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The Comptroller and Auditor General (<keyword id="19900713" type="General" weightage="20" keywordseo="CAG" source="keywords">CAG</keyword>) has asked the <keyword id="19900485" type="General" weightage="20" keywordseo="Finance-Ministry" source="keywords" meta.keywordsubtype="org" meta.entityname="Finance Ministry" meta.hostid="153" meta.entityid="Finance Ministry">Finance Ministry</keyword> to identify <keyword id="22837132" type="General" weightage="20" keywordseo="high-risk-taxpayers" source="keywords">high risk taxpayers</keyword> in the <keyword id="20981418" type="General" weightage="100" keywordseo="GST-composition-scheme" source="keywords">GST composition scheme</keyword> on a periodical basis and verify from other sources, including third parties, their declared <keyword id="22837745" type="General" weightage="20" keywordseo="value-of-sales" source="keywords">value of sales</keyword> to check <keyword id="20121097" type="General" weightage="20" keywordseo="tax-evasion" source="keywords">tax evasion</keyword>. Based on an analysis of 8.66 lakh composition taxpayers under the central jurisdiction between 2019-20 to 2021-22 fiscals, the Comptroller and Auditor General (CAG) found that a significant number of <keyword id="19951327" type="General" weightage="20" keywordseo="gst" source="keywords">GST</keyword> taxpayers have a high risk of crossing the <keyword id="22837744" type="General" weightage="20" keywordseo="turnover-threshold" source="keywords">turnover threshold</keyword> for composition levy scheme (CLS). These high risk taxpayers were identified by audit from the data contained in GST returns viz. GSTR-4A, GSTR-7 along with third party data sources such as IT returns, 'Vahan' database etc. The GST composition scheme is available to taxpayers whose aggregate turnover, in the preceding financial year, has not exceeded Rs 1.5 crore. For taxpayers in special category states, this limit is Rs 75 lakh. The CAG said two major risk areas in respect of CLS taxpayers are under-declaration of the 'value of outward supply' by the taxpayers to continue in the scheme; and non-fulfillment of eligibility conditions for availing CLS. The audit also observed that there were certain CLS taxpayers who were continuing in the Scheme despite not fulfilling the eligibility criteria prescribed in the Act and the Rules, and a substantial number of CLS taxpayers were not discharging their obligatory responsibilities of filing returns and payment of tax under reverse charge. "The Ministry should identify high risk taxpayers in the CLS on a periodical basis using a risk-based approach and verify their declared value of outward supply from other sources including third parties to minimize the possibility of misuse by ineligible persons," the CAG said in a report tabled in Parliament recently. The official auditor also suggested that the Finance Ministry may develop a system of identifying ineligible taxpayers and take action to exclude them from the CLS in order to prevent misuse of the intended benefits of the scheme.

Finance Ministry should identify high risk taxpayers in GST composition scheme: CAG

<ul><li>The <keyword id="19955368" type="General" weightage="100" keywordseo="Budget-2024" source="keywords">Budget 2024</keyword> will be tabled by the finance minister Nirmala Sitharaman on July 23.</li><li>The tech and electronics industry’s expectations from the Budget 2024 include a push for localisation, <keyword id="20335594" type="General" weightage="20" keywordseo="reduced-GST" source="keywords">reduced GST</keyword> and more.</li><li>Here are the key expectations from the tech and electronics industry from Budget 2024.</li></ul> The Budget 2024 is set to be tabled on July 23 by the finance minister Nirmala Sitharaman and like each sector, the Indian tech and electronics industry is ready with its list of expectations from the Narendra Modi-led government in the upcoming budget. The Indian government has been pushing for an increase in electronics manufacturing in India with schemes like Make in India and the Production Linked Incentive (PLI) scheme. This article delves into the key budget expectations of the tech and electronics industry in India. <h2><keyword id="19869633" type="General" weightage="20" keywordseo="Budget-2024-expectations" source="Orion">Budget 2024 expectations</keyword></h2>In the last budget, the government had reduced taxes on key smartphone components such as camera lenses and lithium-ion batteries. This move was aimed at boosting smartphone production in India and bringing the costs down. Companies and consumers both will hope for similar boosts in the upcoming budget as well. <div type="Article" hostid="261" msid="111573138" title="Union Budget 2024: When will it be presented, what time, where to watch and what are various sectors expecting?" mstype="2" mssubtype="0"></div> The <keyword id="19981334" type="General" weightage="20" keywordseo="PLI-scheme" source="keywords">PLI scheme</keyword> has played a key role in boosting domestic production in various sectors. The introduction of a revamped PLI scheme for the manufacture of various consumer technology products such as smartphones, laptops, wearables and more will give a good boost to domestic production. “Guided by Aatmanirbhar Bharat, we seek government support for extensively localizing component production, fostering a lucrative environment where homegrown brands can lead globally. Incentivizing domestic production through tax breaks, subsidies, and R&amp;D funding will enhance India's manufacturing capabilities,” said Amit Khatri, co-founder, Noise. Industry leaders are hoping for steps aimed at boosting the disposable income of consumers. “Higher disposable incomes will lead to a promising growth impetus. We look forward to a budget that will create a stable and growth-oriented tax environment, which will help in ease of doing business, and will lead to increased economic activity and demand generation,” said Pradeep Bakshi, chief executive officer, Voltas. Companies are also hoping for simplified GST rules and reduced GST rates. In one such instance, TV makers are hoping for a reduced GST rate for TVs sized above 32 inches. “One expected move is reducing the GST rate on LED TVs larger than 32-inches from 28% to 18%. This change aims to boost consumer spending in the electronics sector. Expanding PLI schemes to include smart TVs, refrigerators, and washing machines is also important for market growth and improving manufacturing capabilities,” said Avneet Singh Marwah, chief executive officer, Super Plastronics. In addition to measures aimed at boosting domestic production, companies are also hoping for antidumping duties to ensure fair competition with Chinese companies. "While the government has made significant strides in supporting Indian manufacturers through initiatives like the 'Made in India' campaign and the PLI scheme, there is a pressing need to level the competitive playing field. Anticipations include measures such as antidumping duties to ensure fair competition against Chinese and other international companies in the industry,” said Imran Kagalwala, co-founder, UNIX India. SEE ALSO: <a href="https://www.businessinsider.in/budget/news/economic-survey-2024-public-sector-investment-drives-infrastructure-growth-but-private-investment-needed/articleshow/111927594.cms">Economic Survey highlights public sector investment's role in driving infra growth; Underlines need for private sector to step up</a> <a href="https://www.businessinsider.in/budget/news/budget-2024-expectations-fame-scheme-aid-for-vehicle-scrapping-and-other-expectations-of-the-auto-industry/articleshow/111783199.cms">Budget 2024 Expectations: FAME scheme, aid for vehicle scrapping and other expectations of the auto industry</a> <a href="https://www.businessinsider.in/budget/news/budget-2024-key-sustainability-and-energy-initiatives-that-indian-government-plans-to-implement-this-year/articleshow/111917956.cms">Budget 2024: Key sustainability and energy initiatives that Indian government plans to implement this year</a>

Budget 2024 expectations – PLI scheme to GST reduction, budget expectations from the tech industry

With the 2024 general elections handing the <keyword id="19894848" type="General" weightage="20" keywordseo="BJP" source="keywords" meta.keywordsubtype="org" meta.entityname="BJP" meta.hostid="261" meta.entityid="BJP">BJP</keyword> and its allies a fractured, albeit ruling majority in the country for the third consecutive time, India is now gearing up for the 2024–25 <keyword id="19908389" type="General" weightage="20" keywordseo="Union-budget" source="keywords">Union budget</keyword>, which will be presented on July 22 between 11 am and 1 pm. The <keyword id="20613906" type="General" weightage="20" keywordseo="economic-survey" source="keywords">economic survey</keyword> is traditionally presented the day before. However, as per reports, the economic survey is likely to be released on July 3rd this year. The famous halwa ceremony will take place 10 days before the budget is tabled. Pre-budget consultations will begin on June 17th. FM <keyword id="19916618" type="General" weightage="20" keywordseo="Nirmala-Sitharaman" source="keywords">Nirmala Sitharaman</keyword> will become the first finance minister to have presented seven straight budgets, a record previously held by <keyword id="238033" type="General" weightage="20" keywordseo="Morarji-Desai" source="Orion">Morarji Desai</keyword>, who had six consecutive budget presentations to his name. To date, Sitharaman has tabled five full and one interim budget. The first parliamentary session under Modi 3.0 will kick off on June 24, and the 264th session of the parliament will take place between the 27th of June and the 3rd of August. The year is set to see two budgets: one full-fledged budget in July and an interim budget presented on February 1, 2024. <cmsannotation type="cmsannotation" annotationid="What can we expect from this budget?" comment="subhead" text="What can we expect from this budget?">What can we expect from this budget?</cmsannotation> Presenting an interim budget is customary during election years in India since it facilitates the transfer of work and finances between the outgoing and incoming governments. With the upcoming budget, PM Modi’s government will largely focus on tackling unemployment, issues in the agriculture sector, and maintaining the flow of capital expenditure in the economy. The simplification of the <keyword id="19993914" type="General" weightage="20" keywordseo="GST-regime" source="keywords">GST regime</keyword> and rolling out the 3rd edition of the <keyword id="20359761" type="General" weightage="20" keywordseo="FAME-scheme" source="keywords">FAME scheme</keyword> (Faster Adoption &amp; Manufacturing of Electric Vehicles) will also rank highly on the budget agenda. In that stead, a meeting of the GST council is also scheduled to take place on June 22nd. Additionally, experts are also anticipating the expansion of the PLI (production-linked incentives) schemes in this budget to include other sectors as well. <cmsannotation type="cmsannotation" annotationid="Lesser-known budget milestones" comment="subhead" text="Lesser-known budget milestones">Lesser-known budget milestones</cmsannotation> Till 2019, the union budget was carried in a briefcase, a practice initiated by India’s first FM, Sir RK Shanmukham Chetty. In 2019, the budget was presented as a traditional bahi-khata for the first time. It went paperless in 2021 after the FM introduced the budget via a tablet. Apart from having presented most budgets, Sitharaman also holds the record for having delivered the longest budget speech while presenting the Union budget for 2020–21. She spoke for two hours and 42 minutes. On the other hand, India’s shortest-ever budget speech was given in 1977 by Hirubhai Patel.

Union budget 2024-25 : When will it be presented, what to expect and more

The <keyword id="6355040" type="General" weightage="80" keywordseo="gst-council" source="Orion">GST Council</keyword> is likely to introduce an 18 per cent tax rate on corporate guarantees extended by parent companies to their subsidiary firms for getting loans from banks, according to reliable sources. The issue was taken up by the <keyword id="6354679" type="General" weightage="100" keywordseo="gst" source="Orion">GST</keyword> Council's law committee during various meetings held recently. The law committee is of the view that extending a corporate guarantee is a related party transaction that is considered as a supply. The logic is that since supplies come in the 18 per cent GST bracket, this should also be applicable to corporate guarantees. The law committee has recommended adopting valuation rules in line with safe harbour rules under the <keyword id="6370810" type="General" weightage="20" keywordseo="income-tax-act" source="Orion">Income Tax Act</keyword> for providing corporate guarantees. Under these rules, in eligible international transactions, the minimum acceptable commission/fee is 1 per cent of the amount guaranteed. Therefore, it was proposed that there is a need to consider adopting the same in the case of related party transactions under GST as well. The final decision will be taken at the GST Council meeting on Saturday. A corporate guarantee is an arrangement among group companies by which a parent company agrees to act as a guarantor for a subsidiary company while securing credit facilities from a bank. These arrangements are executed either without any consideration or with a nominal commission on the loan amount. The GST Council is also expected to take up the issue on whether this 18 per cent GST should be levied on personal guarantee, as well given by promoters/directors for loans given by banks to a company. In the case of a personal guarantee, the law committee cited the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword>'s mandate which states that no consideration by way of commission, brokerage fees, or any other form could be paid to the director by the company, directly or indirectly, in lieu of providing a personal guarantee to the bank for borrowing credit limits. This appears to suggest that the 18 per cent GST is not strictly applicable in cases of personal guarantees.

GST Council likely to levy 18% tax rate on corporate guarantees for loans

<ul><li>Companies and firms with branches in different states now have a new headache to deal with – charging <keyword id="6354679" type="General" weightage="100" keywordseo="gst" source="Orion">GST</keyword> on salaries of their head office staff. </li><li>Experts suggest that this will effectively make salaries taxable under the purview of GST, which is in contradiction with the law. </li><li>This could also lead to a flurry of notices from the GST authorities, and litigation that can be avoided. </li></ul>The GST (Goods and Services Tax) regime requires firms to take separate registration for each state, and common expenses incurred by the head office, like marketing, advertising, legal services and travel expenses, for instance, are to be distributed to branch offices, usually based on their respective turnovers. Now, a <a href="https://economictimes.indiatimes.com/news/company/corporate-trends/aaar-ruling-on-salary-to-impact-head-office-branch-gst-dynamics/articleshow/88938019.cms">new tax ruling</a> says the same shall apply to salaries paid to head office employees for the services provided to branch offices. Essentially, if you are in the Delhi head office of a company and your <keyword id="10876" type="General" weightage="20" keywordseo="salary" source="Orion">salary</keyword> is ₹10,000 a month, your company has to say how much of the money paid to you is attributable to services rendered to, say, the Kolkata branch office. And, pay GST on that part of the salary. While the employees don’t have to worry about this, the finance team will have a new headache. Experts say this will create confusion and unnecessary litigation. “Salary is not under the purview of the GST law. This AAAR ruling essentially makes salaries taxable under GST, which is contradictory to the provisions of the law,” <keyword id="3183501" type="General" weightage="20" keywordseo="jatin-arora" source="Orion">Jatin Arora</keyword>, partner, <keyword id="3460452" type="General" weightage="20" keywordseo="phoenix-legal" source="Orion">Phoenix Legal</keyword>, told Business Insider. There was a <a href="https://taxguru.in/goods-and-service-tax/gst-implications-inter-unit-service-cost-cross-charges.html">similar ruling</a> from Karnataka Authority of Advance Ruling 2019. The union government had said that it would provide a clarification in this matter but nothing has come through so far. “As per Schedule I, only supply of goods and services between related parties would be subject to tax, whether with or without consideration. However, cost allocation is different from supply of service, and this would not fall under the purview of supply,” <keyword id="3063029" type="General" weightage="20" keywordseo="Abhishek-Rastogi" source="Orion">Abhishek Rastogi</keyword>, partner, <keyword id="908387" type="General" weightage="20" keywordseo="khaitan-co-" source="Orion">Khaitan &amp; Co.</keyword>, told Business Insider. He also further explained that this means that any cost allocation – in this case, salaries of head office staff – would not be taxable under GST. Maharashtra AAAR’s ruling is a result of a request filed by Cummins India, seeking clarity on whether it should charge GST on allocation of salaries of its head office staff to branches. “Due to this, there will be unnecessary confusion, leading to notices from the department and litigation,” Arora added, stating that the government should issue a clarification at the earliest to avoid a flurry of notices from the tax department to firms across the country. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/tesla-india-prospects-get-a-boost-as-states-compete-with-each-other-to-invite-elon-musk-to-their-backyard/articleshow/88890951.cms">Tesla India prospects get a boost as states compete with each other to invite Elon Musk to their backyard</a> <a href="https://www.businessinsider.in/stock-market/news/hcl-technologies-shares-down-7-as-employees-are-leaving-the-firm-at-a-faster-rate-than-ever-before/articleshow/88944681.cms">The street is dumping HCL Tech shares because its employees are leaving at a faster rate than ever before</a> <a href="https://www.businessinsider.in/policy/legal/news/can-you-claim-input-tax-credit-on-csr-expense-three-authorities-have-two-different-rulings/articleshow/86609122.cms">Can you claim input tax credit on CSR expense ⁠— three authorities have two different rulings</a>

GST on salaries? A new ruling can cause a lot of confusion and litigation

The new year 2022 is going to bring a significant change in the manner of availing <keyword id="6456395" type="General" weightage="20" keywordseo="input-tax-credit" source="Orion">Input Tax Credit</keyword> (ITC) by the taxpayers under the Goods and Services Tax Act. The additional condition to avail ITC by the recipient of goods/services introduced by the <keyword id="6374292" type="General" weightage="20" keywordseo="finance-act" source="Orion">Finance Act</keyword>, 2021 has been made effective from January 1, 2022. With the upcoming change, ITC on an invoice/debit note can be availed by a recipient only when details of such invoice/debit note have been furnished by the supplier in his outward supplies (GSTR-1) and such details have been communicated to the recipient of such invoice in Form GSTR-2B. Basically, a buyer will not get credit for the tax paid if the supplier does not upload the invoice and file returns on the <keyword id="6354679" type="General" weightage="20" keywordseo="gst" source="Orion">GST</keyword> portal in a timely manner. Henceforth, the taxpayer will not get the benefit of availing 5% provisional ITC as allowed under aforesaid rule. <cmsannotation type="cmsannotation" annotationid="Implications of the change on businesses" comment="subhead" text="Implications of the change on businesses">Implications of the change on businesses</cmsannotation> One of the major rigours of the above amendment is that it will increase the dependency of recipients on their suppliers for availing any ITC on their supplies. Unless the suppliers report their supplies over the GST portal aptly and the same is visible in their auto drafted GSTR-2B, the ITC on such supplies will not be available to the recipient even if other conditions for availing ITC have been duly satisfied. This brings in dual responsibility on the taxpayers, one to ensure correctness of their own compliances and second to also ensure correct compliances by their suppliers. And if they don’t do the same, they will be the one who will lose their legitimate ITC due to the fault of their suppliers. <cmsannotation type="cmsannotation" annotationid="How can businesses protect their ITC now? Vendor agreements." comment="subhead" text="How can businesses protect their ITC now? Vendor agreements.">How can businesses protect their ITC now? Vendor agreements.</cmsannotation> With such draconian provisions being brought in GST, it is imperative for the businesses to safeguard themselves by introducing such stringent and unwavering clauses in their vendor agreements which will protect them from any loss incurred by them due to failure on part of the supplier to upload invoices or incorrect uploading of invoices of supplies made to recipient under GSTR-1 or due to any other technical flaw and entitle them to offset or recover the same from such defaulting suppliers. <cmsannotation type="cmsannotation" annotationid="Civil suits in case of disagreements" comment="subhead" text="Civil suits in case of disagreements">Civil suits in case of disagreements</cmsannotation> Unless stringent clauses are incorporated in the vendor agreements, it will be difficult for the recipients to claim any remedy under GST law in case any such loss is incurred by them due to non-compliance of the supplies. Therefore, the last legal recourse that may be available to them will be to file civil suits for recovery which itself is a long-drawn process. <cmsannotation type="cmsannotation" annotationid="Improving in-house processes will be the key to ensure ITC is not lost" comment="subhead" text="Improving in-house processes will be the key to ensure ITC is not lost">Improving in-house processes will be the key to ensure ITC is not lost</cmsannotation> In order to avoid any such complexities, businesses should proactively build in-house processes for the relevant stakeholders such as accounts payable team, tax team, finance team etc. to ensure legitimate ITC is not lost. For instance, accounts payable team should ensure that payment for any invoice is not made unless the same is available on the GST portal. Likewise, the tax team should ensure that no ITC is taken on any invoice unless the same is appearing on the GST portal as this may result in denial of ITC later. <cmsannotation type="cmsannotation" annotationid="Other practical solutions to make sure businesses don’t lose ITC" comment="subhead" text="Other practical solutions to make sure businesses don’t lose ITC">Other practical solutions to make sure businesses don’t lose ITC</cmsannotation> Time to time reconciliations from the data available on portal before taking ITC, rigorous follow up with vendors for timely reporting of their invoices, email communications with the suppliers in case of non-reporting or misreporting, holding payments of non-compliant vendors, etc. are some of the practical solutions which can be implemented by the businesses at their end to ensure legitimate ITC without affecting cash flow of the company. <cmsannotation type="cmsannotation" annotationid="Concluding remarks" comment="subhead" text="Concluding remarks">Concluding remarks</cmsannotation> As a closing remark, it won’t be improper to state that having such restrictive provisions runs absolutely contrary to the intention behind introduction of the GST regime which was to eliminate the cascading impact of taxes that existed under the erstwhile regime and to allow free movement of credit. There is no denial that the government must combat bogus invoicing but while doing so it should not harass bonafide taxpayers by increasing compliance burden on them. Note: This is an opinion piece by CA Tushar Aggarwal, Founder Partner Tattvam Advisors &amp; CA Geetika Shrivastava, Executive Partner Tattvam Advisors. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/heres-how-to-avail-gst-credit-if-your-supplier-has-not-uploaded-invoices/articleshow/81145678.cms">Here’s how to avail GST credit if your supplier has not uploaded invoices</a> <a href="https://www.businessinsider.in/policy/legal/news/can-you-claim-input-tax-credit-on-csr-expense-three-authorities-have-two-different-rulings/articleshow/86609122.cms">Can you claim input tax credit on CSR expense ⁠— three authorities have two different rulings</a> <a href="https://www.businessinsider.in/policy/legal/news/cloud-kitchens-are-restaurants-ice-cream-is-not-food-and-other-important-clarifications-that-will-affect-gst-rates/articleshow/86841614.cms">Cloud kitchens are restaurants, ice cream is not food and other important clarifications that will affect GST rates</a>

OPINION: GST Input Tax Credit changes from January 1 – Things to ask your vendor, how to protect your ITC and more

New Delhi, August 16 may have been a working day, but Rajinikanth's '<keyword id="218107" type="General" weightage="20" keywordseo="jailer" source="Orion">Jailer</keyword>' and Sunny Deol's '<keyword id="1847504" type="General" weightage="20" keywordseo="Gadar-2" source="Orion">Gadar 2</keyword>' not only did well, but also left the Akshay Kumar-starrer '<keyword id="452656" type="General" weightage="20" keywordseo="OMG" source="Orion">OMG</keyword> 2' and Chiranjeevi's 'Bholaa Shankar' way behind. At the end of Day 6, 'Gadar 2' was sitting on a worldwide collection of Rs 338.50 crore (gross receipts across India, Rs 308.50 crore, which includes the 18 per cent GST component, plus Rs 30 crore overseas). Interestingly, Tara Singh's one-man war against Pakistan seems to have touched a chord in Chennai, for the southern metropolis saw a 73.75 per cent occupancy in theatres for 'Gadar 2'. Pakistan-bashing, clearly, works as much in the south as it does in the north, that too on a working Wednesday. 'Jailer', being a Tamil film, doesn't have as big a footprint as 'Gadar 2', yet with Thalaiva Rajinikanth headlining it, by its seventh day, it had amassed Rs 420 crore (all-India gross receipts, Rs 264.70 crore, plus Rs 155.30 crore overseas). Of course, the film's domestic collections have come mainly from the four southern states, led by Tamil Nadu (Rs 121.60 crore), followed by Andhra Pradesh / Telangana (Rs 53.50 crore), Karnataka (Rs 44.40 crore) and Kerala (Rs 35.90 crore). But Rajini's global fan following has ensured an overseas collection more than five times higher than that of 'Gadar 2', enabling it to be India's No. 1 movie today. 'OMG 2', in contrast, has just crossed the Rs 100-crore mark (Rs 108.80 crore, including all-India gross receipts of Rs 93.80 and an overseas collection of Rs 15 crore), even as 'Bholaa Shankar' is languishing at Rs 39 crore (all-India gross receipts, Rs 33.40 crore, plus Rs 5.60 crore earned overseas). 'Jailer' was massively hyped across South India, with offices in Tamil Nadu even giving a day off to their employees to watch the film on August 10 upon its release. Rajinikanth's persona in the movie is that of an old jailer hunting down a notorious gang lord and mercilessly eliminating his gang members. Regarding the magic of 'Jailer' at the box office, trade expert Ramesh Bala said: "Rajinikanth is a Superstar. The 'Superstar' tag alone is enough to garner it all the attention it needs. And then, he also benefits from worldwide recognition." Continuing his analysis, Bala said: "Apart from Rajinikanth, the movie has good content, it is different, and has other famous faces from the South, notably Malayalam superstar Mohanlal and Ramya Krishnan. But when you mention Rajinikanth, words such as swag, cool, attitude come to mind, and his 50-year-plus career and humble nature also help." Bala expects the lifetime collection of 'Jailer' to touch Rs 600 crore, which means it will surpass last year's 'Ponniyin Selvan 1' and 'Vikram', and stand just behind Rajini's '2.0'. 'Gadar 2' is not expected to cross Rs 450-500 crore, but its makers, having produced the film reportedly for Rs 75 crore, are already laughing all the way to the bank.

Rajini Rules: 'Jailer' is No. 1 with Rs 420 cr in 7 days; 'Gadar 2' clocks Rs 338.5 cr in six

<ul><li>Corporate entities will not be able to reduce their tax burden by claiming input tax credit on corporate social responsibility activities.</li><li>This could also lead to confusion amongst corporate entities since AARs of different states have given contrary rulings in this regard.</li><li>Earlier, Uttar Pradesh AAR had allowed <keyword id="12201693" type="General" weightage="20" keywordseo="ITC-on-CSR" source="Orion">ITC on CSR</keyword> activities, while Kerala AAR took the contrary position.</li></ul>Input tax credit allows registered entities under <keyword id="6354679" type="General" weightage="20" keywordseo="GST" source="Orion">GST</keyword> to claim credit on the goods and services tax (GST) that they have paid while purchasing goods or services, which can be offset from the GST that they have to pay after making sales. However, input tax credit (ITC) can’t be claimed on expenses made towards corporate social responsibility (<keyword id="6354502" type="General" weightage="20" keywordseo="CSR" source="Orion">CSR</keyword>) activities, according to a new order from the Authority for Advance Rulings (AAR) ruling in Gujarat. There are two other rulings from the same authority and one of those allows the input tax credit on CSR. According to the provisions of Companies Act, 2013, companies with a net worth of ₹500 crore or more, or turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more, will have to mandatorily spend on CSR activities. The spend should be a minimum of 2% of the average net profit of the past three years. <cmsannotation type="cmsannotation" annotationid="The root of the problem" comment="subhead" text="The root of the problem">The root of the problem</cmsannotation> The primary issue here is whether CSR activities can be construed as “in course or furtherance of business”, that is, whether they are fundamental for a company to continue its business activities. However, the GST provisions do not define what exactly that would entail. For this purpose, the applicant in this case, Adama India Pvt. Ltd., relied on the provisions of Companies Act, 2013, to state that CSR activities are mandatory as per law, and not undertaking them would cause harm to the business. This, the applicant says, entitles it to take ITC on CSR activities. However, the Gujarat AAR referred to the Companies (CSR Policy) Rules, 2014, to state that CSR activities are not covered in activities “in the course or furtherance of business”. It also cited the provisions of Companies (CSR Policy) Amendment Rules, 2021, which provide a definition of CSR that excludes it from normal business activities. Essentially, the GAAR ruled that since CSR is specifically excluded from the scope of normal business activities, the applicant cannot take ITC on CSR activities. According to Ayush Mehrotra, one of the partners at Khaitan &amp; Co., this is likely to further increase litigation in GST. “The GST framework is wide enough to inter alia include activities without pecuniary benefits and those which are incidental or ancillary to main business. As such, the present ruling will only cause further litigation on GST which was otherwise expected to be a simpler and straightforward framework,” he told Business Insider. <cmsannotation type="cmsannotation" annotationid="Contrary AAR rulings put corporates in a bind" comment="subhead" text="Contrary AAR rulings put corporates in a bind">Contrary AAR rulings put corporates in a bind</cmsannotation> Gujarat AAR’s ruling is in contrast to that of the Uttar Pradesh AAR, which allowed the applicant to take the credit of Goods and Services Tax (GST) paid by the company while purchasing goods to be used for CSR activities. However, it is in line with the Kerala AAR, which passed a similar ruling in the matter of Polycab Wires donating flood relief items. “It is also noteworthy to highlight that since this ruling is in contradiction to prior rulings issued by competent authorities in other states, the urgent need for a national authority is once again being felt to ensure certainty of legal position,” Khaitan added further. The exclusion of ITC on CSR activities will mean that corporate entities will not be able to reduce their tax burden by claiming <keyword id="12201691" type="General" weightage="20" keywordseo="GST-input" source="Orion">GST input</keyword> credit. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/swiggy-tightens-focus-on-grocery-delivery-as-zomato-steps-out/articleshow/86582683.cms">Swiggy tightens focus on grocery delivery, as Zomato steps out</a> <a href="https://www.businessinsider.in/policy/legal/news/sc-landmark-ruling-in-the-samsung-heavy-industries-case-could-have-a-positive-effect-on-ease-of-doing-business-in-india/articleshow/77148341.cms">Supreme Court’s landmark ruling in the Samsung Heavy Industries case could have a positive effect on ease of doing business in India</a> <a href="https://www.businessinsider.in/policy/legal/news/these-are-the-common-laws-that-you-may-be-inadvertently-breaking-in-india/slidelist/76638782.cms">These are the common laws that you may be inadvertently breaking in India</a>

Can you claim input tax credit on CSR expense ⁠— three authorities have two different rulings

The <keyword id="6355040" type="General" weightage="20" keywordseo="GST-Council" source="Orion">GST Council</keyword> approved the amendments in the GST Act and GST Rules for allowing unregistered suppliers and composition taxpayers to make intra-state supply of goods through <keyword id="35621" type="General" weightage="20" keywordseo="E-COMMERCE" source="Orion">E-Commerce</keyword> Operators (ECOs), subject to certain conditions. Appreciating wholeheartedly the major decision of the GST Council to allow small <keyword id="8112933" type="General" weightage="20" keywordseo="unregistered-vendors" source="Orion">unregistered vendors</keyword> to sell their goods through e-commerce portals, the <keyword id="76562" type="General" weightage="20" keywordseo="Confederation-of-All-India-Traders" source="Orion">Confederation of All India Traders</keyword> (CAIT) on Saturday thanked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for this "progressive decision" which was demanded by CAIT since last more than two years. CAIT national president B.C. Bhartia and Secretary General Praveen Khandelwal said this decision will empower small traders who are below GST threshold limit to expand their business through e-commerce and will strongly strengthen Digital India vision. There are more than 8 crore small traders in the country but a large number of traders are conducting business activities without GST registration since their annual sale is below the GST threshold limit. Such traders will now be able to trade on e-commerce. Earlier, GST Council in its 47th meeting had granted in-principle approval for allowing unregistered suppliers and composition taxpayers to make intra-state supply of goods through ECOs, subject to certain conditions. CAIT said that India is fast emerging as the e-commerce hub and there is tremendous growth in online business. E-commerce business in India is now approximately 10 per cent of total retail. "In view of this it was extremely pertinent that small vendors, those who have small turnovers and do not fall under the purview of the GST, were not able to conduct online business, thus causing huge loss of market and business opportunities," a statement said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/gst-council-meet-decriminalisation-tax-evasion-in-pan-masala-gutkha-biz-on-agenda/articleshow/96297108.cms" style="">GST Council meet: decriminalisation, tax evasion in pan masala, gutkha biz on agenda</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/tata-motors-subsidiary-to-operate-921-electric-buses-in-bluru/articleshow/96294242.cms" style="">Tata Motors subsidiary to operate 921 electric buses in B'luru</a>

GST Council to allow e-commerce for unregistered vendors

New Delhi, The government's decision on mandatory payment of at least 1% of <keyword id="10497869" type="UNKNOWN" weightage="20" keywordseo="gst-tax-liability">GST tax liability</keyword> in cash will impact only around 40,000 to 45,000 taxpayers but help the entire system curb the menace of fake ITC availment and <keyword id="38388" type="ORGANIZATION" weightage="20" keywordseo="operation">operation</keyword> of fly-by-night operators, sources in <keyword id="1549446" type="COMPANY" weightage="20" keywordseo="The-Finance-Ministry">the finance ministry</keyword> said on Saturday. Based on the recommendations of <keyword id="10283255" type="COMPANY" weightage="20" keywordseo="the-gst-law-committee">the GST Law Committee</keyword>, the government has notified <keyword id="10497871" type="UNKNOWN" weightage="20" keywordseo="new-indirect-tax-rules">new indirect tax rules</keyword> that makes cash payment of 1% of GST tax liability mandatory for businesses whose <keyword id="10497870" type="UNKNOWN" weightage="20" keywordseo="taxable-supply-value">taxable supply value</keyword> exceeds ₹50 lakh. This change will come into effect from January 1, 2021. Sources in department of revenue said data indicated out of the total GST tax base of 1.2 crore taxpayers only around 4 lakh taxpayers have supply value greater than ₹50 lakh, and only around 1.5 lakh out of these 4 lakh taxpayers pay less than 1% tax in cash. So, the changes would include only a <keyword id="4473154" type="PERSON" weightage="20" keywordseo="small-section">small section</keyword> of taxpayers. Moreover, the DoR sources said with exclusions around 1.05 lakh taxpayers get further excluded from these 4 lakh. Thus, the rule would apply only to about 40,000 to 45,000 taxpayers. This would be around 0.37% of the total GST tax base of 1.2 crore taxpayers. "The data clearly indicates that a small fraction of taxpayers would need to pay 1% of GST liability in cash. Moreover, the rule is clearly for businesses whose taxable value of supply exceeds ₹50 lakh, so the measure would not affect small businesses or increase their working capital requirement," sources said. Under the new rule cash payment of 1% is to be calculated on the tax liability in a month and not turnover of the month. For example, if the turnover of taxable supplies of a taxpayer is ₹100 in a month and he is required to pay GST of 12% on his output taxable supplies, then he will be required to pay 1% of ₹12, i.e., ₹0.12 (12 paisa) only in the month through cash under this rule. Therefore, the net requirement of cash payment will be only 0.12% of the turnover in such a case, finmin sources said citing another example, if a dealer has made sale of ₹1 crore of the goods whose tax rate is 12 per cent and if he is discharging his tax liability more than 99% through input tax credit (ITC) then he has to pay only ₹12,000 under this rule. The rule clearly identifies where the risk to revenue is high and imposes very reasonable cost to deter the fraudsters in a multi-layered fraud of ITC, said the sources. The government had notified the cash rule to curb fake ITC availment and passing on of such credit by unscrupulous persons who generally pay no tax in cash, particularly in those risky cases where GST turnover does not match with the income tax returns. Such registered person will not be able to use the amount of ITC available in electronic credit ledger to discharge his liability towards output tax in excess of 99% of such tax liability. At least 1% liability would need to be discharged in cash. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-mrs-bectors-ril-bharti-airtel-vodafone-idea-ilfs-interglobe-aviation-future-group-deepak-nitrite-jubilant-foodworks-and-others/articleshow/79933826.cms">Top stocks to watch – Mrs Bectors, RIL, Bharti Airtel, Vodafone Idea, IL&amp;FS, InterGlobe Aviation, Future Group, Deepak Nitrite, Jubilant FoodWorks, and others</a> <a href="https://www.businessinsider.in/stock-market/news/there-are-one-of-only-17-indian-companies-out-of-500-that-aced-the-du-pont-test/articleshow/79911627.cms">There are one of only 17 Indian companies out of 500 that aced the Du Pont test</a> <a href="https://www.businessinsider.in/business/corporates/news/wipro-buyback-offer-details-and-700-million-metro-ag-deal-drives-share-price/articleshow/79911875.cms">Wipro offers 10% more to buy back shares and signs a $700 million deal with Metro AG – everything that’s driving the IT services stock higher today</a>

Payment of 1% GST in cash only for 45,000 taxpayers: DoR sources

Following uproar in the Parliament over <keyword id="6354679" type="General" weightage="20" keywordseo="gst" source="Orion">GST</keyword> on <keyword id="72247" type="General" weightage="20" keywordseo="Food-items" source="Orion">food items</keyword>, <keyword id="309842" type="General" weightage="50" keywordseo="union-finance" source="Orion">Union Finance</keyword> Minister <keyword id="129243" type="General" weightage="100" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword> on Tuesday defended the imposition of 5 per cent GST on food articles such as cereals, rice, flour and curd, which are pre-packaged and labelled, saying that it was a unanimous decision of the <keyword id="6355040" type="General" weightage="80" keywordseo="gst-council" source="Orion">GST Council</keyword> last month in which even non-BJP ruled states were present. The <keyword id="25455" type="General" weightage="80" keywordseo="finance" source="Orion">Finance</keyword> Minister released a list of items that will not attract any GST, when sold loose, and not pre-packed or pre-labeled. In a series of tweets, she said: "Recently, the GST Council in its 47th meeting recommended to reconsider the approach for imposition of GST on specified food items like pulses, cereals, flour, etc. There have been a lot of misconceptions about this that have been spread. Here is a thread to lay the facts." "Is this the first time such food articles are being taxed? No. States were collecting significant revenue from foodgrain in the pre-GST regime. Punjab alone collected more Rs 2,000 cr on food grain by way of purchase tax. UP collected Rs 700 cr," she said. "Taking this into account, when GST was rolled out, a GST rate of 5% was made applicable on BRANDED cereals, pulses, flour. Later this was amended to tax only such items which were sold under REGISTERED brand or brand on which enforceable right was not foregone by supplier," the FM said. "However, soon rampant misuse of this provision was observed by reputed manufacturers &amp; brand owners and gradually GST revenue from these items fell significantly. This was RESENTED by suppliers and industry associations who were paying taxes on branded goods. They wrote to the Govt to impose GST uniformly on all packaged commodities to stop such misuse. This rampant evasion in tax was also observed by States." "The Fitment Committee - consisting of officers from Rajasthan, West Bengal, <keyword id="20154" type="General" weightage="80" keywordseo="tamil-nadu" source="Orion">Tamil Nadu</keyword>, Bihar, Uttar Pradesh, Karnataka, Maharashtra, Haryana, and Gujarat - had also examined this issue over SEVERAL meetings and made its recommendations for changing the modalities to curb misuse. "It is in this context that the GST Council in its 47th meeting took the decision. With effect from July 18, 2022, only the modalities of imposition of GST on these goods was changed with no change in coverage of GST except 2-3 items," said the minister. "It has been prescribed that GST on these goods shall apply when supplied in 'pre-packaged and labelled' commodities attracting the provisions of Legal Metrology Act." "For example, items like pulses, cereals like rice, wheat, and flour, etc, earlier attracted GST @ 5% when branded and packed in unit container. From 18.7.2022, these items would attract GST when 'pre-packaged and labeled'," <keyword id="679937" type="General" weightage="80" keywordseo="sitharaman" source="Orion">Sitharaman</keyword> tweeted. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/ather-450x-gen-3-new-electric-scooter-debuted-today/articleshow/92985192.cms">Ather’s Ravneet Phokela on the company’s new scooter, affordability, EV safety and more</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/two-months-four-airlines-and-14-air-safety-incidents-dgca-says-safety-paramount/articleshow/92983985.cms">Two months, four airlines and 14 air safety incidents — DGCA says 'safety paramount'</a>

Food items when sold loose won't attract any GST, says Nirmala Sitharaman

Amid growing protest over the imposition of Goods and Services Tax (<keyword id="6354679" type="General" weightage="20" keywordseo="gst" source="Orion">GST</keyword>) on essential commodities, <keyword id="28504" type="General" weightage="80" keywordseo="kerala" source="Orion">Kerala</keyword> government on Tuesday said it does not intend to tax items sold by entities like <keyword id="783826" type="General" weightage="100" keywordseo="kudumbashree" source="Orion">Kudumbashree</keyword>, or small stores in 1 or 2kg packets. State Finance Minister K N <keyword id="255137" type="General" weightage="80" keywordseo="balagopal" source="Orion">Balagopal</keyword> told the Kerala Assembly that the decision might lead to issues with the central government but the state was not ready to compromise. "At any rate, in Kerala we don't intend to tax items which are sold by organisations like Kudumbashree or in small stores in 1 or 2 kg packets or in loose quantities. Even if this will lead to issues with the Centre," Balagopal told the Assembly. "We are not ready to compromise on this. We had already said this there." He said the state government has already written to the Centre regarding its stand. "Yesterday too, the CM wrote to them regarding these things. We don't intend to levy it on small-scale traders and small stores. There can be no argument on this," Balagopal added. Kerala government's Kudumbashree, a women self-help group, is considered one of the largest women empowerment projects in the country. It's engaged in ventures such as running of small-scale food processing units, and various others. Balagopal said the branded companies have to pay a tax of 5 per cent on packaged products, but if they mention in the packaging that they are not "claiming the brand" then it is not taxed. "So they (centre) have brought in the rule to catch such companies... but there is still some confusion prevailing over this," he added. Kerala Chief Minister Pinarayi <keyword id="6388414" type="General" weightage="80" keywordseo="vijayan" source="Orion">Vijayan</keyword> has sought an urgent intervention of Prime Minister Narendra Modi on the issue of the imposition of GST on essential commodities, arguing the move will severely affect the common people. Vijayan pointed out that many small shopkeepers and millers pre-pack and keep the items ready for sale so that the customers can readily purchase them off the shelf rather than spend time getting the items weighed and packed. In the letter, Vijayan said such pre-packing is a common practice in most of the retail shops in Kerala and the present change will have an adverse impact on the large number of ordinary customers who frequent these shops for their essential purchases. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/cryptocurrency/news/singapore-to-to-act-tough-on-crypto-platforms-in-the-coming-months/articleshow/92994010.cms">Singapore to to act tough on crypto platforms in the coming months</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/food-items-when-sold-loose-wont-attract-any-gst-says-nirmala-sitharaman/articleshow/92993947.cms">Food items when sold loose won't attract any GST, says Nirmala Sitharaman</a>

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