In general, the last date for filing income tax return is 31st July 2019 for the assessment year 2019-20. One need to report income pertaining to the financial year 2018-19 by this date. If one fails to file the income tax return by this date, there would be late fee consequences ranging from Rs 1,000 to Rs 10,000 as explained under.
India welcomes foreign nationals and organization to set up their business in India. India is a land of opportunities coupled with various government incentive schemes for start-ups.
It is important to choose an appropriate form of business entity, which would facilitate achieving the desired results. It is the first step towards setting up of any business. A foreign individual or company can set up business operations in India in the form of:
1. Foreign Company Representation
a. Liaison office – The office acts as the communication medium only
b. Branch office – Can do business as an agent of the foreign company
c. Project Office – Suitable in case of executing a single project
2. India Corporate Set-up
a. Wholly owned subsidiary – New Private Limited entity owned fully by Foreign company
b. Joint Venture – A new private limited with an Indian partner
c. Limited Liability Partnership – A new corporate entity in the form of partnership with an Indian player
Considering the popular modes, we have listed the main features of the following kind of structures.
|Liaison office||Branch Office||Wholly owned subsidiary|
|Legal Entity||No separate legal entity||Separate legal entity|
|Incorporation approval||Prior RBI approval||Post incorporation reporting|
|Foreign Direct investments||As per RBI framework|
|Commercial activity||Can act as a channel of communication only||Can act as buying/selling agent, can’t do manufacturing (except within SEZ)||Can operate complete business activity|
|Pre-requisites||Parent Company should have a profitable track record during immediately preceding three years in the home country and the net worth as per latest audited Balance Sheet should not be less than USD 50,000/- and USD 100,000 for opening a Liaison office and Branch office respectively.||No such requirement|
|Income Tax rates||Not applicable, as no business activity allowed||At the rate of 40%||At the rate of 25-30%|
|Tax on Repatriation of profits||None||Approx 17-20%|
|Exit from India||Faster and easy in comparison to other structures||Easier than wholly owned subsidiary||Complex in comparison to other structures|
One may please select upon these structures which cater to the requirements of the planned India entry.
With the various measures taken by Government to simplify GST, in a meeting of GST council, it was decided to change the basis of the rate of tax for Hotel Industry. The basis of rate was changed from ‘declared tariff’ system to ‘actual tariff’ system. Declared Tariff means the tariff declared by Hotel at any place like Board at the hotel, promotion material, at any digital platform and so on. In general practice, there is usually a difference between declared tariff and actual tariff.
The concept of declared tariff on the one side could have fetched more revenue to government but was very subjective and difficult to enforce. The notified change is a welcome move for industry which simplifies the procedure and arrests the unwanted valuation litigation. It will make things pocket-friendly and simple to understand for the end user as well.
The Indian Government has a focus of doubling the tourism foreign exchange earnings and has a target of 20 million foreign tourist arrivals (FTAs) by the year 2020. The measure should also help increase the country’s ranking in terms of ‘ease of doing business’ across countries.
The notification to this effect was issued on 26th July 2018 vide Notification No. 13/2018-Central Tax (Rate)
Introduction to Section 194C
As per Section 194C of the Income Tax Act, 1961 any payment to a transporter is subject to a Tax Deduction at Source (TDS) at the rate of:
1% in case if the payee is an Individual or a HUF, and
2% in case of other payees
In case, if such payment exceeds Rs. 30,000 per contract or aggregate of such payments of contracts in a financial year exceeds Rs. 100,000.
TDS on transporters for plying, hiring and leasing goods carriage
Old Provision (till May 31, 2015)
The earlier provision provides that no TDS be deducted from payments made to the transporters if the transporter furnishes his PAN to the payer.
New Provision with effect from June 1, 2015
The new provision of Section 194C limits the above cases for non-deduction of tax. Non-deduction of tax will be applicable only for small transport operators owning not more than 10 goods carriages for the financial year.
If the transporter is doesn’t own > 10 goods carriage at any time during the financial year, then deductor has to obtain a declaration from transporter along with the copy of a PAN before credit or payment to the transporter, whichever is earlier.
The transporter is liable for TDS if > 10 goods carriage is owned at any time during the year. The TDS has to be deduction at the time of paying charges to goods transporter. TDS will be deducted at the rate of 1% or 2% as per the status of Transporter.
With this amendment to the Act, reporting all deductions w.r.t Nil TDS on transporter payment in quarterly return (26Q) is made compulsory.
The person responsible for making the payment to the transporters, which is subject to tax, must collect following documents for such transactions:
Self-attested copy of PAN Card
Declaration of the fact that such contractor is neither registered nor the owner of more than 10 goods carriages.
Take help of mutual funds while investing in Gold, Debt and equity to eliminate many drawbacks of investing through other routes.
Forbes’ Best Countries for Business rankings, Singapore ranks at Rank 9, vis-à-vis India ranks at number 63.
Singapore is considered as world’s second best after New Zealand, when it comes to ease of doing business ranking by World Bank for year 2018. India positions at rank 100.
Singapore is, in fact, is considered the most friendly business environment for promoters. Let’s look at comparative business advantages if one does business in Singapore or India.
At India, the tax highest tax slab is 30% excluding 15% surcharge and other cesses, while at Singapore it is 22%
Tax on dividend
At India, dividend distribution tax is charged at 15%, while there is no dividend distribution tax at Singapore.
Income tax for companies
At India, a flat rate of 25% plus applicable surcharge is charged for small companies and 30% for plus applicable surcharge on bigger ones. In comparison, Singapore charges 17% corporate tax to companies.
Tax exemption for new companies
While there are stringent conditions to be met at India for claiming any tax advantage in initial years, Singapore gives full tax exemption on the first $ 100,000 chargeable income in first 3 years.
In the times of globalization, zero country borders, instant communication, every business wants to expand its wings across the globe. Singapore does offer a very good environment for your global needs.
In a series of steps taken by Government to curb shell companies, Government has made it mandatory for companies (companies formed on or before 31.12.2017) to file various return in e-Form ACTIVE (INC-22A) (Active Company Tagging Identities and Verification), listed as under:
- Email I’d (OTP based verification)
- Photograph of registered office showing external building & inside office also showing therein atleast 1 director/KMP who has affixed his DSC
- Latitude & longitude
- List of directors with name & approved DIN
- Details of Auditor, cost auditor, MD, CEO, CFO or WTD of co
- Company Secretary of co
- Details of AOC4 & MGT7 filed for 2017-18 with SRN
Before filing this form, the company must complete annual filings till 31.03.2018. The form is not applicable to Companies under Struck off, under the process of striking off, under the process of liquidation, amalgamated, dissolved companies as recorded in ROC records.
Last Date of filing form – 25.04.2019, the date got extended to 15.06.2019
Consequences of non filing:
- Fee of 10,000/- if filed after 25/04/2019.
- Marking of status of Company as “Active – Non Compliant” in MCA Master Data.
- Filing of following eforms will be barred: –
- SH-7 (Alteration in share capital)
- PAS-3 (Return of allotment)
- DIR-12 (Director change except cessation)
- INC-22 (change of address)
- INC-28 (for amalgamation /demerger)
Weblink of Rules: –
Applicable to whom:
All companies who get supplies of goods and services from the micro and small enterprises and payment to such vendors exceed 45 days.
What to file:
Need to file a one time return in Form MSME – 1 by 21st Feb 2019 followed by half yearly returns
What to report in Form:
Need to give the details of such identified vendors, amount of payment outstanding exceeding 45 days, reason of delay in payment
Consequences of wrong or delay or non-filing:
Penalty on company Rs 25,000
Every officer in default – Minimum fine Rs. 25,000 which may extend to Rs. 300,000 or Imprisonment which may extended to 6 months or both
Latest update dated 21.02.2019:
MCA General Circular 1/2019, Extension for last date of filing initial return in MSME Form I. The period of 30 days for filing initial return in MSME Form I shall start from the date the said e-form is deployed on MCA 21 portal. Form is still to be released.
Provisional assessment under GST
(Section 60 of The CGST Act, 2017)
If you are unable to determine your tax liability, the GST law has the option to pay tax on a provisional basis. This article explains the procedure of provisional tax assessment under GST and lists out various online application forms under GST law. The procedure can be effectively used to avoid tax litigations.
The provisional assessment provides a way for calculating the tax liability in case the correct tax liability cannot be calculated at the time of supply. The inability to determine the tax amount can be of two types
1. The inability to determining the rate of tax
2. The Inability to determine the value of goods or services
The payment of provisional tax can be made only against a bond and security. At the time of finalization, the tax liability can either be high or less as compared to the provisionally paid tax. In case of an increase in the tax liability, the difference is payable along with interest at a specified rate from the first day after the due date of payment of tax till the date of actual payment and in case of the decrease in the tax liability, the amount will be refunded with interest at a specified rate.
The assessee requesting payment of tax on a provisional basis has to furnish an application along with the supporting documents, electronically in FORM GST ASMT-01 on the common portal.
The Assistant Commissioner / Deputy Commissioner of Central Tax will scrutinize the application in FORM GST ASMT-01. In case, additional information or documents in support is required by the Assistant Commissioner / Deputy Commissioner of Central Tax to decide the case, notice in FORM GST ASMT-02 will be issued to the assessee requesting for submission of the same.
The assessee has to file a reply to the notice in FORM GST ASMT-03, and if he desires can also appear in person before the Assistant Commissioner / Deputy Commissioner of Central Tax to explain his view.
The Assistant Commissioner / Deputy Commissioner of Central Tax will then issue an order in FORM GST ASMT-04 within a period not later than 90 days from the date of receipt of Form GST ASMT-01, allowing the payment of tax on a provisional basis. The order will indicate the amount of tax payable and the amount for which the bond is to be executed along with the security to be furnished. The security in form of bank guarantee will not exceed 25 percent of the amount covered under the bond.
The assessee has to execute the bond in FORMGSTASMT-05 along with the security as bank guarantee for an amount as mentioned in FORM GST ASMT-04. After executing the bond the process of the provisional assessment is complete.
The provisional assessment has to be finalized within 6 months from the date of issuance of FORM GST ASMT-04. The Assistant Commissioner / Deputy Commissioner of Central Tax will issue a notice in FORM GST ASMT-06, calling for information and records required for finalization of assessment and shall issue a final assessment order, specifying the amount payable by the assessee or the amount refundable, if any, in FORM GST ASMT-07.
Once the order in FORM GST ASMT-07 is issued, the assessee has to file an application in FORM GST ASMT-08 for the release of the security furnished.
On receipt of this application, the Assistant Commissioner / Deputy Commissioner of Central Tax will issue an order in FORM GST ASMT-09 in within a period of 7 working days from the date of the receipt of the application for releasing the security after the amount payable specified in FORM GST ASMT-07 has been paid.
Assessment under GST
The article aims to highlight how tax assessment is carried under GST law. The law has very procedurally defined the steps and actions for assessee and GST officer.
Assessment means the determination of tax liability under GST law and includes self-assessment, re-assessment, summary assessment, and best judgment assessment. Given below are the various types of assessment under the GST Act.
- Self-assessment (Section 59)
- Provisional assessment (Section 60)
- Scrutiny assessment (Section 61)
- Best judgment assessment (Section 62 & 63)
- Assessment of non-filers of returns (Section 62)
- Assessment of unregistered persons (Section 63)
- Summary assessment (Section 64)
Only self-assessment is done by the taxpayer himself/itself. All the other assessments are undertaken by tax authorities. Under this article, we will discuss about self-assessment under GST, please refer to our other articles on the subject to read about various other assessments.
Self-assessment (Section 59)
Every registered person would be required to assess his tax liability in accordance with the provision of GST laws and report the basis of calculation of tax liability to the tax authorities, by the filing of periodic tax returns under section 39. Currently, Form GSTR 3B is being filed for declaring output and input tax details by assessees.
Related provisions if there is a delay in the filing of periodic tax returns: –
Section 47: – Levy of late fees
Any registered person who fails to furnish the details of outward or inward supplies required under returns required under section 39 by the due date shall pay a late fee of Twenty-five rupees for every day during which such failure continues subject to a maximum amount of five thousand rupees, equal amount of late fees under SGST act shall also be levied.
Provided that such late fees shall be reduced to Rs. 10 in case of nil reporting/liability during the tax period.
The late fee has recently been waived off for the returns being filed between 22nd December 2018 to 31st March 2019 for the period pertaining to July 2017 to September 2018
Section 50: – Interest on late payment of GST liability
(1) Every person who is liable to pay tax, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall pay on his own, interest eighteen per-cent or such rate as may be notified by the Government on the recommendations of the Council.
(2) The interest under sub-section (1) shall be calculated from the day succeeding the day on which such tax was due to be paid till the date of payment.
Further, the GST officer can levy penalties under Section 122 of the CGST Act, in case one file any wrong or false information in the GST returns.