests, ofnot less than twenty-five per cent. or such otherpercentage as may be prescribed, in sharesof a company or the right to exercise, or theactual exercising of significant influence orcontrol as defined in clause (27) of section2, over the company (herein referred to as“significant beneficial owner”), shall makea declaration to the company, specifying thenature of his interest and other particulars,in such manner and within such period ofacquisition of the beneficial interest or rightsand any change thereof, as may beprescribed:

Provided that the Central Government mayprescribe a class or classes of persons whoshall not be required to make declarationunder this sub-section.

The following are noteworthy :

i. Although beneficial interest has beendefined with respect to a person, section90(1) requires an individual to makedisclosure regarding his beneficial

COMPANIES ACT


interest in the shares of a companyamounting to not less than 25%. In theabsence of any specification, the entireshare capital has to be considered forthe purpose of calculating the cap of25%;

ii. The beneficial owner can be anindividual or more than one person;

iii. The beneficial interest need notnecessarily be in the form ofshareholding. Any right to exercise suchas a pledgor or an option holder oractual exercise of significant influence orcontrol will also be covered;

iv. The onus of making the declaration ison the individual beneficial holder;

v. Details such as particulars apart fromnature of interest or the time periodwithin which declaration has to be madeis yet to be prescribed;

vi. The Central Government has beenempowered to exempt certain class orclasses of person from the requirementto make declaration.

8 .8 .8 .8 .8 . Who has been exempted from theWho has been exempted from theWho has been exempted from theWho has been exempted from theWho has been exempted from therequirement of making declaration?requirement of making declaration?requirement of making declaration?requirement of making declaration?requirement of making declaration?

Currently, no one. It is pertinent to mention herethat under United States Securities Exchange Actof 19345, the following have been exempt fromdefinition of beneficial owner:

i. Member of a national securitiesexchange;

ii. A person who in the ordinary course ofhis business is a pledgee of securitiesunder a written pledge agreement;

iii. A person engaged in business as anunderwriter of securities.

Further SEBI by way of circular dated January 24,20136 has stated that where the client or the ownerof controlling interest is a listed company, or is amajority-owned subsidiary of such a company, itis not necessary to identify and verify theidentity of any shareholder or beneficial ownerof such companies.

9 .9 .9 .9 .9 . What is the meaning of significantWhat is the meaning of significantWhat is the meaning of significantWhat is the meaning of significantWhat is the meaning of significantinfluence or control for the purpose ofinfluence or control for the purpose ofinfluence or control for the purpose ofinfluence or control for the purpose ofinfluence or control for the purpose ofsection 2(27)?section 2(27)?section 2(27)?section 2(27)?section 2(27)?

The definition of ‘significant influence’ as an

Explanation to the definition of Associate hasbeen amended by the Act, 2017 to mean controlof at least 20% of total voting power20% of total voting power20% of total voting power20% of total voting power20% of total voting power. Hencethere is an obvious conflict with section 90(1)because of the following reasons:

i. The threshold for determining beneficialinterest is 25% of the shares (whetherequity or preference) of companywhereas the threshold for determiningsignificant influence is 20% of total votingpower;

ii. There is also a conflict with respect tocalculation of the threshold limit. For thedefinition of beneficial interest, sharesare the base be equity or preference andfor significant influence, total votingpower is the base. Total voting power willmean the equity shareholding of thecompany.

Control is defined in section 2(27) to include theright to appoint majority of directors or controlthe management or policy decisions exercisableby a person or persons acting individually or inconcert, directly or indirectly, including by virtueof their shareholding or management rights orshareholders agreements or voting agreementsor in any other manner. Hence control does nothave to be exercised necessarily throughshareholding.

10.10.10.10.10. What are some instances of control?What are some instances of control?What are some instances of control?What are some instances of control?What are some instances of control?

One may refer AS-21 pertaining to ConsolidatedFinancial Statements7 in this regard.

11.11.11.11.11. How will the individual identify himselfHow will the individual identify himselfHow will the individual identify himselfHow will the individual identify himselfHow will the individual identify himselfas the beneficial owner?as the beneficial owner?as the beneficial owner?as the beneficial owner?as the beneficial owner?

The answer to this query is ambiguous. The onusis very well on the individual but how many layersdoes one have to dig to establish beneficialinterest? One may argue that a cap of two layersof subsidiaries as mentioned earlier will serve thepurpose however, the application of thatprovision is limited. Subsidiary would meanexercise or control of more than 50% of totalvoting power8 whereas the threshold is muchlower for beneficial interest. For shareholding incompanies which is less than 50% of total shares,it remains to be seen if the ultimate beneficialshareholder will identify himself or not.

In this regard, one may refer the SEBI circulardated June 10, 20169 pertaining to KYC normsfor ODI subscribers. Herein SEBI has prescribed

COMPANIES ACT


that the materiality threshold for identification ofbeneficial owner should be first applied at theODI subscriber level and look through principleshould be applied to identify the beneficial ownerof the material shareholder / owner entity.

Similarly, it is important that for the purpose ofdisclosure in section 90(1), a look throughapproach should be adopted such that one seesbeyond the immediate material shareholdingand identifies the ultimate beneficial owner.

12.12.12.12.12. Suppose A Pvt Ltd has 6 corporateSuppose A Pvt Ltd has 6 corporateSuppose A Pvt Ltd has 6 corporateSuppose A Pvt Ltd has 6 corporateSuppose A Pvt Ltd has 6 corporateshareholders holding 16.67% each ofshareholders holding 16.67% each ofshareholders holding 16.67% each ofshareholders holding 16.67% each ofshareholders holding 16.67% each ofthe total shareholding. There is nothe total shareholding. There is nothe total shareholding. There is nothe total shareholding. There is nothe total shareholding. There is nosubsisting agreement to exercise anysubsisting agreement to exercise anysubsisting agreement to exercise anysubsisting agreement to exercise anysubsisting agreement to exercise anyright over the companyright over the companyright over the companyright over the companyright over the company. The 6. The 6. The 6. The 6. The 6corporate shareholders are in turncorporate shareholders are in turncorporate shareholders are in turncorporate shareholders are in turncorporate shareholders are in turnheld by Mrheld by Mrheld by Mrheld by Mrheld by Mr. A. A. A. A. A, his relatives and some, his relatives and some, his relatives and some, his relatives and some, his relatives and someof his employees. Will disclosure underof his employees. Will disclosure underof his employees. Will disclosure underof his employees. Will disclosure underof his employees. Will disclosure undersection 90(1) be required by Mrsection 90(1) be required by Mrsection 90(1) be required by Mrsection 90(1) be required by Mrsection 90(1) be required by Mr. A?. A?. A?. A?. A?

Section 90(1) requires an individual holding 25%or more of total shareholding or having the rightto exercise or actually exercising significantinfluence or control to make disclosure.

In this case, there are no subsisting agreementsbetween the shareholders of A Pvt Ltd. Hence theassessment for disclosure under section 90(1) willbe solely on the basis of shareholding. Thematerial threshold for beneficial interest is 25%of the shares of the company. In this case, noneof the shareholders hold more than 16.67% ofthe total shareholding of A Pvt Ltd. However, theshareholding in the shareholder companies is inturn held in by Mr. A, his relatives and some of hisemployees implying that Mr. A has indirectbeneficial interest in A Pvt Ltd. Hence disclosureby Mr. A along with others holding indirectbeneficial interest of 25% or more ofshareholding is required under section 90(1).

13.13.13.13.13. Suppose it is established that MrSuppose it is established that MrSuppose it is established that MrSuppose it is established that MrSuppose it is established that Mr. A. A. A. A. Aalong with A Pvt Ltd and AB Pvt Ltdalong with A Pvt Ltd and AB Pvt Ltdalong with A Pvt Ltd and AB Pvt Ltdalong with A Pvt Ltd and AB Pvt Ltdalong with A Pvt Ltd and AB Pvt Ltdare the beneficial owners of B Ltd.are the beneficial owners of B Ltd.are the beneficial owners of B Ltd.are the beneficial owners of B Ltd.are the beneficial owners of B Ltd.Herein, A Pvt Ltd and AB Pvt Ltd holdHerein, A Pvt Ltd and AB Pvt Ltd holdHerein, A Pvt Ltd and AB Pvt Ltd holdHerein, A Pvt Ltd and AB Pvt Ltd holdHerein, A Pvt Ltd and AB Pvt Ltd hold12% of shareholding of B Ltd each.12% of shareholding of B Ltd each.12% of shareholding of B Ltd each.12% of shareholding of B Ltd each.12% of shareholding of B Ltd each.MrMrMrMrMr. A holds 1% of shares of B Ltd as. A holds 1% of shares of B Ltd as. A holds 1% of shares of B Ltd as. A holds 1% of shares of B Ltd as. A holds 1% of shares of B Ltd asthe beneficial ownerthe beneficial ownerthe beneficial ownerthe beneficial ownerthe beneficial owner. Under such. Under such. Under such. Under such. Under suchcircumstances who is l iable to makecircumstances who is l iable to makecircumstances who is l iable to makecircumstances who is l iable to makecircumstances who is l iable to makethe disclosure under section 90(1)?the disclosure under section 90(1)?the disclosure under section 90(1)?the disclosure under section 90(1)?the disclosure under section 90(1)?

The individual shareholding of beneficial ownersis immaterial for the purpose of calculating the

threshold limit of section 90(1). The jointshareholding of an individual along with otherpersons or trust has to be considered. In this case,Mr. A may be holding only 1% of shares of B Ltd.However, together with A Pvt Ltd and AB Pvt Ltdhe holds 25% of shares of B Ltd. Hence Mr. A,being the individual has to make the disclosureunder section 90(1).

14.14.14.14.14. Suppose it is established that ABC PvtSuppose it is established that ABC PvtSuppose it is established that ABC PvtSuppose it is established that ABC PvtSuppose it is established that ABC PvtLtd along with A Pvt Ltd and AB Pvt LtdLtd along with A Pvt Ltd and AB Pvt LtdLtd along with A Pvt Ltd and AB Pvt LtdLtd along with A Pvt Ltd and AB Pvt LtdLtd along with A Pvt Ltd and AB Pvt Ltdare the beneficial owners of B Ltd.are the beneficial owners of B Ltd.are the beneficial owners of B Ltd.are the beneficial owners of B Ltd.are the beneficial owners of B Ltd.Herein, A Pvt Ltd and AB Pvt Ltd holdHerein, A Pvt Ltd and AB Pvt Ltd holdHerein, A Pvt Ltd and AB Pvt Ltd holdHerein, A Pvt Ltd and AB Pvt Ltd holdHerein, A Pvt Ltd and AB Pvt Ltd hold12% of shareholding of B Ltd each. ABC12% of shareholding of B Ltd each. ABC12% of shareholding of B Ltd each. ABC12% of shareholding of B Ltd each. ABC12% of shareholding of B Ltd each. ABCPvt Ltd holds 1% of shares of B Ltd asPvt Ltd holds 1% of shares of B Ltd asPvt Ltd holds 1% of shares of B Ltd asPvt Ltd holds 1% of shares of B Ltd asPvt Ltd holds 1% of shares of B Ltd asthe beneficial ownerthe beneficial ownerthe beneficial ownerthe beneficial ownerthe beneficial owner. Under such. Under such. Under such. Under such. Under suchcircumstances who is l iable to makecircumstances who is l iable to makecircumstances who is l iable to makecircumstances who is l iable to makecircumstances who is l iable to makethe disclosure under section 90(1)?the disclosure under section 90(1)?the disclosure under section 90(1)?the disclosure under section 90(1)?the disclosure under section 90(1)?

As has been discussed earlier, a literal reading ofsection 90(1) clarifies that an individual beneficialowner has to make disclosure. Under suchcircumstances, one needs to investigate furtherinto the shareholding of A Pvt Ltd, B Pvt Ltd andABC Pvt Ltd to arrive at the individuals who areultimately holding the shares. This will be astrenuous and long drawn exercise. Further, it isnot necessary that the ultimate shareholding hasto be with an individual. It may also be with atrust or a partner of a partnership firm. Under suchcircumstances it is not clear that who will be liableto make the disclosure. Probably once the formatof the disclosure is released, we will receive clarity.

15.15.15.15.15. What are the other provisions ofWhat are the other provisions ofWhat are the other provisions ofWhat are the other provisions ofWhat are the other provisions ofsection 90 of Act, 2013?section 90 of Act, 2013?section 90 of Act, 2013?section 90 of Act, 2013?section 90 of Act, 2013?

The other provisions are as follows:

i. The company has to maintain a registerof interest declared by individuals undersection 90(1) and changes therein;

ii. The register shall be open to inspectionby any member on payment ofprescribed fees;

iii. The company shall file a return ofsignificant beneficial owners of thecompany and changes therein with theRoC;

iv. The company shall give notice to anyperson whom it has reasonable cause tobelieve to be a significant beneficialowner or having knowledge of identityof a significant beneficial owner or hasbeen a significant beneficial owner at any

COMPANIES ACT


time during the three years immediatelypreceding the date on which notice isissued and who is not registered as asignificant beneficial owner;

v. The information required as above shallbe given by the person within a periodnot exceeding 30 days of the date of thenotice;

vi. On failure to provide such notice or onreceipt of unsatisfactory information, thecompany shall apply to the NCLT. It is tobe noted that the obligation to apply tothe NCLT is mandatory on the company;

16.16.16.16.16. What are the penal provisions underWhat are the penal provisions underWhat are the penal provisions underWhat are the penal provisions underWhat are the penal provisions undersection 90?section 90?section 90?section 90?section 90?

On the recommendation of The Companies LawCommittee in their Report dated February, 2016,the following penal provisions have beenprescribed for person failing to make disclosureunder section 90(1):

i. Punishable with fine which shall not beless than Rs. 1 lakh but which may extendto Rs. 10 lakhs;

ii. If the failure is a continuing one with afurther fine which may extend to Rs. 1000for every day after the first during whichthe failure continues;

It is to be noted here that disclosure under section90(1) has to be made by an individual. However,the penal prosecution under section 90(1) will beon a ‘person’ failing to make disclosure. Henceevery beneficial owner will be liable to criminalprosecution.

Further if a company fails to maintain the registerof interest and file information with RoC or deniesinspection of the register, then the company andevery officer10 of the company who is in defaultshall be punishable with fine which shall not beless than Rs. 10 lakhs but which may extend toRs. 50 lakhs and where the failure is continuingone, with a further fine which may extend to Rs.1000 for every day after the first during which thefailure continues.

Further, if a person willfully furnishes any false orincorrect information or suppresses any materialinformation of which he is aware in thedeclaration made under section 90, he shall beliable to action under section 447.

(Footnotes)(Footnotes)(Footnotes)(Footnotes)(Footnotes)1 http://www.mca.gov.in/Ministry/pdf/CompaniesRestriction OnNumberofLayersRule_22092017.pdf2 https://www.sebi.gov.in/legal/master-circulars/dec-2010/aml-cft-master-circular_14421.html3 https://www.ecfr.gov/cgi-bin/text-idx?node=17:4.0.1.1.1 &rgn=div5#se17.4.240_113d_634 Ibid5 Supra 36 https://www.sebi.gov.in/legal/circulars/jan-2013/guidelines-on-identification-of-beneficial-ownership_24206.html7 http://www.mca.gov.in/Ministry/notification/pdf/AS_21.pdf8 Amended by Bill 2017. Earlier more than 50% of total share capital was to be considered.9 https://www.sebi.gov.in/sebi_data/attachdocs/1465796415786.pdf10 According to section 2(60) of Act, 2013 officer who is in default has been defined to means ‘the purpose of any provision

in this Act which enacts that an officer of the company who is in default shall be liable to any penalty or punishment by wayof imprisonment, fine or otherwise, means any of the following officers of a company, namely:—(i) whole-time director;(ii) key managerial personnel;(iii) where there is no key managerial personnel, such director or directors as specified by the Board in this behalf and whohas or have given his or their consent in writing to the Board to such specification, or all the directors, if no director is sospecified;(iv) any person who, under the immediate authority of the Board or any key managerial personnel, is charged with anyresponsibility including maintenance, filing or distribution of accounts or records, authorises, actively participates in,knowingly permits, or knowingly fails to take active steps to prevent, any default;(v) any person in accordance with whose advice, directions or instructions the Board of Directors of the company isaccustomed to act, other than a person who gives advice to the Board in a professional capacity;(vi) every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention byvirtue of the receipt by him of any proceedings of the Board or participation in such proceedings without objecting to thesame, or where such contravention had taken place with his consent or connivance;(vii) in respect of the issue or transfer of any shares of a company, the share transfer agents, registrars and merchantbankers to the issue or transfer

COMPANIES ACT


Goods Transport is an important aspect of everyeconomy because it primarily facilitates Tradeand Commerce. Most popular form of goodstransport in India is transportation of Goods viaroad. As per the statistics of National HighwaysAuthority of India, about 65% of freight traffic iscarried by the roads. Therefore, roadtransportation plays pivotal role in economicgrowth of our nation.

Goods transportation by road is done largely bythe transporter properly known as GoodsTransport Agency (GTA). Apart from this othermeans for transportation of goods are available,like transportation by truck owners or by providerof vehicle on hire. In this article, an attempt hasbeen made to compile provisions about theGoods Transport Agency (GTA).

What does GWhat does GWhat does GWhat does GWhat does GTTTTTA mean?A mean?A mean?A mean?A mean?

Goods Transport Agency (GTA) is not defined inthe GST Acts but it has been provided by the wayof explanation to Entry No. 9(iii) of NotificationNo. 11/2017-Central Tax (Rate), dated 28th June,2017.

“Goods Transport Agency means any person whoprovides service in relation to transport of goodsby road and issues consignment note, bywhatever name called”.

In fact this definition has been a replica of whatwas available under the Service Tax regime andthe same has been borrowed from Section 65(26)of the Finance Act, 1994. This indicates that, whileothers might also hire out vehicles for goodstransport or do transportation of goods but onlythose issuing a consignment note are consideredas a GTA.

Consignment NoteConsignment NoteConsignment NoteConsignment NoteConsignment Note

As per Rule 54 (3), where the supplier of taxableservice is a goods transport agency supplying

GST on Transportation of Goods

services in relation to transportation of goods byroad in a goods carriage, the said supplier shallissue a tax invoice or any other document in lieuthereof, by whatever name called, containingfollowing information apart from information asrequired by Rule 46 for issue of invoice-

• Gross weight of the consignment.

• Name of consignor.

• Name of consignee.

• Registration number of the goodscarriage in which the goods aretransported.

• Details of the goods transported.

• Details of Place of origin and destination.

• GSTIN of the person liable for paying taxwhether as consignor, consignee or GTA.

Scope of GScope of GScope of GScope of GScope of GTTTTTAAAAA

The services include not only the meretransportation of goods, but also otherintermediate/ancillary services provided such as-

• Loading/unloading

• Packing/ unpacking

• Trans-shipment

• Temporary warehousing etc.

If above services are included and not providedas independent activities, then they will form partof GTA services. In this case, it will not beconsidered as mixed supply rather it will beconsidered as composite supply and taxable onthe basis of principal supply concept.

Section 9(3) of CGST Act, 2017, has empoweredthe Central Government that on therecommendations of the Council, by notification,specify categories of supply of goods or services

CA Sushil Kr Goyal

GST


Consignor

Consignee

Third Person

GTA

Person paying

freight, shall be

liable to pay GST.

or both, the tax on which shall be paid on reversecharge basis by the recipient of such goods orservices or both. Services of GTA has been notifiedby the notification no. 13/2017- Central Tax(Rate), dated 28th June, 2017, under ReverseCharge Mechanism if received by following:

a) any factory registered under or governedby the Factories Act, 1948 (63 of 1948);or

b) any society registered under the SocietiesRegistration Act, 1860 (21 of 1860) orunder any other law for the time being inforce in any part of India; or

c) any co-operative society established byor under any law; or

d) any person registered under the CentralGoods and Service Tax Act or theIntegrated Goods and Service Tax Act orthe State Goods and Service Tax Act orthe Union Territory Goods and Service taxAct; or

e) any body corporate established, by orunder any law; or

f) any partnership firm whether registered ornot under any law including associationof persons; or

g) any casual taxable person;

located in the taxable territory.

As per the above notification, the person whowhowhowhowhopays or is l iable to pay freightpays or is l iable to pay freightpays or is l iable to pay freightpays or is l iable to pay freightpays or is l iable to pay freight for thetransportation of goods by road in goodscarriage, located in the taxable territory shall betreated as the receiver of service.

Exemption to GExemption to GExemption to GExemption to GExemption to GTTTTTA from Registration.A from Registration.A from Registration.A from Registration.A from Registration.

A person who is engaged in making only suppliesof taxable goods/services on which reversecharge applies is exempted from obtainingregistration under GST. (Notification No. 5/2017-Central Tax (Rate), dated 19th June, 2017)

Exemption from GSTExemption from GSTExemption from GSTExemption from GSTExemption from GST

A. Based on the Service ProviderA. Based on the Service ProviderA. Based on the Service ProviderA. Based on the Service ProviderA. Based on the Service Provider

Services by way of transportation of goods-

a) by road except the services of-

(i) a goods transportation agency;

(ii) a courier agency;

b) by inland waterways, are exempted.

Earlier, in Service Tax regime, this exemption wascovered in negative list. This exemption basicallyexempts all service of transportation of goods byroad other than by a GTA or Courier Agency. Onemust identify exact nature of service while decidinghis liability in GST. (Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017)

B. Based on the GoodsB. Based on the GoodsB. Based on the GoodsB. Based on the GoodsB. Based on the Goods

GST is not payable in case of transportation offollowing goods –

a) agricultural produce;

b) milk, salt and food grain including flour,pulses and rice;

c) organic manure;

d) newspaper or magazines registered withthe Registrar of Newspapers;

e) relief materials meant for victims ofnatural or man-made disasters,calamities, accidents or mishap; or

f) defence or military equipments.

(Notification No. 12/2017-Central Tax (Rate),dated 28th June, 2017)

C. Based on the VC. Based on the VC. Based on the VC. Based on the VC. Based on the Valuealuealuealuealue

GST is not payable where value of transportationservice is –

a) goods, where consideration charged forthe transportation of goods on aconsignment transported in a singlecarriage does not exceed one thousandfive hundred rupees;

b) goods, where consideration charged fortransportation of all such goods for asingle consignee does not exceed rupeesseven hundred and fifty;

One must take care that in case more than oneconsignments for one consignee beingtransported in one goods carriage, value of all

GST


consignment meant for the consignee should beadded to determine the applicability ofexemption. (Notification No. 12/2017-CentralTax (Rate), dated 28th June, 2017)

DDDDD. Based on Service Receiver. Based on Service Receiver. Based on Service Receiver. Based on Service Receiver. Based on Service Receiver

GTA service provided to an unregistered personincluding an unregistered casual taxable personis exempt. But this exemption is not applicablefor services provided to the persons covered underreverse charge mechanism. (Notification No. 32/2017-Central Tax (Rate), dated 13th October,2017)

TTTTTax rate and Input Tax rate and Input Tax rate and Input Tax rate and Input Tax rate and Input Tax Creditax Creditax Creditax Creditax Credit

In terms of Notification No. 11/2017- Central Tax(Rate), dated 28th June, 2017 and NotificationNo. 20/2017- Central Tax (Rate), dated 22ndAugust, 2017, GTA can opt for 12% GST with ITCor 5% GST without ITC. GTA has to opt at thebeginning of the financial year. ITC is availableonly on goods or services used in supplying theGTA service, i.e., by the GTA itself.

In case of reverse charge, person paying tax underRCM is liable for 5% GST and the same can beavailed as ITC without any restrictions. The personavailing the service is always eligible for ITCirrespective of tax paid by him or GTA andirrespective of rate of tax paid on the services.

Moreover, as per Notification No. 22/2017 –Central Tax (Rate), dated 22nd August, 2017,RCM is applicable only if GTA has not opted topay taxes @ 12%. This simply means that if GTAis claiming ITC with paying tax @ 12%, thenprovisions of section 9(3) RCM, is not applicableand GTA is require to pay taxes on forward chargebasis. But if GTA is opting for 5% tax rate with noITC to servie provider but no restriction of creditto the receiver of service paid under RCM.

Place of Supply of GPlace of Supply of GPlace of Supply of GPlace of Supply of GPlace of Supply of GTTTTTA under GSTA under GSTA under GSTA under GSTA under GST

The place of supply of services by way oftransportation of goods, including by mail orcourier to

(a) a registered person, shall be thelocation of such person.

(b) a person other than a registeredperson, shall be the location at which suchgoods are handed over for theirtransportation.

Whether the services of GTA are in the nature ofintra-state or inter-state supply, the location ofsupplier and place of supply has to be considered.

Accordingly, location of the supplier means -

• If supply is made from a registered placeof business, the location of such place ofbusiness;

• If supply is made from a place other thanthe registered place of business (a fixedestablishment elsewhere), the location ofsuch fixed establishment;

• If supply is made from more than oneestablishment, whether the place ofbusiness or fixed establishment, thelocation of the establishment most directlyconcerned with the provision of the supply;

• In other cases, the location of the usualplace of residence of the supplier.

Whether 12% or 5% GST ???Whether 12% or 5% GST ???Whether 12% or 5% GST ???Whether 12% or 5% GST ???Whether 12% or 5% GST ???

When supplier of service, the GTA opts forcollecting and paying taxes @ 12% (6% CGST +6% SGST or IGST 12%), credit of Input Tax will bepassed on to the receiver of service. At the sametime receiver of service can take credit of 12%full tax.

In case of 5% GST, RCM is applicable and inputtax of GTA will not get passed on to the receiverof service. In case of RCM cost of transportationof service will be higher than the cost of service iftax is paid under forward charge.

GST

If you believe in yourself and have dedication and pride - andnever quit, you'll be a winner. The price of victory is high butso are the rewards.

– P– P– P– P– Paul Bryantaul Bryantaul Bryantaul Bryantaul Bryant


Cross Charge under GST Regime

Introduction to Cross ChargeIntroduction to Cross ChargeIntroduction to Cross ChargeIntroduction to Cross ChargeIntroduction to Cross Charge

GST Law has deemed existence of branches ofdifferent units across India as distinct persons(subject to the exception of multiple branchesregistered under one GSTIN in Same state whoare considered as one person, unless separatelyregistered as Business Vertical ) and thus, thefollowing consequences emerge from suchdeeming fiction:

Any provision of goods or services from onebranch to another would constitute supplybetweensuch branches

Any Expenditure which are incurred at anyBranch Office but whose outcome is used bydifferent branches require cross charge

Identification of Cross ChargesIdentification of Cross ChargesIdentification of Cross ChargesIdentification of Cross ChargesIdentification of Cross Charges

Generally, one of the offices of anyBusinessEnterprise houses one or many managementfunctions of the said organisation, likeadministrative, administrative, marketing, etc,generally referred to as Head Office. The BusinessEnterpriseexpends a lot of money on suchmanagerial functions while the services of suchfunctions are used by all or many branches. Thesaid Head Office having housed such functioncannot be said to have used such expenses for itsoutput supply solely but such expense belongs toall Branches of the Business Enterprise. It isimportant to mention that Cross Charge movesacross not only branches but can also moveacross Group Companies, in situations wheremany offices of different group companies arerun from the same premises, wherein CrossCharge to all such companies for business supportis necessary. Some of the common expendituremade by such Head Office are –

Sales and Marketing Expenditure:Sales and Marketing Expenditure:Sales and Marketing Expenditure:Sales and Marketing Expenditure:Sales and Marketing Expenditure:Sales, Marketing expense including branddevelopment of the Company are

expended centrally on majoradvertisements like sponsorship, mediaspending, PR expenses etc. Even whenoffices which perform mere marketingexpenses are required to Cross Charge.

Managerial FManagerial FManagerial FManagerial FManagerial Functions:unctions:unctions:unctions:unctions: Generally, thetop management of a company isstationed at one place but looks after thefunctioning of all offices. Such office isbasically a sort of management office andthus, the entire cost of the managementteam including rent, salary, consumablesetc are to be Cross Charged from otheroffices.

Engineering, Designing andEngineering, Designing andEngineering, Designing andEngineering, Designing andEngineering, Designing andTTTTTechnical Technical Technical Technical Technical Team:eam:eam:eam:eam: The expense isbasically for a team which providetechnical support in terms of designing,concept to all those involved in executionand thus, the entire expense need to beCross Charged.

TTTTTax, Lax, Lax, Lax, Lax, Legal and General Counselegal and General Counselegal and General Counselegal and General Counselegal and General CounselFunctions:Functions:Functions:Functions:Functions: These functions are generallyhoused at one place not only for aCompany but also for a group ofcompanies and thus, its Cross Chargerequires through investigation in the natureof such expenses.

Accounting and FinanceAccounting and FinanceAccounting and FinanceAccounting and FinanceAccounting and FinanceManagement:Management:Management:Management:Management: Many Companiesmanage their accounting functionscentrally and primary accounting team islocated out of one office, such teams areresponsible for all branches and notmerely one and thus, their expenses arerequired to be Cross Charged.

Purchase and Logistics ManagementPurchase and Logistics ManagementPurchase and Logistics ManagementPurchase and Logistics ManagementPurchase and Logistics Management:The name says it all as one of the officesgenerally issues all purchase order and

CA Ankit Kanodia

GST


negotiates and control vendor paymentand movement of material to variouslocations in the Country.

Requisite Measuresfor Implementing CrossRequisite Measuresfor Implementing CrossRequisite Measuresfor Implementing CrossRequisite Measuresfor Implementing CrossRequisite Measuresfor Implementing CrossChargeChargeChargeChargeCharge

Though no single formulae can address allsituations, yet the following are suggestive thingsto be examined to avoid any future disallowanceof ITC or demand on count of supply by variousorganisations:

PPPPProper Agreements with Vroper Agreements with Vroper Agreements with Vroper Agreements with Vroper Agreements with Vendors:endors:endors:endors:endors:Business Enterprises should clearly definein their agreements as to whether theagreement is for provision of servicescentrally or directly at various branchesbut payment to be made centrally. Clearpolicy for such expenditure will help theCompany in avoiding a possible demandof GST

Clear InputClear InputClear InputClear InputClear Input-----Output Relationship:Output Relationship:Output Relationship:Output Relationship:Output Relationship:Organisation should clearly mark the costcentres to their income and expenses sothat they donot miss to cross chargeanyCommon Expense

Separate TSeparate TSeparate TSeparate TSeparate Trial Balances for Eachrial Balances for Eachrial Balances for Eachrial Balances for Eachrial Balances for EachRegistration:Registration:Registration:Registration:Registration:Separate Trial Balancemarking all Income, Expenses, AssetsLiabilities is must for every GST registration

TTTTTransfer Pransfer Pransfer Pransfer Pransfer Pricing Study forricing Study forricing Study forricing Study forricing Study forOrganisationOrganisationOrganisationOrganisationOrganisation: Transfer Pricing studyshould be conducted to detect all requisitecross charges

PPPPPeriodicity and Mechanism of Crosseriodicity and Mechanism of Crosseriodicity and Mechanism of Crosseriodicity and Mechanism of Crosseriodicity and Mechanism of CrossChargeChargeChargeChargeCharge

There are no specific provisions or mechanismprescribed under the GST law on the periodicityof Cross Charge.However, it is advisable that theBusiness Enterprise should raise cross chargeinvoices (i.e. valid tax invoice to be reported underGSTR - 1)on monthly basis, by end of the relevantmonth. Such agreed timeline should bedocumented by way of an office memorandum.Thus, the Business Enterprise should raise theCross Charge Invoice on 31st / 30thday of themonth in which the services were rendered underCross Charge.

Division of Expenditure for Cross ChargeDivision of Expenditure for Cross ChargeDivision of Expenditure for Cross ChargeDivision of Expenditure for Cross ChargeDivision of Expenditure for Cross Charge

Every transaction of cross charge would requirean individual examination and no uniform

formulae can run for all expenses and branchesand, thus, Judicious Application is required forproper Cross Charge. Some of the examples areas under:

Property insurance could be allocated onthe basis of asset values while productliability insurance could arguably beallocated on the basis of sales.

Legal department can measure somecosts as related to specific cases directly.While common expenses for legal andsecretarial can be divided on the basis ofturnover.

Measurable direct costs in IT departmentlike personal computers provided to eachdepartment, data storage volume, datatransmission volume, and transactionvolume can form basis of charge.

Service Centres can again cross chargetheir costs on the basis of turnover ofdifferent units.

General Management Costs can createa cross charge on the basis of againturnover including inter state turnover ofdifferent units.

Other suitable method depending on caseto case basis.

VVVVValuationfor Cross Chargealuationfor Cross Chargealuationfor Cross Chargealuationfor Cross Chargealuationfor Cross Charge

Section 15 of CGST Act, 2017 read with CGSTRules, provides for the method for determinationof valuation of supply of goods or servicesbetween branches, which is as follows:

The Value of Supply for the Supply under CrossCharge Mechanismneeds to be determined asper the provisions of Section 15 of CGST Act,2017 and Rule 28, which determines the Valueof Supply of goods or services or both betweendistinct or related persons, other than through anagent, Rule 30, and Rule 31 of the CGST Rules,2017. Now, as per the said provisions –

• If the Recipient is Eligible for Full Input TaxCredit, i.e., the goods or services or both thathas been supplied is not Ineligible for InputTax Credit as per Section 17(5) of the CGSTAct and the same are not liable for reversalof ITC under Section 17(1) or Section 17(2) ofthe CGST Act and Rule 42 and Rule 43 of theCGST Rules, 2017, then the value declaredin the invoice will be deemed to be the Value

GST


of Supply (Second Proviso to Rule 28 of theCGST Rules, 2017)

• In any other case –

o If goods are intended for further supplyas such by the recipient, then at the optionof the supplier, the Value of Supply will bean amount equivalent to 90% of the pricecharged for the supply of goods of likekind and quality by the recipient to hiscustomer not being a related person (FirstProviso to Rule 28 of the CGST Rules,2017)

o In any other case, -

If Open Market Value of Such Supplyis available, then such Open MarketValue of Such Supply will be the Valueof Supply (Rule 28(a) of the CGSTRules, 2017)

- “Open Market Value” of a supplyof goods or services or both meansthe full value in money, excludingthe integrated tax, central tax,State tax, Union territory tax andthe cess payable by a person in atransaction, where the supplierand the recipient of the supply arenot related and the price is the soleconsideration, to obtain suchsupply at the same time when thesupply being valued is made(Explanation to Chapter IV of theCGST Rules, 2017)

If Open Market Value of Such Supplyis not available, then the Value ofSupply of Goods or Services of likekind and quality will be the Value ofSupply (Rule 28(b) of the CGST Rules,2017)

- “Supply of Goods or Services orBoth of like Kind and Quality”means any other supply of goodsor services or both made undersimilar circumstances that, inrespect of the characteristics,quality, quantity, functionalcomponents, materials, and thereputation of the goods or servicesor both first mentioned, is thesame as, or closely or substantially

resembles, that supply of goods orservices or both. (Explanation toChapter IV of the CGST Rules,2017)

If Value of Supply is not determinableunder above clauses, then the valueof supply will be the value asdetermined by the application of Rule30 or Rule 31, in that order (Rule 28(c)of the CGST Rules, 2017)

- Where the Value of Supply ofgoods or services or both is notdeterminable by any of thepreceding rules, the value shall be110% of the cost of productionormanufacture or the cost ofacquisition of such goods or thecost of provision of suchservices(Rule 30 of the CGST Rules, 2017)

- Where the value of supply of goodsor services or both cannot bedetermined under rules 27 to 30,the same shall be determinedusing reasonable meansconsistent with the principles andthe general provisions of section15 and the provisions of thisChapter (Rule 31 of the CGSTRules, 2017)

- In case of supply of services, thesupplier may directly opt for Rule31,ignoring Rule 30 (Proviso toRule 31 of the CGST Rules, 2017)

Accordingly, if the Business Enterprise is engagedin Taxable Supply only, then none of its Brancheswill be liable to make any reversal under Section17(1) and Section 17(2) of the CGST Act, 2017and Rule 42 and Rule 43 of the CGST Rules, 2017.Further, as Business Support Services are notcovered under Section 17(5) of the CGST Act, thevarious Branches will be eligible to claim full ITCof the GST chargeable on the Supply of BusinessSupport Services supplies under Cross Charge.Therefore, the Head Office of the BusinessEnterprise can adopt any reasonable amount asthe Value of Supply.

However, it must be noted that the Value of Supplyshould be such that the GST Chargeable on suchValue is in proximity to the amount of ITC availedby the Head Office. In case the Value of Supply isrelatively too high, then the Head Office will have

GST


relatively higher GST Output Liability, which it maynot be able to pay off fully by utilization of theITC availed and would have to pay the balanceliability by cash. Similarly, in case the Value ofSupply is relatively too low, then the Head Officewill have relatively lower GST Output Liabilitywhen compared to the ITC availed and it wouldhave to carry forward such additional ITC intothe next month.

However, if the Business Enterprise is engaged inTaxable Supply and Exempt Supply, then itsBranches engaged in effecting exempt supplieswill be liable to make reversal of ITC availedunder Section 17(1) and Section 17(2) of the CGSTAct, 2017 and Rule 42 and Rule 43 of the CGSTRules, 2017. Therefore, the Head Office of theBusiness Enterprise will have to determine theValue of Supply by determining Open MarketValue and, if found available, such Open MarketValue will be the Value of Supply of BusinessSupport Services providedunder Cross Charge.

Now, as such Business Support Services are notgenerally supplied between persons other thanrelated and distinct persons, the open marketvalue of such services would not be availablegenerally and the Business Enterprise will have todetermine the Value of Supply by determining theValue of “Supply of goods or services or both oflike Kind and Quality” and if found available suchValue of “Supply of goods or services or both oflike Kind and Quality” will be the Value of Supplyof Business Support Services provided under CrossCharge.

However, it might be possible that the Value of“Supply of goods or services or both of like Kind

and Quality” could also not be determined and,then, the Value of Supply will be determined underRule 30 of the CGST Rules, 2017 as 110% of theCost of Provision of Such Services.Now, theCostof Provision of Such Services should include allthe expenditure made but should exclude,expenditure on which GST is not leviable like,Employee Related Cost,Interest-Related FinanceCost, etc.

Now, if Cost of Provision of Such Services is alsonot available, then the Value of Supply willbedetermined using reasonable means consistentwith the principles and the general provisions ofSection 15 of the CGST Act and the provisions ofChapter IV of the CGST Rules, 2017.

Consequences of Not Implementing CrossConsequences of Not Implementing CrossConsequences of Not Implementing CrossConsequences of Not Implementing CrossConsequences of Not Implementing CrossChargeChargeChargeChargeCharge

Potential for GST liability as such supplyis taxable and when detected at audit /investigation stage

Denial of ITC to unit who has availedcredit on common expenses on the groundthat such expenses are not used by itwholly in provision of output supply

Interest and penalty in case of abovedemands

Such amounts when paid on detection bydepartment shall also not be available ascredit to other branch as ITC is barred fortax paid under Section 74, 129 and 130

Other consequential penalties for proce-dural defaults

GST

Entire water of the sea can't sink a ship unless it gets inside theship. Similarly, negativity of the world can't put you downunless you allow it to get inside you.


Impact of GST Valuation on Sharing of CostBetween Group Companies

One of the major areas of dispute during theService tax regime has been the valuation of thegoods and services which are commonly used bygroup companies. The impact and allocation ofGST for these group companies will also be amajor aspect under the current regime. Theapproach to be followed here depends on whetherthe goods/services have been outsourced fromthird party or have been provided internally.

VVVVValuation of goods and services which arealuation of goods and services which arealuation of goods and services which arealuation of goods and services which arealuation of goods and services which areoutsourced from third partyoutsourced from third partyoutsourced from third partyoutsourced from third partyoutsourced from third party

Various goods and services are procured bygroup companies from third parties. To analysethe valuation of these goods and services, therecan be two approaches which can be evaluatedhere.

The first approach is that the expenses may beincurred by any of the companies. However, uponfollowing the basis of factor costing for therelevant cost, such cost may be divided amongthe two companies. There may be internaladjustments of the payments periodically for thedifferential between the amount incurred and theamount apportioned based on the factor cost. Inthis cost sharing method, the reimbursement willbe on actual expenditure basis and there is noprofit element involved. However, this approachis not free from litigation. There have beeninnumerable judicial cases under Service taxwhich have arisen under this approach. This willbe because the invoice may be in the name ofone of the companies and the Input tax credit hasto be availed by that company as well. However,the expenditure may have to be recognized inanother company ’s books because of the

apportionment using factor costing.Reconciliation statement between the auditedfinancial statements and the returns as per theGST regime to be filed for every financial yearunder the GST regime may also not depict theright picture. This can result in raising of questionsby the Department.

The second approach is that the expenses shouldbe incurred by only one company and it shouldavail the complete input tax credit. In turn, thatcompany should raise an invoice on the othercompany for the portion of services that has beenreceived by that other company. To find the basisof such service, the factor costing techniqueshould be used once again. For each nature ofexpense, the basis of apportionment should befound out. Once this basis is known, the actualcost that has been incurred can be known usingthe books of accounts. Thereafter, using the basisof apportionment, the actual cost to beapportioned to the other company can be foundout. Then, the company which has incurred thatcost can raise an invoice for the costapportionable to the other company. Taxescharged by one company in the invoice will beavailed by the other. So, the matter will be profitneutral for the group as a whole. At the same time,it will lower chances of litigation as one companyis paying taxes for the services provided to theother. So, this is the recommended approach thatshould be followed for dividing of cost betweentwo companies.

For the purpose of exact valuation as per the GSTlaw, one should also refer to Section 15 of theCGST Act, 2017. As per the said section, the value

CA Shubham Khaitan

GST


of supply of goods or services has been stated tobe the transaction value i.e. the price actually paidor payable for the said supply where supplier andrecipient are not related and the price is the soleconsideration. Group companies will always beconsidered as related persons as per theexplanation to Section 15. In the case of relatedpersons, one may need to refer to Rule 28 of theCGST Rules, 2017. As per the said rule:

“The value of the supply of goods or services orboth between distinct persons as specified in sub-section (4) and (5) of section 25 or where thesupplier and recipient are related, other thanwhere the supply is made through an agent, shall-

(a) be the open market value of such supply;

(b) if the open market value is not available, bethe value of supply of goods or

services of like kind and quality;

(c) if the value is not determinable under clause(a) or (b), be the value as determined by theapplication of rule 30 or rule 31, in that order:

Provided that where the goods are intended forfurther supply as such by the recipient, the valueshall, at the option of the supplier, be an amountequivalent to ninety percent of the price chargedfor the supply of goods of like kind and quality bythe recipient to his customer not being a relatedperson:

Provided further that where the recipient is eligiblefor full input tax credit, the value declared in theinvoice shall be deemed to be the open marketvalue of the goods or services.”

As per the provisions given above, open marketvalue should be given the first priority if therecipient and supplier are related. Open marketvalue has been defined to be the following:

“open market value” of a supply of goods orservices or both means the full value in money,excluding the integrated tax, central tax, State tax,Union territory tax and the cess payable by aperson in a transaction, where the supplier andthe recipient of the supply are not related and theprice is the sole consideration, to obtain such

supply at the same time when the supply beingvalued is made;”

Hence, OMV basically refers to the supply of suchservices in a situation where the supplier andrecipient are not related and price is the soleconsideration.

However, as per the proviso to Rule 28 of theCGST Rules, 2017, it should be mentioned herethat the value mentioned as per the invoice willbe deemed to be the open market value. Once,the open market value is determinable, one neednot refer to the other provisions of the rules fordetermining the taxable value.

When the cost is incurred by one company byprocuring services from third party, the valuecharged can be considered as the open marketvalue. This is because the transaction occursbetween the supplier and the recipient whereinboth are not related and price is the soleconsideration. One should find the proportion tobe allocated to the other company dependingon the nature of cost using factor costing. Thenthis proportion so arrived should be used toapportion the cost using the value adopted in thetransaction with the third party. To further securethe matter, the law allows any value as adoptedin the invoice to be the taxable value when therecipient is eligible for full input tax credit in arelated party transaction.

VVVVValuation of goods and services providedaluation of goods and services providedaluation of goods and services providedaluation of goods and services providedaluation of goods and services providedinternal lyinternal lyinternal lyinternal lyinternal ly

Various facilities owned by one companycan beused by the other for running its operations. Forthe expenses incurred regularly, theapportionment of cost has already been discussedabove. However, for the usage of the facilities, aseparate charge should be levied by onecompany to the other. It is pertinent that a suitablevalue should be adopted for the usage of thesefacilities for the purpose of charging GST.

As per Section 15 of the CGST Act, 2017, thevalue of supply of goods or services has beenstated to be the transaction value i.e. the priceactually paid or payable for the said supply where

GST


supplier and recipient are not related and theprice is the sole consideration. Group companieswill always be considered as related persons asper the explanation to Section 15. In the case ofrelated persons, one may need to refer to Rule28 of the CGST Rules, 2017. As per the said rule:

“The value of the supply of goods or services orboth between distinct persons as specified in sub-section (4) and (5) of section 25 or where thesupplier and recipient are related, other thanwhere the supply is made through an agent, shall-

(a) be the open market value of such supply;

(b) if the open market value is not available, bethe value of supply of goods or

services of like kind and quality;

(c) if the value is not determinable under clause(a) or (b), be the value as determined by theapplication of rule 30 or rule 31, in that order:

Provided that where the goods are intended forfurther supply as such by the recipient, the valueshall, at the option of the supplier, be an amountequivalent to ninety percent of the price chargedfor the supply of goods of like kind and qualityby the recipient to his customer not being a relatedperson:

Provided further that where the recipient is eligiblefor full input tax credit, the value declared in theinvoice shall be deemed to be the open marketvalue of the goods or services.”

As per the provisions given above, open marketvalue should be given the first priority if therecipient and supplier are related. Open marketvalue has been defined to be the following:

“open market value” of a supply of goods orservices or both means the full value in money,excluding the integrated tax, central tax, State tax,Union territory tax and the cess payable by aperson in a transaction, where the supplier andthe recipient of the supply are not related andthe price is the sole consideration, to obtain suchsupply at the same time when the supply beingvalued is made;”

Hence, OMV basically refers to the supply of suchservices in a situation where the supplier andrecipient are not related and price is the soleconsideration.

If OMV is not available, then the supply of goodsor services or both of like kind and quality shouldbe taken. It may be extremely difficult to find thevalue of similar goods or services in the givencase as the erected plant and machinery beingtransferred may not be an openly tradable good.

One should refer to Rule 30 if the valuation cannotbe arrived on the basis of the open market valueand value of supply of goods or services of likekind and quality. Rule 30 mentions that the valuetaken should be 110% of the cost of productionor manufacture or the cost of acquisition of goodsor cost of provision of services.

If the value cannot be determined by Rule 30either, one can determine the valuation on thebasis of reasonable means consistent with theprinciples and the general provisions of section15 and the rules. The supplier of services has anoption to avail this rule avoiding Rule 30completely.

However, as per the proviso to Rule 28 of theCGST Rules, 2017, it should be mentioned herethat the value mentioned as per the invoice willbe deemed to be the open market value. Once,the open market value is determinable, one neednot refer to other provisions of the rules fordetermining the taxable value.


It may be emphasized that the valuationmentioned in all the above cases have beenopined based on the provisions of the GST law.As far as practicable, the methods to be adoptedfor finding the correct market value has beenrecommended. However, the decision relating tothe arm’s length prices should only be taken aftercomplying with the relevant provisions of transferpricing.

GST


Touted to be the most challenging and historicchange in India, the Goods and Services Tax (GST)in India has had a major rejig in the indirect taxa-tion regime of the country. The new regime is aconsumption based tax which aims to tax theevent of “Supply” rather than different events likemanufacture, sale etc. which was the scenario inthe earlier tax regime. Due to the presence ofthe multiple legislations, the earlier tax regimeconsisted of different events for leviability whichin some cases had overlapping provisions in oneor more Acts.An important reason for introduc-ing GST is that it will increase the efficiency withwhich resources are allocated in the economy.The GST remedies the cascading effects of thesales tax and service tax. Unlike sales tax andservice tax, which are collected only at the pointof sale to the final consumer, GST revenue is col-lected throughout the production process.An im-portant effect of GST would be to improve com-pliance. The value chain under the GST will befully traceable. Thus, the GST regime shall beaway to redress the issues of double taxation.

The implementation of any reform in a countrylike India with a population of over 1.2 billion isa challenging task and so has been the case withthe GST implementation too. India houses a vastnumber of unorganized business players in al-most every industrial sector and with small chunkof these players within the banking channels andambit of current taxation regime, the task alto-gether becomes humongous. Thus, the decisionto replace the indirect tax regime faced a hugeamount of resistance and criticisms, in fact, thisis why it took 17 years for the Indian governmentto introduce GST in India.

Progress so farProgress so farProgress so farProgress so farProgress so far

The GST regime which saw its sunrise on 1st July,2017, has experienced its amount of struggle. The

GST in 2018- what’s in Store?

sail to the new regime has not been smooth andcan be called a bumpy ride even though we arein the fourth month of its implementation. TheGST regime differs in lot many sense from theearlier tax regime which has been in existence fordecades. The new regime is highly technologydriven system which warrants for the monthly re-porting and payment of the revenue of person’scovered by the GST regime. A small snapshot ofthe registration and revenue figures has been il-lustrated through the table below:

GST figures as on 29GST figures as on 29GST figures as on 29GST figures as on 29GST figures as on 29ththththth August, 2017 August, 2017 August, 2017 August, 2017 August, 201711111

PPPPPersons who were requiredersons who were requiredersons who were requiredersons who were requiredersons who were requiredto file returnsto file returnsto file returnsto file returnsto file returns 59.57 lakhs

PPPPPersons who haveersons who haveersons who haveersons who haveersons who havefiled returnsfiled returnsfiled returnsfiled returnsfiled returns 38.38 lakhs

PPPPPercentageercentageercentageercentageercentage 64.42

TTTTTotal revenue from GSTotal revenue from GSTotal revenue from GSTotal revenue from GSTotal revenue from GST 92, 283 croreTTTTTotal tax payersotal tax payersotal tax payersotal tax payersotal tax payers 72.33 lakhsComplete migrationComplete migrationComplete migrationComplete migrationComplete migration 58.53 lakhsNew registrationNew registrationNew registrationNew registrationNew registration 18.83 lakhs

GST figures as on 25GST figures as on 25GST figures as on 25GST figures as on 25GST figures as on 25ththththth September September September September September, 2017, 2017, 2017, 2017, 201722222

PPPPPersons who were requiredersons who were requiredersons who were requiredersons who were requiredersons who were requiredto file returnsto file returnsto file returnsto file returnsto file returns 68.20 lakhsPPPPPersons who haveersons who haveersons who haveersons who haveersons who havefiled returnsfiled returnsfiled returnsfiled returnsfiled returns 37.63 lakhsPPPPPercentageercentageercentageercentageercentageTTTTTotal revenue from GSTotal revenue from GSTotal revenue from GSTotal revenue from GSTotal revenue from GST 90,669 crore

GST figures as on 23rd OctoberGST figures as on 23rd OctoberGST figures as on 23rd OctoberGST figures as on 23rd OctoberGST figures as on 23rd October, 2017, 2017, 2017, 2017, 20173

PPPPPersons who were requiredersons who were requiredersons who were requiredersons who were requiredersons who were requiredto file returnsto file returnsto file returnsto file returnsto file returnsPPPPPersons who haveersons who haveersons who haveersons who haveersons who havefiled returnsfiled returnsfiled returnsfiled returnsfiled returns 42.91 lakhsTTTTTotal revenue from GSTotal revenue from GSTotal revenue from GSTotal revenue from GSTotal revenue from GST 92,150 crores

Anita BaidSenior ManagerVinod Kothari Consultants Pvt. Ltd.

GST


Major developments in the GST law so farMajor developments in the GST law so farMajor developments in the GST law so farMajor developments in the GST law so farMajor developments in the GST law so far

The GST council has already met 24 times4andhas made several changes in the text of the law,majorly to combat the shortcomings of the origi-nal version of the law. Let us take a note of thehighlights of such changes –

1 .1 .1 .1 .1 . Exemption from registration for perExemption from registration for perExemption from registration for perExemption from registration for perExemption from registration for per-----sons avail ing inputs subject to re-sons avail ing inputs subject to re-sons avail ing inputs subject to re-sons avail ing inputs subject to re-sons avail ing inputs subject to re-verse chargeverse chargeverse chargeverse chargeverse charge55555

As per the original law, any person whowas required to pay tax on reverse chargebasis, was required to obtain GST regis-tration mandatorily. This became an un-necessary hardship for the business under-takings, as a large portion of thepopulationrequired attracted the registra-tion requirements, even where their aggre-gate turnover remained lower than thespecified limits. In order to remove thehardship from the small scale businesses,the GST Council made changes in the GSTlaw to cast an exemption to these entitiesfrom registration requirements.

2 .2 .2 .2 .2 . Grandfathering provisions relatingGrandfathering provisions relatingGrandfathering provisions relatingGrandfathering provisions relatingGrandfathering provisions relatingto transactions that had taken placeto transactions that had taken placeto transactions that had taken placeto transactions that had taken placeto transactions that had taken placebefore 1before 1before 1before 1before 1ststststst July July July July July, 2017 and continuing, 2017 and continuing, 2017 and continuing, 2017 and continuing, 2017 and continuingthroughthroughthroughthroughthrough66666

Several grandfathering provisions for pre-GST era transactions were introduced inorder to provide a relief to the Industry atlarge. One such important relief was inrespect of old/existing leases of motorvehicles purchased and leased prior to 1stJuly, 2017. The changes are as given be-low:-

a. Leasing ofmotor vehicles pur-chased and leased prior to 1stJuly, 2017 would attract GSTat a rate equal to 65% of theapplicable GST rate (includingCompensation Cess).

b. Such motor vehicles when soldshall attract GST of 65% of theapplicable GST rate (includingCompensation Cess).

c. Sale of vehicles by a registeredperson who had procured the

motor vehicle prior to 1st July,2017 and has not availed anyInput Tax Credits of CentralExcise duty, VAT or any othertaxes paid on such motor ve-hicles, would also be subject to65% of applicable GST rate(including CompensationCess). This notification wouldbe valid till 1st July, 2020.

This change was very significant for thecar leasing players who were otherwisegreatly affected with the new provisionsmaking the economics of the leasing busi-ness unfavorable. The notification comesas a huge sigh of relief to leasing compa-nies, saving them from incurring hugelosses on existing lease contracts. Thisaddresses the major issue of tax mismatchfor the leasing companies.

3 .3 .3 .3 .3 . Revision in turnover l imit for com-Revision in turnover l imit for com-Revision in turnover l imit for com-Revision in turnover l imit for com-Revision in turnover l imit for com-posit ion levyposit ion levyposit ion levyposit ion levyposit ion levy77777

An eligible registered person, whose ag-gregate turnover in the preceding finan-cial year did not exceed seventy five lakhrupees, may opt to pay, in lieu of the cen-tral tax payable by him, an amount cal-culated at the rate of -

(i) one per cent. of the turnover inState in case of a manufacturer,

(ii) two and a half per cent. of theturnover in State in case of per-sons engaged in making sup-plies referred to in clause (b)of paragraph 6 of Schedule IIof the said Act, and

(iii) half per cent. of the turnover inState in case of other suppliers

Further, the amount of aggregate turnovereligible for composition scheme has beenenhanced from Rs. 75 lakhs to Rs. 1crores.8

Pursuant to the power with the Government toincrease the limit of aggregate turnover, andbased upon the recommendations of the GSTCouncil, the aforesaid change is in favor of thesmall service providers. This would providethem relief from undertaking the lengthy com-pliances applicable to a normal supplier.

GST


4 .4 .4 .4 .4 . Suspension of payment of tax in re-Suspension of payment of tax in re-Suspension of payment of tax in re-Suspension of payment of tax in re-Suspension of payment of tax in re-verse while avail ing supplies fromverse while avail ing supplies fromverse while avail ing supplies fromverse while avail ing supplies fromverse while avail ing supplies fromunregistered personsunregistered personsunregistered personsunregistered personsunregistered persons99999

A registered person procuring taxablegoods/ services from unregistered suppli-ers, shall not be required to pay CGSTunder reverse charge mechanism U/s 9(4)of CGST Act, 2017 till March 31, 2018with effect from 13th Oct, 2017.

Practically procurement of goods fromunregistered suppliers can not beavoided. Hence, the deferment of theapplicability of section 9(4) will enablesmooth implementation & success of GST.

5 .5 .5 .5 .5 . Suppliers of services below thresh-Suppliers of services below thresh-Suppliers of services below thresh-Suppliers of services below thresh-Suppliers of services below thresh-old limit exempted from compulsoryold limit exempted from compulsoryold limit exempted from compulsoryold limit exempted from compulsoryold limit exempted from compulsoryregistration even if carrying out inregistration even if carrying out inregistration even if carrying out inregistration even if carrying out inregistration even if carrying out ininterinterinterinterinter----- state suppliesstate suppliesstate suppliesstate suppliesstate supplies1010101010

All service providers, whether supplyingintra-State, inter-State or throughecommerce operator,will be exempt fromobtaining GST registration, provided theiraggregate turnover does not exceed Rs.20 lakhs.

This shall serve as a measure towards tax-payer facilitation to exempt such suppli-ers providing services through an e-com-merce platform from obtaining compul-sory registration provided their aggregateturnover does not exceed the thresholdlimit.

6 .6 .6 .6 .6 . No GST on advance received againstNo GST on advance received againstNo GST on advance received againstNo GST on advance received againstNo GST on advance received againstsupply of goods for all assessessupply of goods for all assessessupply of goods for all assessessupply of goods for all assessessupply of goods for all assesses1111111111

All persons (below or above 1.5 cr limit)shall not be required to pay tax on ad-vance received against future supplies ofgoods. This facility was allowed only topersons below the 1.5 cr limit which willcontinue to enjoy the relaxation from 13thOctober 2017 but all other taxable per-sons (other than composition) will nowenjoy from 15th November 2017 on-wards.

Pursuant to this notification, GST shall notbepayable at the time of transfer of funds,but at the time of appropriation of funds,i.e. whenthe invoice is raised.

7 .7 .7 .7 .7 . Major rejig in the rate scheduleMajor rejig in the rate scheduleMajor rejig in the rate scheduleMajor rejig in the rate scheduleMajor rejig in the rate schedule1212121212

The GST council meeting slashed tax rates

on 178 items coming under 28% slab ratewhich leaves on 50 items under the high-est tax rate of 28%. Also, there werechanges in the filing period which was re-duced from monthly to quarterly makingeasier compliance for the small mediumenterprises. Overall, the council took note-worthy decisions in its meeting and madethe overall easier environment for the busi-ness units to operate.

8 .8 .8 .8 .8 . Operationalization of anti-profiteerOperationalization of anti-profiteerOperationalization of anti-profiteerOperationalization of anti-profiteerOperationalization of anti-profiteer-----ing provisionsing provisionsing provisionsing provisionsing provisions1313131313

Section 171 of the CGST Act provides forthe anti-profiteering measures so as toensure that benefit of credit available isultimately passed on to the consumer. Pre-viously, with change in law and to enableease of understanding for all theassessees, anti-profiteering measureswere kept in abeyance.The constitution ofthe National Anti-Profiteering Authority isexpected to bolster consumer confidenceand ensure all stakeholders reap the in-tended benefits of GST.

9 .9 .9 .9 .9 . E-way billE-way billE-way billE-way billE-way bill1414141414

In the recent 24th GST council meeting, itwas finally decided that the electronic waybill commonly known as e-way bill is in-troduced and will be applicable from 1st

February 2018 across the nation. However,the states can introduce any individualpattern of e-way bill in there own but it ismandatory to introduce the e-way bill inrespective states by the given deadline.

What to expect on GST front in 2018What to expect on GST front in 2018What to expect on GST front in 2018What to expect on GST front in 2018What to expect on GST front in 2018

There has been a major overhaul in the provi-sions of the GST regime that were initially intro-duced in the wake of practical problems facedby the tax payers. To counter this, at reasonableinterval of time, the GST Council meets to decideon course of action to be taken by the govern-ment to resolve the issue.

The GST common portal gst.gov.in is a commonplatform for all the GST related issues and vari-ous practical issues are being experienced whileworking on GST common portal. It is desirablethat in the upcoming year all the utilities on theGST portal are being implemented after beingthoroughly tested before and thereafter the indus-try is mandatorily required to comply with it.

GST


Further,matching insistence should become op-erative however, it is expected that only for abovea threshold limit of say Rs. 10,000 of credit, thematching requirement must be applicable andbelow the threshold the matching requirement canbe done away with.

With respect to the non-taxable supplies, it is ex-pected that the same should be kept outside theambit of ‘exempt supplies’ as well as ‘aggregateturnover’. Inclusion of non-taxable supplies inaggregate turnover results in an effectively lowerlimit for composition levy as well as for thresholdexemption. Further, when a supply is non-taxable,it should not affect the taxability indirectly by af-fecting the threshold exemption and compositionscheme.

The Government is expected to come out withclarifications that are desirable on some majordebatable issues. For instance, in terms of para6 Schedule III of the CGST Act, Actionable Claimsother than lottery, betting and gambling is nei-ther be treated as a Supply of Services nor sup-ply of goods. Actionable claim has been definedunder the CGST Act to have the meaning assignedto it under Transfer of Property Act, 1882. Accord-ingly, it can be inferred that secured debt wouldget excluded from the definition of ActionableClaims. Thus,becoming eligible to GST whichmay be subject matter of dispute in future if notclarified timely by the Government. Further, as-signment / securitization transactions are trans-actions in money being assignment of loan re-ceivables. Taxing such transactions would meaneither taxing a loan transaction or taxing interestthereon. Countries worldwide like Canada, Ma-laysia, United Kingdom, Singapore, Australia etc.have specifically kept securitization transactionsoutside the indirect tax regime. Hence, suitableclarification must be provided on these issues.

GST helpdesks have been a boon for resolvingtransitions, registration etc. issues/ queries and ishelping one and all with smooth transition to GSTregime. Considering the bulk of enquiries madeto the help desks, it is also likely that additionalmanpower shall be deployed for resolving que-ries/ issues, reducing call/ email revert time tohelp keep up the good work undertaken by GSThelpdesk. An assistance provided by properlytrained officials will add to the smooth function-ing of the GST helpdesk and providing specificanswers to the queries/ issues as against beingreferred to GST Acts, Rules, FAQs etc.

What is needed to be done further?What is needed to be done further?What is needed to be done further?What is needed to be done further?What is needed to be done further?

1 .1 .1 .1 .1 . A thorough study of the problemsA thorough study of the problemsA thorough study of the problemsA thorough study of the problemsA thorough study of the problemsarising from the implementation ofarising from the implementation ofarising from the implementation ofarising from the implementation ofarising from the implementation ofGST in every industryGST in every industryGST in every industryGST in every industryGST in every industry

In order to develop an efficient and effec-tive taxation system, it necessary on thepart of the government to understandvarious facets of the Industry. This wouldinclude analyzing the industry impact con-sidering the global situation of the prod-uct / service along with the impactonmajor vendors and customers.

2 .2 .2 .2 .2 . Establishing an expert committeeEstablishing an expert committeeEstablishing an expert committeeEstablishing an expert committeeEstablishing an expert committeerepresenting every industry whorepresenting every industry whorepresenting every industry whorepresenting every industry whorepresenting every industry whocould then report to the GSTcould then report to the GSTcould then report to the GSTcould then report to the GSTcould then report to the GSTAdvisory councilAdvisory councilAdvisory councilAdvisory councilAdvisory council

The industry specific provisions can bemonitored and reviewed only by expertsbelonging from the said industry. An ex-pert committee representing each indus-try shall contribute towards bringing a lotof positive changes favorable for the tax-payers.

3 .3 .3 .3 .3 . Detailed Industry guides to be issuedDetailed Industry guides to be issuedDetailed Industry guides to be issuedDetailed Industry guides to be issuedDetailed Industry guides to be issuedto keep the industry player abreastto keep the industry player abreastto keep the industry player abreastto keep the industry player abreastto keep the industry player abreastof the changing provisions andof the changing provisions andof the changing provisions andof the changing provisions andof the changing provisions andscenariosscenariosscenariosscenariosscenarios

This would assist the tax players in gettingsolutions to their trade specific queries andconcerns at a micro level.The same willserve as a guide to taxpayers in relationto GST matters from the point of view of aspecific industry or sector.

4 .4 .4 .4 .4 . Helping multi lateral organizationsHelping multi lateral organizationsHelping multi lateral organizationsHelping multi lateral organizationsHelping multi lateral organizationsand professional bodies like SIDBI,and professional bodies like SIDBI,and professional bodies like SIDBI,and professional bodies like SIDBI,and professional bodies like SIDBI,ICAI, ICSI etc to train professionalsICAI, ICSI etc to train professionalsICAI, ICSI etc to train professionalsICAI, ICSI etc to train professionalsICAI, ICSI etc to train professionalswho can assist the taxpayers in ful-who can assist the taxpayers in ful-who can assist the taxpayers in ful-who can assist the taxpayers in ful-who can assist the taxpayers in ful-fi l l ing their obligations.fil l ing their obligations.fil l ing their obligations.fil l ing their obligations.fil l ing their obligations.

The lack of knowledge and expertise canonly be filled up by providing necessarytraining and guidance to these profes-sional, who are responsible for assistingand carrying out the various obligationon behalf of the taxpayers. In order to getacquainted with GSTN and related pro-cedures, an optional access can be pro-vided to the interested assessees to helpthem with training and understanding ofGSTN systems.

GST


5 .5 .5 .5 .5 . Conducting detailed surveys onConducting detailed surveys onConducting detailed surveys onConducting detailed surveys onConducting detailed surveys onproblems being faced by the taxproblems being faced by the taxproblems being faced by the taxproblems being faced by the taxproblems being faced by the taxpayers and their probable solutionspayers and their probable solutionspayers and their probable solutionspayers and their probable solutionspayers and their probable solutions

In order to support smooth transition andensure reduced litigations, the problemsfaced at the operational level must beexamined. This shall also help in address-ing the concerns and taking suitable stepsin this regard. Further, conductingfrequentGST audit on the basis of the datagenerated on a quarterly basisshall keepa check on the effectiveness of the taxsystem.


GST is a new law but existing industry practices

are old, time tested and designed as per existinglaws to get the maximum benefit. Each businessprocess has its own function and bearing on thetax liability of a business. For a business to adaptand cope up with the changing horizons they needto change in a way that makes a business insu-lated from the heat and cold showers of GST.Hence, a critical look at each and every businessprocess must be taken, keeping GST law in con-sideration and make necessary changes to getthe best out of GST. As a whole, the Indianeconomy is expected to be benefitted in the longterm since GST will bring a more transparent andtax compliant structure resulting in generation ofmore revenue to the government as well asbenefits to the business, industry and consumers.

(F(F(F(F(Footnotes)ootnotes)ootnotes)ootnotes)ootnotes)1 http://cbec.gov.in/resources//htdocs-cbec/press-release/Fresh%20Press%20note%20on%20GST%20Rev.%20Fif.%20for%20July%2017.pdf2 http://cbec.gov.in/resources//htdocs-cbec/press-release/CBEC%20Press%20release%20dt.%2026.09.2017%20on%20GST%20FIG.%20SEPTEMBER%2017.pdf3 http://cbec.gov.in/resources//htdocs-cbec/press-release/CBEC_Press%20_Release_dt24.10.2017 GST_Revenue_Figures_as_on_2

3rd October 2017%20.pdf4 As on 18th December, 20175 http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-5-central-tax-english.pdf6 http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-37-CGST-rate-english.pdf7 http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-8-central-tax-english.pdf8 http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-46-cgst-english.pdf9 http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-38-cgst-rate-english.pdf10 http://w

ww.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-65-central-tax-english.pdf11 http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-66-central-tax-english.pdf12 http://www.cbec.gov.in/resources//htdocs-cbec/press-release/CBEC_Press_Release_dt_16.11.2017

after_on_GST%20Rate_Changes.pdf13 http://www.cbec.gov.in/resources/htdocs-cbec/gst/adv_GST.pdf14 http://www.cbec.gov.in/resources//htdocs-cbec/press-release/

CBEC_Press_Release_dt_16.12.2017_on_Interstate_E-Way_Bill.pdf

GST


ACAENew Members

1. CA Puja Agarwal L 1357

2. Dr. Dilip Kr. Datta L 1358

3. CA Bhabataran Maji L 1359

4. Ms. Rachna Jaiswal L 1360

5. CA Rajni Lath L 1361

6. Mr. Manoj Kataruka L 1362

7. CA Lalit Kumar Shroff L 1363

8. CA Praveen Kumar Shroff L 1364

9. CA Bishnu Kant Agarwal L 1365 *

10. CA Rahul Sureka L 1366

11. CA Ravi Sarda L 1367

12. CA Abhijit Pathak G 1368

13. CA Amit Saraf L 1369

14. Mr. Mrityunjoy Seal L 1370 *

15. CA Mukesh Khandelwal L 1371

16. CA Adarsh Rathi L 1372

17. CA Harsh Satish Udeshi L 1373 *

18. CA Ramakant Sureka L 1374

19. CA Om Prakash Dokania L 1375*

20. CA Partha Pratim Ghosh L 1376

21. CA Sourabh Mitra L 1377

22. CA Amita Mundra L 1378

NEW MEMBERS ENROLLED : APRIL, 2017 TO MARCH, 2018

Sl.No. Name Membership No.

23. CA Sushil Kr. Agrawal L 1379

24. Mr. Ritesh Kr. Agarwal L 1380

25. Mr. Kaushik Gangwal L 1381

26. CA Kamlesh Kumar Agarwal L 1382

27. CS Ghanshyam Saraf L 1383 *

28. CA Rishabh Jain L 1384

29. CA Vivek Chiraniya L 1385

30. CA Aditya Chirimar L 1386

31. CA Vinod Kr. Khetan L 1387

32. CA Gagan Kedia L 1388

33. CA Rajiv Kr. Agarwal L 1389

34. CA Gurjot Singh Gulati G 1390

35. Ms. Priti Kanoria L 1391 *

36. CA Abhijit Bandyopadhyay L 1392 *

37. Mr. Ajay Kumar Joshi L 1393

38. CA Vidyut Sethi L 1394

39. CA Debayan Patra L 1395

40. CA Lata Saraogi L 1396

41. Mr. Kailash Dhanuka L 1397

42. CA Piyush Chirania L 1398

43. CA Ajay Kumar Tekriwal L 1399

44. CA Gurjot Singh Gulati L 1400 *

45. CA Prabir Kumar Biswas L 1401 *

* Conversion from General to Life Membership Conversion from General to Life Membership Conversion from General to Life Membership Conversion from General to Life Membership Conversion from General to Life Membership

Sl.No. Name Membership No.


ACAENOTE


ACAEACAE Application Form for Membership


ACAEA L B U M

ACAE – ALBUM

Interactive Session with Dr. Parthasarathi Shome, Chairman, International Tax Research and Analysis Foundation, Bangalore and Visiting Fellow, Faculty of Law-Taxation, London School of Economics, London on Direction of Economic and Fiscal Policies – Recent Trends on 19.01.2018 at ACAE, Emami Conference Hall

President CA Arun Kr Agarwal, Chairman-International Tax Research and Analysis Foundation, Bangalore, Dr. Parthasarathi Shome, Vice President CA Vasudeo Agarwal and General Secretary CA Jitendra Lohia

Workshop on 16.09.2017 on GST at ACAE Emami Conference Hall

L-R : Guest Speakers CS T B Chatterjee, CA Tarun Kr. Gupta, Mr. Khalid Aizaz Anwar, Senior Joint Commissioner (WBGST) and CA Pramod Kr. Mundra, Past Convenor.

Lecture Meeting on Recent Amendment in Companies Act, 'Struck-off' Companies, Disqualification of Directors, Condonation of

Delay Scheme, 2018 (CODS Scheme) on 10.01.2018 at ACAE, Emami Conference Hall

Felicitation of Guest Speakers CA Nitesh More and CS Deepak Kr. Khaitan

Guest Speaker CA Veena Hingarh giving her deliberations

Lecture Meeting on Forensic Audit on 12.01.2018 at ACAE, Emami Conference Hall

Programme for Articles/Students on (1) Mastering Emotional Intelligence (2) Important Deductions under Chapter VIA of Income-Tax Act, 1961 on 13.01.2018 at ACAE, Emami Conference Hall

Guest Speaker CA Niraj Agrawal, CA Pramod Kr Mundra, Chairman-Students & New Members Sub-Committee and Guest Speaker -An Article Mr. Amit Sureka


ACAEA L B U M

Workshop on Goods and Services Tax (GST). (1) E-Way Bill. (2) Practical Issues in Exports and Refunds, (3) ITC and Reversal thereof under GST alongwith practical workings on 30.01.2018 at ACAE, Emami Conference Hall

Watch Live Telecast of Union Budget – 2018 with Panel Discussions on 01.02.2018 at ACAE, Emami Conference Hall

Panelist CA S S Gupta, President CA Arun Kr Agarwal, Panelist CA Pulak Kr Saha and Convenor of Study Circle CA Anup Kr Sanghai

Programme for Articles / Students on Provisions of Tax Deducted at Source under Income-Tax Act, 1961 on 10.02.2018 at ACAE Emami Conference Hall

One of the students presenting a memento to Guest Speaker CA R R Modi

Special Invitee Shri J B Dutta, Assistant Commissioner, GST Nodal Officer,Kolkata Zone giving his deliberations. Others on the dais Guest Speakers CA Vikash Parakh, CA Amit Jain, and CA Rajeev Agarwal.

General Secretary CA Jitendra Lohia, Guest Speakers CA K R Sekar, Partner, Deloitte Haskins and Sells LLP, Bengaluru, Shri N K Poddar, Sr. Advocate, Supreme Court of India, President CA Arun Kr Agarwal, Guest Speaker Shri Shailesh P Sheth, Advocate,SPS Legal, Mumbai and Convenor of Study Circle CA Anup Kr Sanghai

Seminar on Union Budget – 2018 on 03.02.2018 at Vidya Mandir


ACAEA L B U M

Panel Discussion on E Way Bill – Issues and Challenges on 13.02.2018 at Kala Kunj

Lecture Meeting on (1) Examining Benami Transactions in the backdrop of Zero Tolerance to Black Money. (2) Income Computation and Disclosure Standards – A Critical Analysis on 16.02.2018 at BCCI

Cross-section of the participants

Lecture Meeting on Relevance of Common Law in Income-Tax Proceedings on 27.02.2018 at ACAE, Emami Conference Hall

Panelists CA Rip Das, Eminent Tax Consultant, Shri Khalid Aizaz Anwar, Sr. Joint Commissioner, Adv N D Saha, Chairman, All India Federation of Tax Practitioners (EZ), Moderator CA Arun Kr Agarwal, Shri Santosh Saraf, Past President, MCCI, Logistics Industry, CA Shagun Tulsyan, Head - Indirect Taxation, Emami, FMCG Industry

Convenor CA Anup Kr Sanghai, Guest Speaker CA (Dr.) Girish Ahuja, Delhi, President CA Arun Kr Agarwal and Guest Speaker CA S S Gupta

Guest Speaker CA Ramesh Kr Patodia giving his deliberations


ACAEA L B U M

Panel Discussion on Swift Transactions – Cause, Effect, Risks and Audit on 06.03.2018 at ACAE, Emami Conference Hall

Moderator CA Vivek Agarwal along with Panelists Mr. Prafulla Kr Dash, Dy. General Manager, Zonal Head-Commercial Banking EZ, ICICI Bank, Kolkata, CA Tushar Kanti Basu, Partner, Gosh Basu & Associates, Kolkata, and Mr. Bijitendra Mondal, Assistant General Manager, UCO Bank, FCC IEP Kolkata

Programme for Articles/Students on Supply, Composition Scheme and Reverse Charge under GST on 10.03.2018 at ACAE, Emami Conference Hall

Articles & Students listening attentively to the deliberations by Guest Speaker CA Pramod Dayal Rungta

Lecture Meeting on (1) Issues in Accounts & Audit in Companies Amendment Bill, 2017, (2) Valuation Rules under Income-Tax Act, 1961 on 13.03.2018 at ACAE, Emami Conference Hall

Programme for Articles/Students on Time and Place of Supply under GST on 17.03.2018 at ACAE, Emami Conference Hall

Guest Speaker CA Pradeep Modi giving his deliberations.

Guest Speakers CA K K Chhaparaia and

CA (Dr.) Debashis Mitra


ACAEA L B U M

Lecture Meeting on (1) Audit Quality & Oversight on Profession : Root Cause Analysis and Emerging Legislation. (2) NFRA and its impact on 17.03.2018 at R Singhi Hall, EIRC Auditorium

Convenor ACAE Study Circle, CA Anup Kr Sanghai, Guest Speaker CA (Dr.) Debashis Mitra, President CA Arun Kr Agarwal and Guest Speaker CA P R Ramesh, Partner, Deloitte Haskins & Sells LLP, Mumbai

On the dais invitees Chairperson-EIRC CA Sonu Jain, Central Council Members-ICAI CA Sushil Kr Goyal, CA Ranjeet Kr Agarwal and CA (Dr.) Debashis Mitra (Guest Speaker) and President ACAE CA Arun Kr Agarwal

Workshop on Stress Management (1) Counselling – The Talking Remedy, (2) New Techniques and Life Skills on 20.03.2018 at ACAE Emami Conference Hall

Seminar on Audit of Banks. 1 (i) CBS Controls – Its impact on Financials (ii) Analysis of CBS Reports for NPAs & Frauds. (2) (i) Audit of Advances including Restructuring of Advances (ii) Long Form Audit Report (iii) RBI Circulars on Advances issued during recent months including Master Circular on Advances. (3) Critical System related issues involved in Bank Audit including SWIFT Transactions on 22.03.2018 at Kala Kunj

Glimpses of Cororate Stress Buster organised on 10th February, 2018 at SangVi Camac Street Studio

Guest Speaker Ms. Nivedita Bhattacharjee, President CA Arun Kr Agarwal, Guest Speaker Ms. Saroj Agarwal and General Secretary CA Jitendra Lohia

General Secretary CA Jitendra Lohia welcoming the Guest Speakers. On the dais, Convenor ACAE Study Circle, CA Anup Kr Sanghai, Guest Speaker Prof. Arif Ahmed, FCA, Director, South-Asian Management Technologies Foundation, Kolkata, CA D S Premnath, Partner, C Ramachandram & Co., Hyderabad, and CA Dipankar Chatterji, Sr. Partner, L B Jha & Co., Kolkata.


ACAEA L B U M

ET Bengal Corporate Awards presented by ACAE celebrated its sixth year on 16th March, 2018 at The Taj Bengal, Kolkata

(L-R) Dignitarires CA P R Ramesh,Chairman-Deloitte India, CA Jinesh S Vanzara,ACAE Chairman-ET Bengal Corporate Awards Committee, CA Arun Kr Agarwal, President - ACAE, Dr. Amit Mitra,Guest of Honour, MIC of Finance, Industry and Commerce, Govt. of WB, Mr. Javed Sayed, Deputy Executive Editor, The Economic Times and Mr. Ashok Sen., Associate Vice President, The Times Group, light the Inaugural Lamp.

Dr. Amit Mitra sharing a brief report card on the state's progress.

CA Arun Kr Agarwal, giving his speech.

President - ACAE

Dr. Amit Mitra confers the Indian Visionary Award on Mr. Kishore Biyani, Founder & Group CEO, Future Group.

Mr. Sanjiv Goenka, Chairman RP Sanjiv Goenka Group, confers the Lifetime Achievement Award on Mr. S K Roy, Managing Director, Peerless General Finance & Investment Co. Ltd (receiving on Mr. Roys behalf CFO Mr. A K Mukhuty)

A Glimpse of Inter-CA Study Circle Cricket Tournament on 14.01.2018 at Space Circle

Participating Teams

lACAE CA Study Circle – EIRClCentral Kolkata CA Study Circle – EIRC lVIP Road CA Study Circle – EIRClDTPA CA Study Circle – EIRC lVitta Salahkar CA Study Circle – EIRC

·

Co-ordinating Study Circle – ACAE Chartered Accountants' Study Circle – EIRC

VIP CA Study Circle – EIRC won the match and the Runner up – Central Kolkata CA Study Circle – EIRC.

CA Pramod Kr Mundra, Chairman – Sports Sub-Committee

lViews Exchange CA Study Circle – EIRC

H O U S E J O U R N A LH O U S E J O U R N A L

TE AA DR VO IP SR EO RC SF &O EN XO EI

CT

UAI TC IVO ES SSA

ACAE

Work is Worship

ESTD. 1960

6, Lyons Range, 3rd Floor, Unit - 2, Kolkata - 700 001Phone : +91-33-2210-7724Telefax : +91-33-4060-8353E-mail : [email protected] : www.acaekolkata.org

At a glance - Annual Picnic at Panchmukhi Residency, Badu Road, Kathore More, Madhyamgram on 21st January, 2018

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