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333rd Issue: 16th January 2022- 22nd January 2022

EDITORIAL

As a facilitation measure for taxpayers & for assisting the taxpayers in doing a correct self-assessment, a new functionality of interest calculator is being released in GSTR-3B. This functionality will arrive at the system computed interest on the basis of the tax liability values declared by the taxpayers. The interest appliable, if any, on the tax liability declared in the GSTR-3B of a particular tax period will be computed after the filing of the said GSTR-3B. These systems computed interest values will be auto-populated in Table-5.1 of the GSTR-3B of the next tax period. The facility would be similar to the collection of Late fees for GSTR-3B, filed after the Due date, posted in the next period’s GSTR-3B.

  1. This functionality has a user-friendly interface, which informs the taxpayers regarding the manner of system computation of interest values for each tax head. This functionality also assists the taxpayers in doing the correct computation of interest for the liability of any past period declared in the GSTR-3B for the current tax period, based on the details furnished by them on the portal.
  2. This functionality will further improve the ease of filing returns under GST and is, therefore, in the direction of further reducing the compliance burden for taxpayers.

    -For detailed advice regarding the interest calculator in GSTR-3B visit the GST portal.

    -For Annexure containing a sample computation with screenshots of the upcoming functionality visit the GST portal.

  3. This functionality, as and when available on the GST Portal shortly, will be intimated to the taxpayers.

SYNOPSIS

S.NO. TOPICS PAGE NO.
1] TAX CALENDAR 4
2] INCOME TAX 5
NOTIFICATION Extension of timelines for filing of Income-tax returns and various reports of audit for the Assessment Year 2021-22  
3] GST 6-7
INSTRUCTION DOWNSTREAM INVESTMENTS & REGULATIONS UNDER FEMA,1999  
4] FEMA 8
DISCUSSION DOWNSTREAM INVESTMENTS & REGULATIONS UNDER FEMA,1999  
5] CUSTOMS 9
NOTIFICATION Supersession Notification OF notification No. 98/2021-Customs(N.T.)  
6] DGFT 10
NOTIFICATION AMENDMENT IN EXPORT POLICY OF ENOXAPARIN (FORMULATION AND API) AND INTRAVENOUS IMMUNOGLOBULIN (IVIG) (FORMULATION AND API) – 50/2015-2020
7] GST PLEADING AND PRACTICE: WITH SECTION-WISE GST CASES & GST NOTICES AND THEIR REPLIES 11
8] LET’S DISCUSS FURTHER 12

 

TAX CALENDAR

Due Date Form/Return/Challan Reporting Period Description
18th January GSTR-4 December 2021 Quarterly return for a registered person opting for composition levy.
 18th January GSTR- 5A December 2021 OIDAR – Details of supplies of online information and database access or retrieval services by a person located outside India made to non-taxable persons in India.
 20th January GSTR-5 December 2021 Return by a non-resident taxable person.
 20th January GSTR -3B December 2021 GSTR return for the month of December 2021. For the taxpayer with Aggregate turnover up to INR 5 crores during the previous year and taxpayers who have opted for monthly filing of GSTR-3B.

 

INCOME TAX

CIRCULAR

Extension of timelines for filing of Income-tax returns and various reports of audit for the Assessment Year 2021-22.

OUR COMMENTS: On consideration of difficulties reported by the taxpayers and other stakeholders due to COVID and in electronic filing of various reports of audit under the provisions of the Income-tax Act,1961 (Act), the Central Board of Direct Taxes (CBDT), vide circular number 1/2022 dated 11th January 2022, in the exercise of its powers under Section 119 of the Act, provides relaxation in respect of the following compliances:

  1. The due date of furnishing of Report of Auditunder any provision of the Act for the Previous Year 2020-21, which was 30th September 2021, in the case of assessees referred in clause (a) of Explanation 2 to sub-section (1) of section 139of the Act, as extended to 31st October 2021 and 15th January 2022 by Circular No.9/2021 dated 20.05.2021 and Circular No.17/2021 dated 09.09.2021 respectively, is hereby further extended to 15th February 2022;
  2. The due date of furnishing of Report of Auditunder any provision of the Act for the Previous Year 2020-21, which was 31st October 2021, in the case of assessees referred in clause (aa) of Explanation 2 to sub-section (1) of section 139of the Act, is hereby extended to 15th February 2022;
  3. The due date of furnishing of Report from an Accountant by persons entering into an international transaction or specified domestic transaction under section 92Eof the Act for the Previous Year 2020-21, which was 31st October 2021, as extended to 30th November 2021 and 31st January 2022 by Circular No.9/2021 dated 20.05.2021 and Circular No.17/2021 dated 09.09.2021 respectively, is hereby further extended to 15th February 2022;

4. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 31st October 2021 under sub-section (1) of section 139 of the Act, as extended to 30th November 2021 and 15th February 2022 by Circular No.9/2021dated 20.05.2021 and Circular No.17/2021 dated 09.09.2021 respectively, is hereby further extended to 15th March 2022;

5. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 30th November 2021 under sub-section (1) of section 139 of the Act, as extended to 31st December 2021 and 28th February 2022 by Circular No.9/2021dated 20.05.2021 and Circular No.17/2021 dated 09.09.2021 respectively, is hereby further extended to 15th March 2022.

Clarification 1: It is clarified that this extension shall not apply to Explanation 1 to section 234A of the Act, in cases where the amount of tax on the total income as reduced by the amount as specified in clauses (i) to (vi) of sub-section (1) of that section exceeds one lakh rupees.

Clarification 2: For the purpose of Clarification 1, in the case of an individual resident in India referred to in sub-section (2) of section 207 of the Act, the tax paid by him under section 140A of the Act within the due date (without extension under Circular No.9/2021, Circular No.17/2021 and this Circular) provided in that Act, shall be deemed to be the advance tax.

GST

INSTRUCTION

GUIDELINES FOR RECOVERY PROCEEDINGS UNDER THE PROVISIONS OF SECTION 79 OF THE CGST ACT, 2017 IN CASES COVERED UNDER EXPLANATION TO SUB-SECTION (12) OF SECTION 75 OF THE CGST ACT, 2017.

OUR COMMENTS: Vide Instruction No.1/2022 dated 7th January 2022, Sub-section (12) of section 75 of the CGST Act, 2017 (hereinafter referred to as “the Act”) provides that notwithstanding anything contained in section 73 or section 74 of the Act, where any amount of self-assessed tax in accordance with the return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79. An explanation has been added to sub-section (12) of section 75 vide section 114 of the Finance Act, 2021 with effect from 01.01.2022 to clarify that “self-assessed tax” shall include the tax payable in respect of outward supplies, the details of which have been furnished under section 37 but not included in the return furnished under section 39.

  1. Doubts are being raised by the trade and the field formations regarding modalities for initiation of the recovery proceedings under section 79of the Act in the cases covered under the explanation to sub-section (12) of section 75 of the Act. In view of the above, the following guidelines are hereby issued with respect to the recovery proceedings under section 79 of the Act in such cases.

3.1 Sub-section (12) of section 75 of the Act is reproduced hereunder for reference:

“(12) Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.

Explanation. – For the purposes of this subsection, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.

From the perusal of the above provision, it is clear that where the tax payable in respect of details of outward supplies furnished by the registered person in GSTR- 1, has not been paid through GSTR-3B return, either wholly or partly, or any amount of interest payable on such tax remains unpaid, then in such cases, the tax short paid on such self-assessed and thus self-admitted liability, and the interest thereon, are liable to be recovered under the provisions of section 79.

3.2 There may, however, be some cases where there may be a genuine reason for the difference between the details of outward supplies declared in GSTR-1 and those declared in GSTR-3B. For example, the person may have made a typographical error or may have wrongly reported any detail in GSTR-1 or GSTR-3B. Such errors or omissions can be rectified by the said person in a subsequent GSTR-1GSTR-3B as per the provisions of sub-section (3) of section 37 or the provisions of sub-section (9) of section 39, as the case may be. There may also be cases, where a supply could not be declared by the registered person in GSTR-1 of an earlier tax period, though the tax on the same was paid by correctly reporting the said supply in GSTR-3B. The details of such supply may now be reported by the registered person in the GSTR-1 of the current tax period. In such cases, there could be a mismatch between GSTR-1 and GSTR-3B (liability reported in GSTR-1> tax paid in GSTR-3B) in the current tax period. Therefore, in all such cases, an opportunity needs to be provided to the concerned registered person to explain the differences between GSTR-1 and GSTR-3B, if any, and for short payment or non-payment of the amount of self-assessed tax liability, and interest thereon, before any action under section 79 of the Act is taken for recovery of the said amount.

3.3 Accordingly, where ever any such amount of tax, self-assessed by the registered person in his outward supply statement GSTR-1 is found to be short paid or not paid by the said person through his GSTR-3B return in terms of the provisions of sub-section (12) of section 75 of the Act, the proper officer may send a communication (with DIN, in terms of guidelines issued vide Circular No. 122/41/2019-GST dated 5th November 2019) to the registered person to pay the amount short paid or not paid or to explain the reasons for such short payment or non-payment of self-assessed tax, within a reasonable time, as prescribed in the communication. If the concerned person is able to justify the differences between GSTR-1 and GSTR-3B, or is able to explain the reasons for such short-payment or non-payment of tax, to the satisfaction of the proper officer, or pays the amount such short paid or not paid, then there may not be any requirement to initiate proceedings for recovery under section 79.

3.4 However, if the said registered person either fails to reply to the proper officer or fails to make the payment of such amount short paid or not paid, within the time prescribed in the communication or such further period as may be permitted by the proper officer, then the proceedings for recovery of the said amount as per provisions of section 79 may be initiated by the proper officer. Further, where the said registered person fails to explain the reasons for such difference/ short payment of tax to the satisfaction of the proper officer, then the proper officer may proceed for recovery of the said amount as per provisions of section 79.

  1. The difficulty, if any, in implementation of the above guidelines may please be brought to the notice of the Board. The Hindi version would follow.

FEMA

DISCUSSION

Downstream Investments & Regulations under Fema,1999

OUR COMMENTS: Investment in an Indian Company can be made by a Non-resident as well as a resident person or entity. Any investment by a non-resident in India is called Foreign Direct Investment and regulated by RBI, FDI Guidelines. On the other hand investment by a resident in Indian entities can also be divided into two categories such as investment by resident and non-resident.

Suppose an entity A Ltd., has received foreign investment by complying with FDI Policies and it has an investment in B Ltd., in this case, its investment in B Ltd., will be considered as Indirect Foreign Investment. Downstream generally means, the flow towards the stream or along with the water stream. Downstream Investment under FEMA,1999 means investment by an Indian entity having FDI into another Indian entity. The first foreign investment is called Foreign Direct Investment and the later one is called Foreign Indirect Investment.

INDIRECT FOREIGN INVESTMENT –  has been defined in Regulation 14(1)(v) of FEMA Notification No. 20 as under: “‘Indirect foreign investment’ means entire investment in other Indian companies by an Indian company (IC), having foreign investment in it provided; (a) Indian Company is not ‘owned and controlled by resident Indian citizens and/or Indian Companies which are owned and controlled by resident Indian citizens or (b) where the Indian company is owned or controlled by non-residents. However, as an exception, the indirect foreign investment in the 100% owned subsidiaries of operating-cum-investing/investing companies will be limited to the foreign investment in the operating-cum-investing/ investing company.”

THE RBI FAQ on Foreign Investment in India -Downstream investment is an investment made by an Indian entity that has total foreign investment in it or an Investment Vehicle in the capital instruments or the capital, as the case may be, of another Indian entity. If the investor company has total foreign investment in it and is not owned and not controlled by resident Indian citizens or is owned or controlled by persons resident outside India then such investment shall be “Indirect Foreign Investment” for the investee company.

Please note that:  An Indian company (owned or controlled by persons resident outside India or not owned and not controlled by resident Indian citizens (FOCC)) investing in instruments other than capital instruments of another Indian company will not be treated as a downstream investment. The downstream investment made in accordance with the guidelines in existence prior to February 13, 2009, would not require any modification to conform to these regulations.

All other investments, after the said date, would come under the ambit of FEMA 20(R). Downstream investments made between February 13, 2009, and June 21, 2013, which were not in conformity with these regulations should have been intimated to the Reserve Bank by October 3, 2013, for treating such cases as compliant with these regulations.

CUSTOMS

NOTIFICATION

Supersession Notification OF notification No. 98/2021-Customs(N.T.)

OUR COMMENTS: The Central Board of Indirect Taxes vide and Customs notification no 2/2022 dated 6th January 2022 hereby determines that the rate of exchange of conversion of each of the foreign currencies specified in column (2) of each of Schedule I and Schedule II annexed hereto, into Indian currency or vice versa, shall, with effect from 7th January 2022, be the rate mentioned against it in the corresponding entry in column (3) thereof, for the purpose of the said section, relating to imported and export goods.

Sl. No Foreign Currency Rate of exchange of one unit of foreign currency equivalent to Indian rupees
1 2 3
    a b
    For imported goods For Exported Goods
1. Australian Dollar 54.75 52.45
2. Bahraini Dinar 204.05 191.55
3. Canadian Dollar 59.35 57.25
4. Chinese Yuan 11.90 11.50
5. Danish Kroner 11.55 11.15
6. EURO 85.85 82.80
7. Hong Kong Dollar 9.75 9.40
8. Kuwaiti Dinar 254.50 238.30
9. New Zealand Dollar 51.80 49.45
10. Norwegian Kroner 8.55 8.25
11. Pound Sterling 102.60 99.10
12. Qatari Riyal 21.00 19.70
13. Saudi Arabian Riyal 20.50 19.25
14. Singapore Dollar 55.80 53.90
15. South African Rand 4.85 4.55
16. Swedish Kroner 8.30 8.00
17. Swiss Franc 82.90 79.65
18. Turkish Lira 5.65 5.25
19. UAE Dirham 20.95 19.65
20. US Dollar 75.40 73.65

 

Sl. No Foreign Currency Rate of exchange of 100 units of foreign currency equivalent to Indian rupees
1 2 3
    a b
    For imported goods For Exported Goods
1. Japanese Yen 65.50 63.15
2. Korean Won 6.40 6.00

 

DGFT

NOTIFICATION

AMENDMENT IN EXPORT POLICY OF ENOXAPARIN (FORMULATION AND API) AND INTRA-VENOUS IMMUNOGLOBULIN (IVIG) (FORMULATION AND API) – 50/2015-2020

OUR COMMENTS:  In exercise of powers conferred by Section 3 read with Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No. 22 of 1992), as amended, read with Para 1.02 and 2.01 of the Foreign Trade Policy. 2015-20. the Central Government vide notification number 50_2015-2020 dated 10th January 2022, hereby makes the following amendment in Chapter 29 and 30 of Schedule 2 of the ITCHS Export policy 2018 related to the export of Enoxaparin and Intra-Venous Immunoglobulin (IVIG):

S.No ITC HS Codes Description Present Policy Revised Policy
207 AE Ex2942
Ex3001
Ex3002
Enoxaparin

(Formulation and API)

Free Restricted
207 AF Ex3002 Intra-Venous Immunoglobulin (IVIG)

(Formulation and API)

Free Restricted

 

  1. Effect of this Notification:

The export of Enoxaparin (Formulation and API) and Intra-Venous Immunoglobulin (IVIG) (Formulation and API) falling under the ITC (HS) Codes specified above or falling under any other HS Code has been put under the restricted category, with immediate effect.

 

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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