Major GST Proposals Announced in Union Budget 2023-24

Feb 03, 2023

The indirect tax proposals announced by the Finance Minister Nirmala Sitharaman aim to reduce tax burden and improve tax administration. On the customs front, several rates have been rationalised. Some of the major proposals of the Finance Bill under the GST law have been summarised below

GST

Input Tax Credit cannot be claimed on goods/services used for CSR activities: Budget 2023

Feb 02, 2023

The Budget on Wednesday proposed certain amendments in GST Act and said that input tax credit cannot be claimed on goods/ services used or intended to be used for Corporate Social Responsibility (CSR) activities. The amendments in the Central GST Act has been brought through the Finance Bill, 2023.

The amendments propose to decriminalise certain offences under the indirect tax law and double the threshold for launching prosecution under the tax law to Rs 2 crore. It, however, retained the limit at Rs 1 crore for fake invoicing cases.

GST

How to resolve mushrooming GST disputes

Jan 25, 2023

The Goods and Services Tax (GST) was introduced with a stated objective to rationalise the indirect tax ecosystem of India creating a common national market for goods and services. ‘Ease of doing business’, economic growth and price rationalisation were the cornerstones of this ‘one nation-one tax’ initiative. The success and effectiveness of tax reforms largely depend upon a robust dispute settlement system, which caters to efficiency in the disposal of disputes, while keeping litigation costs low.

Under GST, disputes arise from differences in tax paid by the assessees and the computation of tax liability by authorities. Such tax disputes can arise due to various reasons during assessment, audit and/or scrutiny of records/accounts, viz. rate of tax, a claim of tax exemption, the claim of an input tax credit, incorrect determination of place of supply, nature of supply (composite or mixed supply), classification of goods and services, etc. While GST is touted to remedy the proliferation of tax disputes and simplify tax administration, early experiences point to the contrary.

GST

Jan 25, 2023

Recently, a functionality of "Automated Drop Proceedings" of GSTINs suspended due to non-filing of returns has been implemented on the GST Portal. This functionality is available for the taxpayers who have filed their pending returns i.e. 6 monthly or 2 Quarterly returns.

If such taxpayers have filed all their pending returns, the system will automatically drop the proceedings and revoke suspension.

If the status of the GSTIN does not automatically turn ‘ACTIVE’, then taxpayers are advised to revoke the suspension once the due returns have been filed, by clicking on ‘Initiate Drop Proceeding’ for which navigation is as follows:

"Log on to GST Portal > Services > User Services > View Notices and Orders > Initiate Drop Proceeding"

In case the system does not automatically drop the proceedings or taxpayer is unable to revoke the suspension by clicking on ‘Initiate Drop Proceeding’, then taxpayer is advised to contact Jurisdictional Officer.

GST

Direct recovery of GST in case of discrepancies between GSTR-1 and GSTR-3B

Jan 18, 2023

As an outcome of the recent 48th GST council meeting, the manner of dealing with difference in liability reported in statement of outward supplies (GSTR-1) and that reported in return (GSTR-3B) has been codified in the form of Rule 88C of the CGST Rules. This rule is likely to affect the taxpayers in case of any discrepancies between the supplies reported in GSTR-1 and GSTR-3B. The onus will be on the taxpayers to ensure compliance.

The first question that arises in mind is whether this rule has got a statutory backing. The answer to this question apparently seems to be a yes. Section 75(12) of the CGST Act provides for direct recovery of unpaid or short-paid self-assessed tax as per GSTR-3B without following the demand procedures laid down under the CGST Act.

GST

New Income Tax Return Forms for AY 2023-24 notified by CBDT: ITR 1-6, ITR-V details here

Feb 15, 2023

New ITR forms for AY 2023-24: New Income Tax Return (ITR) filing forms for individuals and businesses for Assessment Year 2023-24 (FY 2022-23) have been notified by the Income Tax Department. Through a notification dated February 10, the Central Board of Direct Taxes (CBDT) notified ITR forms 1-6, ITR-V (verification form) and ITR acknowledgement form. (Read: What’s new in New ITR forms)

Income Tax

Feb 15, 2023

New UTR (Unique Transaction Reference) forms for AY 2023-24: The Income Tax Department has notified Income Tax Return forms (ITR 1-6) and Income Tax verification form (ITR V) for the assessment year 2023-24. These forms will be used for return filing for income made in FY 2022-23.

The last date for ITR filing for AY 2023-24 is July 31. The tax department has notified the ITR forms for AY 2023-24 early compared to previous years. Last year, the CBDT notified the forms for AY 2022-23 on March 30.

Income Tax

Budget 2023 proposal for Angel tax on non-resident investments is problematic

Feb 14, 2023

If we ran a poll on the most oft-quoted reactions by tax professionals to the Finance Minister’s Union Budget Speech each year, the adage ‘the devil is in the detail’ is likely to figure high. While this year’s budget overall appears to be well-balanced though walking a tight rope between continuing an economic stimulus through capital expenditure spends and fiscal prudence, after going through the fine print of the tax proposals, we found the inevitable devil in the proposed amendment to the so-called ‘Angel tax’ provisions.

The deemed income provisions (under Section 56(2)(viib) of the Income-tax Act, 1961) require Indian companies to offer to tax, any consideration received on allotment of shares with share premium in excess of the fair value of the shares (as per prescribed tax rules). As they currently stand, the provisions can apply to Indian companies raising funds only from resident investors, but the budget proposes that their application should be tested irrespective of whether the investor is a resident or a non-resident. The provisions were introduced as anti-abuse rules that were meant to curb money laundering arrangements

Income Tax