Thursday, June 28, 2018

MCA: DIR-3KYC for all Directors

MCA has updated following Important Notice on its website:

As part of updating its registry, MCA would be conducting KYC of all Directors of all companies annually through a new eform viz. DIR-3 KYC
to be notified and deployed shortly. Accordingly, every Director who has been allotted DIN on or before 31st March, 2018 and whose DIN is in ‘Approved’ status, would be mandatorily required to file form DIR-3 KYC on or before 31st August,2018. While filing the form,the Unique Personal Mobile Number and Personal Email ID would have to be mandatorily indicated and would be duly verified by One Time Password(OTP). The form should be filed by every Director using his own DSC and should be duly certified by a practicing professional (CA/CS/CMA). Filing of DIR-3 KYC would be mandatory for Disqualified Directors also.

After expiry of the due date by which the KYC form is to be filed,the MCA21 system will mark all approved DINs (allotted on or before 31st March 2018) against which DIR-3 KYC form has not been filed as ‘Deactivated’ with reason as ‘Non-filing of DIR-3 KYC’. After the due date filing of DIR-3 KYC in respect of such deactivated DINs shall be allowed upon payment of a specified fee only, without prejudice to any other action that may be taken.

​We shall inform you once E-form DIR-3 KYC is notified and deployed on website.

www.canilayshah.com

Monday, April 2, 2018

MAJOR AMENDMENTS IN INCOME TAX APPLICABLE FOR A.Y. 2018-19 wef 1.4.2018


1. Limit for payment of expenses by cash (Both capital and revenue expenditure) reduced from RS. 20,000 to RS. 10,000 per day in aggregate per person. 

2. No Person shall receive an amount of two lakh rupees or more, by cash (Sec 269ST). 

3. For below Rs. 2 crores turnover cases - For Non cash sales (through Digital, Online, cheque, Bank etc.) : Net Profit will be taken as 6% of Turnover/ Gross Receipt. It is 8% For Cash Sales.

 4. Tax Exemption limit is Rs.2,50,000/- (same as earlier) After that, up to 5 Lakh, Tax rate is 5% (earlier it was 10%). 

5. Tax rebate is reduced to Rs.2500 from Rs.5000 per year for taxpayers with income up to Rs.3,50,000 (earlier Rs.5,00,000). 

6. Surcharge at 10 percent of tax levied on rich taxpayers with income between Rs.50 Lakh and Rs.1 Crore. The rate for surcharge for the super-rich, with income above Rs.1 Crore will remain 15%. 

7. Payment of Rent - Rs.50,000 per month by any Individual or HUF (not subject to Tax Audit requirement) - Deduct TDS @ 5%. 

8. Capital gain in respect of Land and Building period reduced from 3 Years to 2 Years and Base year shifted from 01/04/1981 to 01/04/2001. 

9. Corporate tax rate for the account year 2017-18 for companies with annual turnover up to Rs.50 crores (in account year 2015-16) is reduced to 25%. No change in firm tax rate of 30%. 

10. Donation made exceeding Rs.2000 in cash will be not be eligible for deduction under section 80G. 

11. Shares of unquoted shares to be taxed at (deemed) fair value. 

12. Tax exemption will be available on reinvestment of capital gains in notified redeemable bonds (In addition to investment in NHAI and REC bonds). 

13. Deduction for first time investors in listed equity shares or listed units of equity oriented funds under the Rajiv Gandhi Equity Savings Scheme under section 80CCG of IT act 1961 is withdrawn from FY 2017-18. If an individual has already claimed deduction under this scheme before April 1, 2017, They shall be allowed to avail a deduction for the next two years. 

14. No tax is applicable for partial withdrawals from National Pension System. NPS subscribers will be able to withdraw 25% of their contribution to the corpus for emergencies before retirement. Withdrawal of 40% of the corpus is tax free before retirement.

 15. In absence of PAN of the buyer of specified goods, the rate of TCS will be twice of the extent rate or 5%, whichever is higher. 

16. From Financial Year 2017-18, if Return is not filed within due date, late fee of Rs.5,000 for delay up to 31st December, and Rs.10,000 thereafter. Such fee will be restricted to Rs.1,000 for small taxpayers with income up to Rs.5 lakh.

 17. A simple one page tax return form is to be introduced for Individual with taxable income up to Rs. 5 lakh (excluding Business Income). Those filing returns for the first time in this category will generally not be subject to scrutiny. 

18. Time period for revision of tax return cut to one year (from 2 years) from the end of relevant financial year or before completion of assessment, whichever is earlier. 

19. Where Section 12AA registered trusts modify their object clause, they need to apply within 30 Days to CIT for approval.

 20. It is mandatory to disclose the Aadhar number while filing IT Return. Earlier it was optional to disclose Aadhar number. Generally the last date of filing IT return is 31 July. Therefore, it is advisable for taxpayer to get their Aadhar number at the earliest.

Thursday, July 13, 2017

GST : TRADERS WITHIN REVENUE THRESHOLD OF 1.5 CR WILL UNDER EXCLUSIVE CONTROL OF THE STATE

GST Council says states will get exclusive control over all dealers up to a revenue of Rs1.5 crore—addressing the issue of dual control over small traders

In a big step towards the implementation of the goods and services tax (GST), the centre and the states on Friday reached a consensus on most contentious issues under the new indirect tax regime, raising hope that they would be able to agree on the last remaining issue, the tax rates, by next month.

The GST council, at its first meeting, agreed on a revenue threshold of Rs20 lakh below which the traders will be exempted from GST. This limit will be Rs10 lakh for the north-eastern and hill states.

The council also managed to reach middle ground on sharing of administrative powers between the centre and the states. It decided that states will get exclusive control over all dealers up to a revenue threshold of Rs1.5 crore—thus addressing the issue of dual control over small traders.

Given the lack of expertise among states to levy service tax, the centre will get control over all the existing 1.1 million service tax-registered dealers irrespective of their revenue levels.

The new additions to the dealer base will be shared between the centre and the states at a later stage once the states develop the requisite expertise.

For traders with revenue above Rs1.5 crore, a mechanism will be worked out wherein an assessee will be regulated either by the central government or the state government, based on risk evaluation.“All decisions were arrived at by a consensus and not by voting,” said finance minister Arun Jaitley after the meeting.

The swift agreement on these contentious issues also raises hopes that the 1 April 2017 implementation date for GST will be met. Revenue secretary Hasmukh Adhia said the GST council had made good progress in managing to resolve many issues.

The next meeting of the GST council will be held on 30 September when it will decide on the five categories of draft rules detailing the processes under GST and on area-based and industry-wise exemptions. The tax rates and the slabs will be decided at a meeting to be held between 17 and 19 October.

In the meeting held Friday, the states agreed to keep 2015-16 as the base year for computation of compensation. All items including cesses will be included in the revenue base.

It has been agreed that compensation to the states for potential revenue loss resulting from the transition to GST will not be bunched up and either made bi-monthly or quarterly. However, the final procedure for computation of revenue projections is yet to be worked out. The options being discussed are to arrive at a growth rate for revenue projections, or take into account the revenue for the best three years in the last five years.

The exemption limit will make it administratively easier for the government and keep several small businesses out of the GST ambit, said Pratik Jain, leader, indirect tax, at consulting firm PricewaterhouseCoopers India.

The decision to give centre administrative control over small traders may mean dual control for companies that provide both goods and services, said Harishanker Subramaniam, national leader, indirect tax, at EY India.

Business Standard, New Delhi, 10th July 2017

Friday, July 7, 2017

Perks Gifts to Employees May Come Under GST

Cos could however claim input tax credit on intra-company transactions.

India Inc may have to deal with another avatar of GST — the tax may be applicable on senior executives’ big-ticket perquisites over and above those mentioned in the employment contract and on gift items of over Rs 50,000. However, companies should be able to claim input tax credit on these intracompany ‘transactions’.

Tax professionals ET spoke to said the rate may be in the 18% band, depending on the nature of the perk/gift. A finance ministry official, who did not wish to be identified, said an employer’s gifts to employees will be treated as supplies without any consideration and attract GST. However, companies are likely to be able to claim input tax credit on it. Keeping tabs on company perks and gifts will not be an additional enforcement cost to the government, tax experts said. All purchases by companies will be available on GSTN. Therefore, during audits these issues can be easily identified. GST rules say services by an employee to the employer will not attract tax if they are related to his/ her employment. However, other kind of services may attract GST. “If an employee acts as a DJ in a company offsite and gets paid, such payment by his employer will attract GST,” said Waman Parkhi, partner, indirect tax, at consultancy firm KPMG.

Economic Times New Delhi, 06th July 2017

Tuesday, July 4, 2017

GST: Directors face higher risks for tax default

The goods and services tax (GST), India’s new indirect tax regime, makes directors of private limited companies liable for recovery of unpaid taxes, interest or penalties pertaining to supply of goods or services. To complicate matters, the GST Acts do not provide a definition for the term ‘director’ or make any distinction between executive or non-executive directors. Further, the existing directors and officer’s liability insurance — that helps a company hedge against professional and functional risks emanating from managing and running a business – do not cover the additional risks under GST.

Section 89 of the Central GST Act refers to recovery of tax, interest and penalties in case of private companies. “In such cases all directors will be held liable unless they prove it is not due to their neglect or breach of duty," says Shriram Subramanian, founder and managing director, InGovern Research Services.

Legal experts say VAT Acts of some states put the onus on directors for such pending recoveries from private companies, which are in the process of being wound up. However, GST extends this to pending tax dues of all private companies, taking a cue from provisions similar to the one provided in Section 179 of the Income Tax Act,1961, notes Lalit Kumar, partner, J Sagar Associates.

Experts point out that these provisions are applicable notwithstanding the limited liabilities that a director may have under the Companies Act, 2013.

What the Central GST Act says

Section 89: (1) Notwithstanding anything contained in the Companies Act, 2013, where any tax, interest or penalty due from a private company in respect of any supply of goods or services or both for any period cannot be recovered, then, every person who was a director of the private company during such period shall, jointly and severally, be liable for the  payment of such tax, interest or penalty unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.

“As a consequence, all persons who were directors of the company during the period of default would be exposed to personal liability to make good the unpaid tax, interest or penalty liabilities," says Sandeep Chilana, partner, Shardul Amarchand Mangaldas. The maximum penalty liabilities under GST laws can go up to 100 per cent of the pending tax amount, he adds.

The provision does not cover directors of public companies, including those which converted from private to public before recovery proceedings are initiated.As the GST Acts do not define the term ‘directors’, this means the provisions would apply to executive as well as non-executive directors, including independent and foreign directors, exposing them to the liabilities. This could expose foreign directors in Indian subsidiaries and joint ventures to huge risks in India, necessitating a review of their position, points out a note on GST by law firm Shardul Amarchand Mangaldas.

Insurance policies may not come in handy to cover the risks posed to directors by the new indirect tax regime. Experts say directors and officers liability insurance (also known as D&O insurance) covers are general in nature and are not specific to any kind of tax liability. “Taxes are always excluded from D&O policies. Also there is an exclusion for negligence," says Chilana.

In face of charges of non-recovery of taxes, interest or penalties, the best bet for a director is to prove that there has been no gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company, say legal experts. 

Business Standard New Delhi, 03rd July 2017

Thursday, June 29, 2017

Arun Jaitley: System geared up for GST from July 1

The government has notified the implementation of the central goods and services tax (C-GST) from July 1, making it clear that the roll out of the new indirect tax regime is on course. “I don’t see much of a problem. Small issues will always arise whenever you make a change of any kind. But I’m sure the system is fully geared up and the system will eventually smoothen itself out,” finance minister Arun Jaitley said after a Cabinet meeting on Wednesday.

Asked about West Bengal chief minister Mamata Banerjee’s statement against the implementation of GST from July 1, Jaitley said the date had been decided by consensus by the GST Council, which meant by the Centre as well as all the states.

“It [the date] has not been decided by the Centre. And more importantly, there is a constitutional mandate and that mandate is that on 16th of September, you
will lose the right to collect existing taxes. So the alternate system has to come into pl ..“We have spent so much time in building consensus and fortunately, we were able to build consensus. Therefore that spirit of consensus should be maintained by all. Even the function we are organising symbolises that larger national consensus,” he said.

When asked about Trinamool and some other Opposition parties planning to boycott the midnight launch function. States will now notify their respective GST Acts and other provisions including the roll out date.

The Centre has also notified some For purchases from unregistered vendors, a limit of Rs 5,000 a day has been prescribed for payment of tax under reverse charge, which provides relief from cumbersome compliances in case of small and petty expenses.

Further, for purchases exceeding this value, instead of self-invoicing for every transaction, a facility of doing this on a monthly basis has been provided for. A simple summary format for the first two months has also been prescribed (GSTR- 3B) in line with the announcement made in the last GST Council meeting.

It has notified the number of Harmonised System of Nomenclature digits required to be printed on a tax invoice. A registered person with an annual turnover of up to Rs 1.5 crore in the preceding financial year will not be required to mention the digits.

Those with turnover between Rs 1.5 crore and Rs 2 crore will mention two digits and those above Rs 5 crore will mention four digits.Centre has also notified the rate of interest of 18% for delayed payments, 24% for excess claim of input tax credit or undue or excess reduction in output liability, 6% in case of withheld refund and 9% for delayed refund after an order of adjudicating authority of appellate tribunal.

The government would also unveil a new simplified procedure on Thursday for exporters to ensure a smooth transition to GST.“The new procedures will be in line with the GST,” a government official told ET. Customs has already started testing new forms on its systems. Central Board of Excise and Customs has also issued a set of guidance for importers and exporters to help them transition  to GST changes in GST to give relief to small vendors.

The Economic Times New Delhi, 29th June 2017



MCA: DIR-3KYC for all Directors

MCA has updated following Important Notice on its website: As part of updating its registry, MCA would be conducting KYC of all Directors...