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331st Issue: 2nd January 2022- 8th January 2022

The 46th GST Council meeting, chaired by Hon’ble Finance Minister and comprising state FMs, was held on December 31, 2021, with a single agenda to consider Gujarat’s demand of putting the rate hike on textiles decision on hold, as also representations received from trade in this regard. The GST rate hike on textiles from 5 percent to 12 percent was to come into effect from January 1, 2022. GST Council has unanimously decided to defer the hike in GST on textiles from 5 percent to 12 percent. It will give much-needed impetus and support to the textile sector wherein a large number of small & medium scale taxpayers were worried about the recent hike in GST rates. The matter will be discussed again in the next Council meet for future roadmap.

However, there is no deferment on GST rate from 5% to 12% on footwear w.e.f. January 1, 2022, is also one of the unorganized sectors with small/ medium scale traders.

Another relief to the taxpayer has been provided by the government in the form of extension of due date from 31.12.2021 to 28.02.2022 for furnishing Annual Return in FORM GSTR-9 & self-certified reconciliation statement in FORM GSTR-9C for the financial year 2020-21.

In Addition to the above, a glimpse of the major amendments recently in GST Law is as under:

  1. ITC can be availed only when details of invoice/debit note have been communicated to the recipient of such invoice (GSTR-2A/ 2B).
  2. Penalty applicable in case of detention of goods shall be revised. A time limit of 7 days is being specified for issuance of notice from the date of detention of the vehicle and a further time limit of 7 days for issuance of the order. A time limit of 15 days is being specified for disposal of goods, from the receipt of the order in case of Detention, Seizure, and Confiscation of Goods.
  3. Appeal against the order issued for Detention of Goods shall be filed on payment of pre-deposit of 25% of the Penalty demanded.
  4. Department shall have the power to recover tax where a taxpayer has furnished GSTR 1 but not filed its GSTR 3B
  5. Allow attachment of Property including bank accounts on initiation of any proceeding. It further allows attachment of property and bank accounts of the Beneficiary [u/s 122(1A) also.
  6. A taxpayer who has not filed his GSTR 3B for the preceding month shall be not allowed to file GSTR 1.
  7. Aadhaar Authentication is made mandatory in case of filing of an application for revocation of cancellation of registration and refund application.
  8. The activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment, or other valuable consideration will be treated as supply. Paragraph 7 of the Schedule II of the Central Goods and Services Tax Act shall be omitted accordingly.

SYNOPSIS

S.NO. TOPICS PAGE NO.
1] TAX CALENDAR 4
2] INCOME TAX 5
NOTIFICATION RULE 2DD INSERTED- COMPUTATION OF EXEMPT INCOME OF SPECIFIED FUND FOR THE PURPOSES OF CLAUSE (23FF) OF SECTION 10 OF THE INCOME TAX ACT.
3] GST 6
NOTIFICATION AMENDMENT NOTIFICATION NO. 17/2017- CENTRAL TAX (RATE), DATED THE 28TH JUNE, 2017
NOTIFICATION GST RATE ON FOOTWEAR OF SALE VALUE NOT EXCEEDING RS.1000 PER PAIR HAS BEEN INCREASED FROM 5% TO 12%.
4] FEMA 7
PRESS RELEASE Clarification on Acquisition/Transfer of Immovable Property in India by Overseas Citizen of India (OCIs)
DISCUSSION CENTRAL BANK DIGITAL CURRENCY
5] CUSTOMS 8
NOTIFICATION seeks to impose ADD on “Decor Paper” originating in or exported from China PR for a period of 5 years
6] DGFT 9
NOTIFICATION EXTENSION OF LAST DATE FOR SUBMITTING APPLICATIONS FOR SCRIP BASED FTP SCHEMES
7] GST PLEADING AND PRACTICE: WITH SECTION-WISE GST CASES & GST NOTICES AND THEIR REPLIES 10
8] LET’S DISCUSS FURTHER 11

 

TAX CALENDAR

Due date (2021) Form/Return/Challan Reporting Period Description
7th January Challan Form ITNS 281 December 2021 Monthly payment of TDS on all types of payments (Except in the case where amounted is credited in the Month of March 31)
 

7th January

 Challan Form ITNS 281 December 2021 Monthly payment of TCS u/s 206C (other than government assessee)
 

 

7th January

Form No. 27C December 2021 The last date of submission of declaration i.e., for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax as the case may be.
7th January Challan Form ITNS 281 October 2021-December 2021 Quarterly payment of TDS for payments u/s 192, 194A, 194D, or 194H with the prior approval of the Joint Commissioner
7th January Form No.26QB FY 2020-2021 Payment on transfer of certain immovable property other than agricultural land

 

INCOME TAX

NOTIFICATION

RULE 2DD INSERTED- Computation of exempt income of the specified fund for the purposes of clause (23FF) of section 10 OF THE INCOME-TAX ACT.

OUR COMMENTS: The Central Board of Direct taxes vide notification no 138/2021, dated 27th December 2021, made insertion in the Income-tax Rules, 1962 (hereafter referred to as the principal rules), after rule 2DC, the following rule shall be inserted, namely:-

2DD. Computation of exempt income of the specified fund for the purposes of clause (23FF) of section 10.

(1) For the purpose of clause (23FF) of section 10, the income of the nature of capital gains, arising or received by a specified fund, which is attributable to units held by non-resident (not being a permanent establishment of a non-resident in India) in such specified fund shall be computed as under:-

(i) where the specified fund files Form No. 10-II in accordance with sub-rule (2), the Income exempt under clause (23FF) of section 10= [A*B/C], where,-

A = income of the nature of capital gains, arising or received by a specified fund, which is on account of transfer of shares of a company resident in India, by the specified fund and where such shares were received by the specified fund, being resultant fund, in relocation from the original fund, or from its wholly-owned special purpose vehicle, and where such capital gains would not be chargeable to tax if the relocation had not taken place;

B = aggregate of daily ‘assets under management of the specified fund which are held by non-resident unitholders (not being the permanent establishment of a non-resident in India), from the date of acquisition of the share of a company resident in India by the specified fund to the date of transfer of such share.

C = aggregate of daily total ‘assets under management of the specified fund, from the date of acquisition of the share of a company resident in India by the specified fund to the date of transfer of such share.

(ii) where no Form No.10-II is filed by the specified fund, the exempt income shall be NIL.

(2) The specified fund shall furnish an annual statement of exempt income in Form No.10-II electronically under the digital signature on or before the due date, which is duly verified in the manner indicated therein.

(3) It shall get the annual statement, referred to in sub-rule (2), certified by an accountant before the specified date and such accountant shall furnish by that date the certificate in Form No. 10-IJ electronically under digital signature, which is duly verified in the manner indicated therein.

(4) The Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems), as the case may be, shall specify the procedure for filing of the Form Nos. 10-II and 10-IJ and shall also be responsible for evolving and implementing appropriate security, archival, and retrieval policies in relation to the statements so furnished under this rule.

(5)In the principal rules, in Appendix II, after Form 10-IH, the following Forms shall be inserted, as mentioned in the notification.

GST

NOTIFICATION

GST RATE ON FOOTWEAR OF SALE VALUE NOT EXCEEDING RS.1000 PER PAIR HAS BEEN INCREASED FROM 5% TO 12%.

OUR COMMENTS: The Department of Revenue, Ministry of Finance, vide Notification No. 21/2021 dated 31st December 2021 on hereby makes the following amendments on the recommendations of the Council, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.14/2021-Central Tax (Rate), dated the 18th November 2021:

  1. In the said notification, –
  2. in Schedule I – 2.5%, serial number 225 and the entries relating thereto shall be omitted;
  3. in Schedule II – 6%, after serial number 171 and the entries relating thereto, the serial number 171A1 – Ch-64, – Footwear of sale value not exceeding Rs.1000 per pair and entries shall be inserted. This notification shall come into force on the 1st day of January 2022.

NOTIFICATION

AMENDMENT NOTIFICATION NO. 17/2017- CENTRAL TAX (RATE), DATED THE 28TH JUNE, 2017

OUR COMMENTS: The Central Government, vide notification number 17/2021 dated 18th November 2021 on the recommendations of the Council, hereby makes the following amendments further to amend the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.17/2017- Central Tax (Rate), dated the 28th June 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 696(E) dated the 28th June 2017, namely:-

  1. In the notification,-

(i) in clause (i), for the words “and motorcycle;”, the words “, motorcycle, omnibus or any other motor vehicle;” shall be substituted;

(ii) after clause (iii), the following clause shall be inserted, namely:-

“(iv) supply of restaurant service other than the services supplied by restaurant, eating joints, etc. located at specified premises.”

  1. In the said notification, in Explanation, –

(i) in item (b), for the words, brackets, numbers, and figures “and “motorcycle” shall have the same meanings as assigned to them respectively in clauses (22), (25), and (26) of section 2 of the Motor Vehicle Act, 1988 (59 of 1988).”, the words, brackets, numbers and figures,”, motorcycle, motor vehicle, and omnibus shall have the same meanings as assigned to them respectively in clauses (22), (25), (27), (28)and (29) of section 2 of the Motor Vehicle Act, 1988 (59 of 1988).” shall be substituted;

(ii) after the item (b), the following shall be inserted namely, –

“(c) specified premises means premises providing hotel accommodation service having declared tariff of any unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent.”

(3)This notification shall come into force with effect from the 1st day of January 2022.

FEMA

PRESS RELEASE

Clarification on Acquisition/Transfer of Immovable Property in India by Overseas Citizen of India (OCIs)

OUR COMMENTS: A press release dated 29th December 2021, stated that a large number of queries have been received at various offices of the Reserve Bank, based on newspaper reports on a Supreme Court Judgement, on whether prior approval of RBI is required for acquisition/transfer of immovable property in India by as Overseas Citizen of India OCIs.

It is hereby clarified that the concerned Supreme Court Judgement dated February 26, 2021, in Civil Appeal 9546 of 2010 was related to provisions of FERA, 1973, which has been repealed under Section 49 of FEMA, 1999. At present, NRIs/OCIs are governed by provisions of FEMA 1999 and do not require prior approval of RBI for acquisition and transfer of immovable property in India, other than agricultural land/ farmhouse/ plantation property, as per the terms and conditions laid down in Chapter IX of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, dated October 17, 2019 (as amended from time to time), issued under Section 46 of FEMA 1999.

DISCUSSION

CENTRAL BANK DIGITAL CURRENCY

OUR COMMENTS: The idea of “Central Bank Digital Currencies” (CBDC) is not a recent development. Some attribute the origins of CBDCs to Nobel laureate James Tobin1, an American economist, who in the 1980s suggested that Federal Reserve Banks in the United States could make available to the public a widely accessible ‘medium with the convenience of deposits and the safety of currency.’ It is only in the last decade, however, that the concept of digital currency has been widely discussed by central banks, economists & governments.

  1. Except as currency notes, all other use of paper in the modern financial system, be it as bonds, securities, transactions, communications, correspondences or messaging – has now been replaced by their corresponding digital and electronic versions. On anecdotal evidence, the use of physical cash in transactions has been on the decline in recent years, a trend further reinforced by the ongoing Covid19 pandemic. These developments have resulted in many central banks and governments stepping up efforts towards exploring a digital version of fiat currency. Some of this interest among central banks has been indigenous in nature for pursuing specific policy objectives – for example, facilitating negative interest rate monetary policy. Another driver is to provide the public with virtual currencies, that carry the legitimate benefits of private virtual currencies while avoiding the damaging social and economic consequences of private currencies.
  2. 3. It is important to understand and appreciate what precisely is a CBDC, and to do that one needs to understand what a currency is and what money is.

CUSTOMS

NOTIFICATION

seeks to impose ADD on “Decor Paper” originating in or exported from China PR for a period of 5 years

OUR COMMENTS: Vide notification number 77/2021 dated 27th December, the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, the Central Government, after considering the aforesaid final findings of the designated authority, hereby imposes on the subject goods, the description of which is specified in column (3) of the Table below, falling under tariff item of the First Schedule to the Customs Tariff Act as specified in the corresponding entry in column (2), originating in the country as specified in the corresponding entry in column (4), exported from the country as specified in the corresponding entry in column (5), produced by the producers as specified in the corresponding entry in column (6), and imported into India, an anti-dumping duty at the rate equal to the amount as specified in the corresponding entry in column (7), in the currency as specified in the corresponding entry in column (9) and as per unit of measurement as specified in the corresponding entry in column (8), of the Table mentioned in the notification:-

The anti-dumping duty imposed under this notification shall be effective for a period of five years (unless revoked, superseded, or amended earlier) from the date of publication of this notification in the Official Gazette, and shall be payable in Indian currency.

Explanation. – For the purposes of this notification, the rate of exchange applicable for the purposes of calculation of such anti-dumping duty shall be the rate which is specified in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), issued from time to time, in the exercise of the powers conferred by section 14 of the Customs Act, 1962 (52 of 1962), and the relevant date for the determination of the rate of exchange shall be the date of presentation of the bill of entry under section 46 of the said Act.

*Notes: uncoated paper in reel form of 40-130 GSM, having Klemm absorbency of at least 12 mm per 10 minutes, the wet tensile strength of 6-12 N/15 mm, and Gurley porosity of 10-40 sec / 100 ml, containing titanium dioxide or pigments as filler. It includes base paper for high pressure (HPL) or low-pressure (LPL) decorative laminates, also known as decor paper, decorative base paper, decorative paper for high-pressure or low-pressure laminates, coating base paper, and print base paper, but excluding printed ready-to-use decor paper.

The product under consideration includes various types of decor paper, such as surfacing paper (white/off-white), liner (white / off-white), barrier paper, shuttering base, overlay paper, and print base paper (color/white). It may be imported as base paper for waxing, coating, and impregnation; base paper for printing; base paper for use in decorative industry and barrier paper, and may come in various sizes as 95 cm, 96 cm, 102 cm, 123 cm, 123.5 cm, 124 cm, 124.5 cm, 125 cm, 131 cm, 132 cm, 183 cm, 184 cm, and 185 cm.

DGFT

DISCUSSION

EXTENSION OF LAST DATE FOR SUBMITTING APPLICATIONS FOR SCRIP-BASED FTP SCHEMES.

OUR COMMENTS:   Department of Commerce, Ministry of Commerce & Industry vide Notification No. 48/2015-2020 dated 31st December 2021 notified the Extension of Last Date for Submitting applications for Scrip based FTP Schemes. The Central Government hereby amends the para 3.13A of the FTP 2015-20 (as notified vide Notification no. 26 dated 16th September 2021) with immediate effect. The para 3.13A shall now read as below:

3.13A: Last Date of Submitting Applications for Scrip based Schemes:

(a) In supersession of the existing laid down provisions in the Hand Book of Procedures, 2015-20 with regard to the last date for submitting online applications for scrip based claims, the last date for submitting online applications stands revised to 31st January 2022 for the following schemes i.e.

  1. for MEIS (for exports made in the period (s) 01.07.2018 to 31.03.2019, 01.04.2019 to 31.03.2020 and 01.04.2020 to 31.12.2020),
  2. for SEIS (for service exports rendered for FY 18-19 and FY 2019-20),iii. for 2 % additional ad hoc incentive (under para 3.25 of the FTP – for exports made in the period 01.01.2020 to 31.03.2020 only)
  3. for ROSCTL (for exports made from 07.03.2019 to 31.12.2020) and
  4. for ROSL (for exports made up to 06.03.2019 for which claims have not yet been disbursed under scrip mechanism).

After 31.01.2022, no further applications would be allowed to be submitted and they would become time-barred. Late cut provisions shall also not be available for submitting claims at a later date.

(b) In supersession of the laid down provisions on the applicable late cut as in para 9.02 of the HBP, the new late cut for applications submitted up to 31.01.2022 as indicated above shall be:

 

SI No. Scheme Period of Exports (Let Export Date in the period) / Services rendered in the period Late Cut (as % age of Entitlement under the Scheme )
1 MEIS FY 2018-19 (01.07.2018 to 31.03.2019) 10%
2 MEIS FY 2019-20 and FY 2020-21 (up to 31.12.2020) Nil
3 SEIS FY 2018-19 5%
4 SEIS FY 2019-20 Nil
5 ROSCTL 07.03.2019 to 31.12.2020 Nil
6 ROLL Up to 06.03.2019 Nil

 

Effect of this Notification: The last date of submitting applications under MEIS, SEIS, ROSCTL, ROSL, and 2% additional ad hoc incentive (under para 3.25 of FTP) which was earlier notified to be 31.12.2021 has been extended till 31.01.2022.

 

Profile photo of CA Vivek Jalan CA Vivek Jalan

Vivek Jalan, from Tax Connect, is a Chartered Accountant & a qualified L.LM & LL.B. He is The Chairman of The Ease of Doing Business Committee therein. He is a member of The Confederation of Indian Industries (CII)- Economic Affairs & Taxation Committee. He is the Member of The Consultative Committee of The Commissioner of SGST. He is also The Member of The Regional Advisory Committee of The Chief Commissioner of CGST. He is advising Large MNCs, PSUs & PAN India Organizations in GST & Income Tax and has offices in Kolkata, Delhi, Bangalore, Mumbai & now Surat. He is a regular Columnist and guest expert in Economic Times, Times of India, Dalal Street Journal, Money Control, Live mint, CNBC, Hindustan Times, Zee Business, Financial Express, other dailies, and business magazines like Business Today, etc. He is also a guest expert on Taxation matters in All India Radio and other media platforms. He is the Editor of Weekly Bulletin TAX CONNECT, a publication on Indirect Taxes and Direct Taxes which reaches more than 70000 professionals.

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