Due Dates
GST Compliance calendar for due dates falling in the month of April 2023
DIRECT TAX
Direct Tax Updates
Circulars/Notifications/Press Release
Relaxation in time for linking of PAN With AADHAAR
- As per the provisions of Income Tax Act, it is mandatory for every person who has been allotted a Permanent Account Number (PAN) to intimate his/her Aadhaar Number to the prescribed authority so that the Aadhaar and PAN can be linked. CBDT has extended the due date for linking PAN with Aadhar to 30th June 2023.
Roll Out of Annual Information System(AIS) for Taxpayer Mobile App
- Mobile App for AIS for Taxpayers has been launched to enable taxpayers to view their information as available in the Annual Information Statement (AIS) / Taxpayer Information Summary (TIS). Taxpayers can use the mobile app to view their information related to TDS/TCS, interest, dividends, share transactions, tax payments, Income Tax refunds, Other Information (GST Data, Foreign Remittances, etc.) as available in AIS/TIS.
Case Laws
Adopting Stamp duty value as Sales consideration is inappropriate in case of compulsory acquisition of land by NHAI : Calcutta High Court
- Assessee transferred land under compulsory acquisition to the National Highways Authority of India (NHAI) and Assessing Officer computed the capital gains on such land by considering the provisions under section 50C that is considering the stamp duty value of such land as sales consideration.
- Matter reaches to High Court where it was held that the transfer of land was not a result of an agreement between the parties but on account of compulsory acquisition. Thus, there is no room to suspect the correct valuation and the apparent consideration reflected in the sale documents.
- The compensation for compulsory acquisition is much lesser than the fair market value of the property as the value is determined by taking into various factors.
- Accordingly, it was held by the High Court that, the question of suppression of the value and invoking Section 50C of the Act does not arise in the referred case.
No disallowance of expenditure, if payer fails to deduct tax but Payee has duly paid the taxes: Delhi ITAT
- Assessee, an Indian company has paid the race promotion fee to Formula One Championship Ltd. of UK and disclosed the same in its return.
- Assessing Officer (‘AO’) disallowed the same for non-deduction of TDS on the sum paid and Commissioner of Income Tax Appeal (“CIT (A)”) also upheld this decision.
- Assessee filed an appeal with the Tribunal challenging the decision of the CIT(A) regarding disallowance of the sum paid to foreign company.
- Tribunal referred the 2nd proviso to section 40a(i) of the Act which provides that where the income is disclosed in the return of payee and tax is paid by him, then it shall be deemed that assessee has deducted and paid the tax and no disallowance shall be attracted.
- Tribunal, therefore quashed the addition made to income.
GST LITIGATION UPDATE
Professional services exported by E&Y not intermediary services – Delhi High Court
- The petitioner in this case provided professional services to overseas EY Entities and raised invoices for the services rendered. The consideration for the services was received directly from the overseas entities in convertible foreign exchange. The petitioner had accumulated ITC on account of supplies availed for performing the services and applied for a refund of the ITC.
- The Adjudicating Authority found that the petitioner had not exported services as the services provided were “intermediary services” and the place of supply was the petitioner’s location in India. The Appellate Authority upheld this decision. However, the High Court disagreed with this interpretation and held that even if the petitioner had rendered services on behalf of a third party, it would not result in the petitioner falling within the definition of ‘intermediary’ under Section 2(13) of the IGST Act.
- The High Court also noted that the services rendered by the petitioner were considered as ‘export of services’ prior to the rollout of the GST regime and that the Circular No.159/15/2021-GST acknowledges that there is broadly no change in the scope of intermediary services in the GST regime vis-à-vis the service tax regime. Therefore, the professional services rendered by the petitioner would fall within the scope of definition of ‘export of services’ as defined under Section 2(6) of the IGST Act, and the place of supply would be determined based on the location of the recipient of the services, which is outside India. As a result, the impugned orders were set aside, and the petition was allowed by the High Court.
[M/s E&Y Limited vs Additional Commissioner of CGST-Appeals II]
RCM is not applicable on security services rendered by Body Corporate – Haryana AAR
- This AAR pertains to the applicability of the reverse charge mechanism (RCM) under the provisions of the Central Goods and Services Tax (GST) Act, 2017 on security services provided by a limited liability partnership (LLP). The question before the AAR was whether an LLP can be considered as a body corporate under the GST Act, and if so, whether the forward charge mechanism or RCM would be applicable in the case of security services provided by an LLP.
- The AAR has held that an LLP is a body corporate and is viewed as an alternate corporate business model that combines the advantages of a limited liability company with the flexibility of a partnership. The LLP Act, 2008 defines an LLP as a separate legal entity having perpetual succession and partners’ liability is limited to their agreed contribution to the LLP.
- The AAR further held that the scope of the applicability of the RCM notification is that the RCM is relevant only when the security services are provided by the supplier of services who is any person other than a body corporate. Thus, the RCM would not be applicable in the present case, and the applicant who is LLP is required to charge applicable tax under forward charge mechanism on the security services rendered by it.
[M/s AS&D Enterprise LLP]
No GST on merchanting trade transaction – Karnataka AAR
- The AAR pertains to a case where there are two transactions involving the applicant – the first transaction is the supply of goods by an Indian manufacturer to the applicant, and the second transaction is the supply of the same goods by the applicant to an overseas customer. The issue before the AAR was whether the second transaction would be classified as a supply of goods or services and whether it would be zero-rated or not.
- The AAR observed that the Indian manufacturer is the exporter of the goods as he undertakes to supply the goods and complete all export compliances, including filing of Shipping Bill as an exporter and receiving the Bill of Lading from the shipper. The manufacturer exports the goods in terms of Section 2(5) of the IGST Act, 2017, and is, therefore, the exporter of the goods. Thus, in the first transaction, the place of supply of goods shall be the location outside India in terms of Section 11(b) of the IGST Act, 2017.
- In the second transaction, the goods are supplied from a location outside India to another location outside India, that is, the supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering India. The AAR held that this transaction is covered under Entry 7 of Schedule III of the CGST Act, 2017, which treats such a transaction or supply as neither a supply of goods nor a supply of services.
- In conclusion, the AAR held that the supply of goods from the applicant to the overseas customer is treated neither as a supply of goods nor as a supply of services and is not subject to GST.
[M/s Marubeni India Pvt Ltd]
High Court permits rectification of errors in GSTR-01 return beyond statutory time limit
- M/s Shiva Jyoti Constructions, the petitioner, filed a Writ Petition in the High Court seeking permission to rectify their GST returns for September 2017 to March 2018. In their original returns, they had mistakenly shown transactions as B2C instead of B2B, which resulted in the loss of input tax credit to the recipient. The petitioner discovered the error in filing of GSTR-1 in the year 2020, by which time the statutory time limit to rectify the errors in GST returns had already passed.
- The High Court of Odisha granted the petitioner’s request to resubmit the corrected B2B entry and directed the Department to receive the corrected entry manually and facilitate the uploading of the details in the portal. The Court’s decision was because there was no tax evasion and that the only issue was the allowance of ITC benefit to the recipient.
[M/s Shiva Jyoti Constructions]
Foreign Trade Policy update
Government introduces amnesty scheme for Advance Authorization and EPCG Authorization holders
- The scheme covers the authorizations issued under Advance Authorisation Scheme and EPCG Scheme until 31.03.2015 and authorizations issued before that, whose Export Obligation Period was valid beyond 12.08.2013.
- To avail the scheme, the authorization holder must register on the website https://www.dgft.gov.in before 30.06.2023 and pay all customs duties that were exempted in proportion to unfulfilled Export Obligation, along with maximum interest at the rate of 100% of such duties exempted by 30.9.2023. In other words, interest is capped at 100% of duty amount.
- However, no interest is payable on the portion of Additional Customs Duty and Special Additional Customs Duty.
- The Regional Authority of DGFT will examine the request and issue a letter granting Export Obligation Discharge Certificate (EODC) based on the evidence of payment and other relevant documents.
- In case of an appeal, firms must produce a copy of the closure letter from the concerned Regional Authority to the Adjudicating Authority, and on submission of such closure letter, the Adjudicating Authority/Appellate Authority will decide on the closure of such case/appeal and inform the same to the appellant and concerned Regional Authority.
- The scheme does not allow CENVAT Credit or Refund on duties paid under this scheme, and the applicant must give an undertaking that they will not file any application for CENVAT Credit or refund of any duty paid under this scheme before any authority and/or before any court of law.
- In cases where duty is already deposited along with applicable interest in full are not eligible for coverage under this scheme.
- Cases under investigation or cases adjudicated for/involving fraud, misdeclaration, or unauthorized diversion of material and/or capital goods will be excluded from the coverage.
AI: Ready or Not, Here I Come
- Whenever a new technology comes into play, there are always apprehensions in society. Change is hard for a species such as human beings whose entire survival was contributed to adaptability; the irony of the modern society is not missed here. We have seen similar anxiety during the introduction of computers, the fear of job loss, fear of having lack of technical prowess in the newly introduced sector are reasonable arguments for such patterns to arise in history. Computers were a turning point in human history just like the agricultural revolution and industrial revolutions. I am sure the work force at the time may have stumbled in the short term but what we can learn from history is that we adapted to it in the long term. We are at such a turning point right now in human history with the unleashing of Artificial Intelligence into society.
- It is astonishing that after seeing so many post-apocalyptic movies of AI taking over the world, we still haven’t come up with ways to manage or regulate AI. It is astonishing to see that a world filled with constraints, red tapes, regulations, and compliances gave a free hand in developing a technology that has the power to define or redefine the course of human history. Surprisingly, in the age of social media where ideas and information are said to have free flow, we can’t see a meaningful discussion on this matter that takes in the current worries of the stakeholders that it impacts. Wherever we look, what we see are confused institutions (government or non-governmental) who doesn’t have any clear answers, and tech giants in the race to put out the best version of AI technology out there without any leash or analysis of the impact it might have on the current employment ecosystem, and not to forget the experts and commentators with their dooms day predictions. No wonder there is chaos and confusion when it comes to the subject of AI everywhere.
- The tech and tech companies now have no boundaries and for many years now have crept and bypassed into the space of sovereignty, democracy, and legality of systems in place. The decisions made about the future are taken by a handful of tech leaders in the world. Before we jump the gun to make the most powerful AI system in the world, it is important to make sure that we have systems in place to make sure that the effects would be positive, and the risks will be manageable. Corporates should view the issue through ways in which they implement a change management in their organization. Companies prepare for change, study the change and analyze the impact of the change before implementing those changes on the ground. Most efficient of the private institutions understand that change is hard to come by and the underlying impacts are hard to notice. Such care given to corporate governance should be followed when implementing changes in societies as well.
- Indian tech giant Infosys’s founder, NR Narayana Murthy, in a recent interview has said that AI has the power to make our life more convenient by being assistive to us rather than replacing us. We have a few leaders who follow parallel lines of AI, helping us out and increasing our productivity. They believe the power to creatively use AI still lies with humans. We have seen the patterns in history, where agricultural revolutions changed the lifestyle of our species and during industrial revolution machineries replaced manual labors in the farms and people found jobs in urban centers of manufacturing. We have seen the birth and rise of many service sectors after the Information technology revolution. Furthermore, we have to our inherent ability to adapt to rely on. However, we would still be dependent on institutions, national and international, to take a pause and then jointly develop a set of shared protocols for advanced AI design and development that are rigorously audited and regulated.
Customs updates
Government amends MOOWR scheme, provides for upfront payment of integrated tax and compensation cess
Presently, under the Manufacture and Other Operations in Special Warehouse Regulations, 2020 (“MOOWR”), import duties (BCD and IGST) are deferred until goods are cleared for home consumption or exported, without any interest. Duties are only paid when capital goods or raw materials are cleared for home consumption under Section 68 of the Customs Act, 1962.
The Finance Act, 2023 introduces a new Section 65A in the Customs Act, 1962 which has been made effective from 1.4.2023. The key provisions of Section 65A are as follows:
- Integrated tax and compensation cess will now be payable upfront on all goods imported under the MOOWR Scheme.
- A bill of entry for home consumption will have to be filed upon removal of goods for the purpose of deposit in the warehouse.
- A bill of entry for home consumption will also be required upon removal of goods from one warehouse to another warehouse, for goods already deposited on the date of notification of Section 65A, for which no bill of entry for home consumption was filed originally.
- The Central Government may issue a notification exempting certain specified goods, importers, or sectors operating under the MOOWR Scheme from the application of this section.
- This amendment will not apply to dutiable goods already deposited in the warehouse or permitted to be removed for deposit in the warehouse prior to the date of notification of Section 65A.
These changes will have significant implications for importers operating under the MOOWR Scheme. They will need to factor in the upfront payment of integrated tax and compensation cess while importing goods and comply with the new filing requirements for bills of entry.
Government introduces phase wise implementation of Electronic Cash Ledger under the Customs Act from 1.4.2023
Section 51A of the Customs Act mandates that payment of duty, interest, penalty, fee, or any other amount under the Act be made through the Electronic Cash Ledger (ECL). The Customs (Electronic Cash Ledger) Regulations, 2022, govern the operationalization of the ECL. The implementation of the ECL was deferred until 31.03.2023 due to the pending development of IT infrastructure and necessary integration with authorized banks.
As of 01.04.2023, the first phase of the ECL implementation has been initiated, and payment of customs duty, cess, surcharge, integrated tax, compensation cess, interest, penalty, and fees will be required to be made through the ECL. However, certain categories are exempted, as outlined below:
- Deposits for goods imported or exported at customs stations where the Customs Automated System is not in place.
- Deposits for accompanied baggage.
Deposits for goods imported or exported at International Courier Terminals.
In the second phase, which starts from 01.05.2023, all payments related to courier shipments will be required to be made through the ECL, except for deposits related to goods imported or exported at International Courier Terminals.
It is important to note that TR-6 challan payments made through authorized bank counters at customs locations will be exempted from the provisions of section 51A until such activity is also migrated to the ECL in subsequent phases.
Government waives interest on import customs duty from 1.4.2023 to 10.4.2023 for delay caused due to technical glitches
With effect from 1.4.2023, payment of customs duty on import of goods is required to be made through electronic cash ledger (“ECL”). However, due to technical glitches in the newly implemented system, the importers faced various issues while making payments, including issues with generating OTP, duty challans not being timely updated, and technical difficulties being faced in duty payments through NEFT/RTGS.
As a result, the CBIC has issued Customs (Waiver of Interest) Order, 2023, which waives the whole of interest payable under Section 47(2) of the Customs Act for the period starting from 1 April 2023 up to and including 10 April 2023, in respect of goods where the payment of import duty was to be made from the amount available in ECL. Additionally, the Order allows importers to claim a refund of interest in accordance with Section 27 of the Act for Bills of Entry where import duty payment has already been done and integrated in ICES.
CORPORATE LAW UPDATE
Due Dates under the legislation
- ECB 2 Return for the month of April 2023 to be filed on or before 7 May 2023.
- MSME Return for the period of 1 October 2022 to 31 March 2023 to be filed on or before 30 April 2023.
Legal Updates
SINGAPORE UPDATES
Latest Updates
Accounting and Corporate Regulatory Authority (ACRA)
1)Changes to How ACRA Information Products are Downloaded
- From 4 March 2023, customers purchasing ACRA’s information products need to download the products from the ACRA iShop homepage (i.e., Product Download Module, by entering the receipt number and the delivery email address provided.
- Previously, customers downloaded their purchased information products by clicking on a link sent to their email addresses. As a deterrent measure to counter phishing scams, download links will be removed from emails sent by ACRA from 4 March 2023.
- Customers who are eligible to receive a free business profile upon successful registration/incorporation as well as filing of their annual returns, annual declarations, or renewal of business registration, can retrieve the receipt number from their personal dashboard (i.e., message widget) in Bizfile+ and proceed to download the free business profile from the ACRA iShop homepage.
2) Serving the Accountancy Sector as One Entity
- With effect from 1 April 2023, the Accounting and Corporate Regulatory Authority (ACRA), the Singapore Accountancy Commission (SAC) and the Accounting Standards Council (ASC) will merge as one entity. The merged entity will take on the name of ACRA.
- The merger will strengthen the effectiveness of regulation, standards-setting, and sector development by harnessing synergies across complementary accountancy-related functions.
- The merged ACRA will take on SAC’s role to develop the accountancy sector. The Accounting Standards Committee to be set up by ACRA will set accounting standards for companies, charities, co-operative societies and societies in Singapore, a function now carried out by the Accounting Standards Council.
3) Chat with ACRA Digital Assistant - Ask Ada
- As part of ACRA’s on-going efforts to improve our services, customers will be served by ACRA’s new digital assistant, Ask Ada from 17 March 2023.
- Ask Ada is powered by natural language processing and predictive analytics to answer your questions with greater accuracy. Following the successful pilot last year for selected topics and eServices, Ask Ada will replace ACRA’s existing digital assistant, Ask Jamie to help customers with their queries on a larger range of topics including sole-proprietorships/partnership, local companies, limited liability partnerships and foreign companies as well as ACRA’s new trustBar verification service.
- Besides just answering questions, Ask Ada can also help users with service transactions such as performing renewal or cessation of business registration and even making payment seamlessly within the chat itself.
Monetary Authority of Singapore
1) Launch of Cross-border QR Code Payments Connectivity between Singapore and Malaysia
On 31st March 2023, The Monetary Authority of Singapore (MAS) and Bank Negara Malaysia (BNM) today launched a cross-border QR code payment linkage between Singapore and Malaysia. This payment linkage will allow customers of participating financial institutions to make retail payments by scanning NETS QR and DuitNow QR codes. It will support in-person payments through the scanning of physical QR codes displayed by merchants, and online cross-border e-commerce transactions.
The NETS-DuitNow QR code payment linkage is a key milestone in the on-going collaboration between Singapore and Malaysia to enhance cross-border payments connectivity. With pre-pandemic annual traffic between the two countries averaging 12 million visitors, the payment linkage will provide merchants and consumers with a more seamless and efficient means to make and receive payments. This initiative is testament to both countries’ commitment to improve the cost, speed, access and transparency of cross-border payments, in line with the ASEAN Payment Connectivity Initiative and the G20 Roadmap for Enhancing Cross-border Payments.
This cross-border QR code payment linkage is made possible through the strong collaboration of various industry players from both countries, including Network for Electronic Transfers (Singapore) Pte. Ltd (NETS), the Association of Banks in Singapore, Payments Network Malaysia Sdn. Bhd. (PayNet), and participating financial institutions from both countries.
In the next phase, MAS and BNM plan to expand the payment linkage to enable cross-border account-to-account fund transfers and remittances. This will allow users to make real-time fund transfers between Singapore and Malaysia conveniently using just the recipient’s mobile phone number via PayNow and DuitNow. This service is expected to go live by end-2023.
Inland Revenue Authority of Singapore
1) Income Tax: The General Anti-avoidance Provision and its Application
On 31 March, 2023, the Inland Revenue Authority of Singapore (IRAS) published the Second edition of the e-tax guide (the “Guide”) on Income Tax and Stamp Duty: Mergers and Acquisitions Scheme. Income Tax: The General Anti-avoidance Provision and its Application.
The latest amendments made are:
Inserted new tax avoidance categories and examples in section 6:
- Setting up of conduit entity to obtain treaty benefit for the purpose of avoiding withholding tax
- Assignment of debt to an offshore jurisdiction for the main purpose of obtaining tax advantage
Inserted section 9 on section 33A surcharge :
2) Carry-Back Relief System
On 31 March 2023, the Inland Revenue Authority of Singapore (IRAS) published the Eight edition of the e-tax guide (the “Guide”) on Carry-Back Relief System.
The e-Tax Guide has been updated with the following changes:
- Renumbered provisions in the Income Tax Act 1947 (2020 Revised Edition)
- Addition of “a body of persons” in paragraph 7.1 and footnote 4 to incorporate the changes under section 37D(4AA) with effect from YA 2023. The subsequent footnotes were renumbered
- Editorial changes to footnote 6 and paragraph 9.4
