Archives May 2021

Section to be discussed with relevant Rules:

Section 44AB	Audit of Accounts
With Section 44AD	Presumptive Income from Business
With Section 44ADA	Presumptive Income from Profession
Rule- 6G	Audit Report
Section 271B	Penalty

Section 44AB. Every person-

(a)  Carrying on business and his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds “One crore (1 Crore) rupees” in any previous year:

Provided that in the case of a person whose-

(a)  Aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent  (5%) of the said amount; and

(b)  Aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent (5%) of the said payment,

Above clause shall have effect as if for the words “one Crore (1 Crore) rupees”, the words “five Crore (5 Crore) rupees” had been substituted; or]

Note:

• The Finance Act-2021 has increased the threshold limit under this section from Rs. 5 Crores to Rs. 10 Crores
• Where cash transactions do not exceed 5% of total cash transactions. It is further clarified that transactions settled through non-account payee Cheque and Demand dreaft shall be treated as “Cash Transactions” for the purpose of computing the threshold limit of 95% digital transactions.

(b)  Carrying on profession and his gross receipts in profession exceed fifty lakh (50 Lakh) rupees in any previous year; or

(c)  Carrying on the business and the profits and gains from the business are deemed to be the profits and gains of such person under Section 44AE or Section 44BB or Section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or

(d)  Carrying on the profession and the profits and gains from the profession are deemed to be the profits and gains of such person under Section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or

(e)  Carrying on the business and the provisions of sub-section (4) of Section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year

Section 44AD(4) Where an assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1), he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1).

Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore (2 Crore) rupees in such previous year:

Provided further that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later :

Provided also that in a case where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section.

Summary:

For Resident Professionals (Sec 44AB + Sec 44ADA)

For Business (Sec 44AB + Sec 44AD) (Resident Individual /HUF/Firm (excluding LLP)

For Business (Sec 44AB + Sec 44AD) (Other Assessees)

Rule 6G- Report of audit of accounts to be furnished under section 44AB

Penalty u/s 271B

According to section 271B, if any person who is required to comply with section 44AB fails to get his accounts audited in respect of any year or years as required under section 44AB or furnish tax audit report, the Assessing Officer may impose a penalty. The penalty shall be lower of the following amounts:

(a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such year or years.

(b) Rs. 1,50,000.

However, according to section 271B​, no penalty shall be imposed if reasonable cause for such failure is proved.

Examples: Applicability of 44AD/44ADA & 44AB

Section to be discussed with relevant Rules under Chapter VI Input Tax Credit of CGST Act, 2017

17

Apportionment of credit and blocked credits

38,42 & 43

Section 17(1) the registered person used goods or services or both “partly for the purpose of business and partly for other purposes”, the amount of input tax credit available shall be restricted to so much of the amount as is attributable to the purpose of his business.

Section 17(2) read with Rule 42 & 43 Where the purchased goods or supply used by the registered person partly for taxable supply including zero rated and party for exempt supply, than the amount of credit shall be restricted to the amount attributable to the said taxable supplies including zero-rated supplies.

Section 17(3) – Inclusions in the Value of Exempt supply:

1. Outward Supplies on which recipient is liable to pay tax under reverse charge,
2. Transaction in securities (value shall be 1% of sale value),
3. Sale of land (value shall be the same as adopted for the purpose of paying stamp duty)
4. Sale of building subject to para 5(b) of schedule II (value shall be the same as adopted for the purpose of paying stamp duty)

Definition of Exempt Supply:

“Exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;

Section 17(4) – Apportionment of Input Tax Credit in case of Banking Company (including NBFC).

OPTION 1: Comply with the provisions of Section 17(2) read with Rule 42 & 43.

OPTION 2: Avail an amount equal to fifty per cent of the eligible input tax credit on inputs, capital goods and input services in that month.

The option once exercised shall not be withdrawn during the remaining part of the financial year. (1^st Proviso)

It may be noted that the restriction of fifty per cent (50%) shall not apply to the tax paid on supplies made by one registered person to another registered person having the same Permanent Account Number. (2^nd Proviso)

Section 17(5) – Blocked Credit

Input tax credit shall not be available in respect of the following:

a) Motor Vehicles for transportation of persons having seating capacity up to 13 persons (including drivers), Except Making the following taxable supplies:

1. Further supply of such motor vehicles,
2. Transportation of passengers, or
3. Imparting Training on driving such motor vehicles.

aa) Vessels and aircraft except when they are used for making the following taxable supplies, namely:—

                                   &

For transportation of Goods.

ab) Services of general insurance, servicing, repair & maintenance so far as they relate to clause (a) & (aa)

Provided the ITC shall be available for the following:

Where the motor vehicle, vessel or aircraft are used for the purposes specified in above clauses.

• Manufacture of such vessel, vehicle or aircraft, or
• Supply of general insurance in respect of such vehicle, vessel or aircraft insured by him.

b) i) Supply of  goods and services being:

Allowed ONLY if goods / services of a particular category are used towards making taxable outward supplies of the same category, or as an element of composite & mixed supply.

*except when used for the purposes specified in clause (a) & (aa) above.

ii) Membership of a club, health & fitness center and

iii) Travel benefits extended to employees on vacation such as leave or home travel concession.

Allowed ONLY where the services are notified as obligatory for an employer to provide to an employee.

c) Works contract services, except where it is an input service for further supply of works contract service.

d) Goods or services received by a taxable person for construction of an (Immovable property on his own account even when used in course or furtherance of business.)

e) Taxes on supply of goods or services paid u/s 10

f) Goods or services or both received by a non-resident taxable person except on goods imported by him, shall not be allowed

g) Goods or services or both used for personal consumption

h) Goods lost, stolen, destroyed, written off or disposed of by way of gift or free supplies and

i) Any tax paid in accordance with the provisions of sections 74, 129 and 130

Rule- 42 Determination of Input Tax Credit in respect of Inputs or Input Services and Reversal thereof:

	Total Credit	T
Less:	Non Business	T1
Less:	Exclusively for Exempt	T2
Less:	Blocked Credit u/s. 17(5)	T3
	Credited to Electronic-Credit ledger	C1
Less:	Exclusively for taxable	T4
	Common	C2
Less:	Proportional to exempt (C2*E/F)	D1
Less:	Non business (5% of C2 if C2 contains Non business)	D2
	Credit to be taken	C3

Key points for Rule 42:

1.     Credit calculated on provisional basis shall be computed finally before due date of filing returns for the month of September following the end of the FY to which credit relates;

2.     In case amount calculated exceeds the provisional calculation the differential amount shall be added to the output tax liability

3.     Interest from the month of April of next FY till the date of payment to be paid

4.     In case amount finally calculated is short of the provisional calculation, the differential amount shall be taken as credit in the month of September

5.     It is to be noted that the reversal to be done at the end of the financial year is only applicable for Rule 42.

Introduction:

• GST is a comprehensive value added tax system that allows uninterrupted flow of credit among different sectors.
• Tax is levied at each stage of value addition. The tax charged at previous stage is passed on to next stage in form of Input tax credit.
• A registered person can take the credit of input tax subject to conditions and restrictions as prescribed and elaborated in next section of the presentation.

Section to be discussed with relevant Rules under Chapter VI Input Tax Credit of CGST Act, 2017

Sections	Section Heading	Rules
16	Eligibility and conditions for taking input tax credit	36 & 37

As per Section 16(1) Goods or services or both, whose credit is to be availed are used or intended to be used in the course or furtherance of business by every registered person, subject to conditions and restrictions as specified under section 49 (Payment of tax, interest, penalty and other amounts) of CGST Act.

As per Section 16(2) registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both as mention above have to fulfill below mention conditions:

• Such registered person have in possession of a tax invoice or debit note issued by a supplier or such other tax paying documents as may be prescribed.

Explanation:

Rule 36(1) issued for Documentary Requirements for claiming ITC says.

• Such registered person has received the goods or services or both.

Explanation: It shall be deemed that the registered person has received the goods or Services in below cases. (Or called exceptions)

1. Goods are delivered by the supplier to a recipient or “any other person” on the direction of such registered person- (Bill to – Shipped to concept) as agent or otherwise.
2. Services are provided by the supplier to any person on the direction of and on account of such registered person.

• Tax charged on goods and services or both have been actually paid to the government, either through cash or input tax credit, subject to condition of section 41 (Tax charged on goods and services have been actually paid to the government)

• Such registered person furnished the return under section 39.

Key Points from Proviso:

1. In the case of goods which are “Sold in lots or in Installments”, starting lots are send to the receiver under the cover of delivery challan. Invoice is being sent along with the last lot or installment. Therefore, ITC on such goods can be availed only when last lot or installment has been received
2. In the case the Invoice has been issued by the vendor and ITC has been claimed correspondingly for such invoice but the “Material is still in transit” then such claimed credit need to be reversed until the delivery not completed. Interest Liability on such credit depends upon the utilization of the Credit.
3. If the recipient “Fails to pay the amount” towards the value and tax thereon to the supplier of goods or services within 180 days, the amount of credit availed to the non-payment by the recipient will be added to its output tax liability along with interest thereon in the manner as prescribed. The said period of 180 days is to be calculated from the date of invoice.

The credit reversed earlier can be re- claimed once the payment has been made to the supplier. No time limit has been prescribed to re-claim the credit.

As per Section 16(3) if the registered person (Recipient) has claimed depreciation on the tax component of the cost of capital goods and plant and machinery, then input tax credit on the said tax component shall not be allowed.

As per Section 16(4) Time limit to avail Input tax credit.

Explanation Rule 36(4):

ITC to be availed by a registered person in respect of Invoices or Debit Notes, the details of which have not been uploaded by the supplier under GSTR-1, shall not exceed 5% of the eligible credit available in respect of Invoices or Debit Notes the details of which have been uploaded by the supplier in GSTR-1

What is Input Service Distributor under GST Law?

A supplier of goods /services may have various offices such as head office (registered office), regional office, branch office, sales depot etc., Such units having large share of common expenditure (input services) but get invoiced on centralized location may obtain registration as an Input Service Distributor for availment of credit on such input services and distribution of credit to other units and strengthen the seamless flow of credit under GST.

Key points from Definition of ISD under section 2(61) of CGST Act:

1. ISD mechanism is meant only for distribution of the credit on common invoices pertaining to input “only for services and not goods” (inputs or capital goods).
2. The ISD distributes credit of to a supplier of goods/services having office in different locations but registered under same PAN.
3. An ISD will have to take a separate registration as such ISD compulsorily.
4. No threshold limit for registration for an ISD.
5. ISD issues tax invoice or other prescribed documents for distribution of credit.
6. The concept of ISD under GST is carried over from the Service Tax Regime.

Example:

The head office of M/s XYZ Limited is located in Mumbai having branches in Chennai, Bangalore and Kolkata. The head office incurred Business promotion expense (service) for beneficial for company as a whole and received the invoice for the same. Since the advantage of promotion is benefiter to all its branches, the input tax credit of entire services cannot be claimed in Mumbai. The same has to be distributed to all the locations. In this case the head office at Mumbai is the Input Service Distributor (ISD).

How to credit distributed by ISD?

As per Section 20 (1)of CGST Act 2017, states that the Input Tax Service Distributor (ISD) shall distribute the credit (ITC) of CGST as CGST or IGST and IGST as IGST, by issue of a document containing the amount of Input Tax Credit (ITC) being distributed in such manner as may be prescribed in rule 54(1) of the CGST Rules, 2017, and it is clearly mentioned that such invoice that it is issued only for distribution of input tax credit.

Credit of	Distributed As (if Recipient  in same State)	Distributed As (if Recipient  in different State)
CGST	CGST	IGST
IGST	CGST or SGST	IGST
SGST	SGST	IGST

The credit has to be distributed only to the branch/unit to which the supply is directly attributable. If input services are attributable to more than one recipient of credit, the distribution shall be in the “Pro-rata basis of turnover” during the Relevant Period.

Aggregate of the turnover of all such recipients to whom such input service is attributable and which are operational in the current year.

Meaning of “Relevant Period”

(a) If the recipients of the credit have turnover in their State in the preceding financial year during which credit is to be distributed, the said financial year, or

(b) If some or all recipients of the credit do not have any turnover in their State in the preceding financial year during which the credit is to be distributed, the last quarter for which details of such turnover of all the recipients are available, previous to the month during which credit is to be distributed.

Key points from Distribution process:

1. For the purposes of distributing the input tax credit, an ISD has to issue an invoice/relevant document, as prescribed in rule 54(1) of the CGST Rules, 2017, clearly indicating in such invoice that it is issued only for distribution of input tax credit.
2. The input tax credit available for distribution in a month shall be distributed in the same month and details for the same should be furnished in FORM GSTR-6 (Monthly Return)
3. An ISD shall separately distribute both the amount of eligible and ineligible input tax credit.
4. An ISD cannot accept any invoices on which tax is to be discharged under reverse charge mechanism. If ISD wants to take reverse charge supplies, then in that case ISD has to separately register as Normal taxpayer.
5. The amount of the credit distributed shall not exceed the amount of credit available.
6. Excess credit distributed can be recovered along with interest only from the recipient and not from ISD. The provisions of section 73 or 74 would be applicable for the recovery of credit.

The Hon’ble Finance Minister presented the Union Budget 2021 on 01 February 2021 wherein announced “No depreciation to be allowable on Goodwill from 01 April 2021” (assessment year 2021-22 onwards).

The tax authorities always argued that the depreciation on goodwill in business restructuring like Merger and Acquisition should be disallowed. The rationale beside that no allocable cost is actually incurred for the creating the goodwill and the goodwill is not specifically included in section 32 (Depreciation allowed on Tangible and Intangible Assets) of the Act. The matter has been argued at many judicial forums including the Supreme Court.

In 2012, Supreme Court settled this controversy in the case of Smifs Securities Limited. In this case, depreciation on goodwill arising in the course of amalgamation, the Supreme Court held that the goodwill arising out of excess consideration paid on and over the fair value of assets on business acquisition would qualify as Intangible assets as “any other business or commercial rights of similar nature” applying the principle of ‘ejusdem generis’ to the words used in the meaning of intangible assets

Finance Bill, 2021, above controversy settled by amendments on prospective basis to clarify that no depreciation would be allowable on goodwill from 01 April 2021 (assessment year 2021-22 onwards).

The proposed amendments by Finance Bill, 2021 are as below:

 1.  Section 2(11) – Block of asset has been amended to clarify it does not include goodwill of a business or profession.

 2.  Section 32 has been amended that intangible depreciation is not allowable on goodwill of a business or profession. Further, definition of asset has been amended to exclude goodwill of a business or profession as an asset for the purpose of section 32.

 3.  Section 50 – Computation of capital gains in case of depreciable assets has been amended to provide that where goodwill forms part of block of asset for assessment year 2020-21 and depreciation has been claimed, the written down value of the block would be determined in the prescribed manner. The rules prescribing the computation mechanism will be notified in due course.

 4.  Section 55 – Cost of acquisition has been amended in relation to goodwill of a business or profession if:

 (i)  Goodwill acquired from a previous owner, the cost would be the purchase price of the owner

(ii) Goodwill acquired as a result of gift, amalgamation, and merger. Goodwill was acquired by previous owner; cost will be the cost to the previous owner

(iii) In all other cases- cost will be nil.

It is also been clarified that where depreciation has been claimed on the goodwill preceding to assessment year 2021-22, the same would be reduced from written down value of the block of intangible assets.

Hon’ble Supreme Court Order on Extension of Limitation period:

1. In view of the Covid-19 pandemic the Hon’ble Supreme Court took suo motu cognizance of the situation arising from difficulties that might be faced by the litigants across the country in filing petitions/applications/suits/appeals/all other proceedings within the period of limitation and in furtherance of its Order dated 23 March 2020; issued another Order dated 8 March 2021^[1] wherein the Hon’ble Court in view of Covid-19 pandemic provided following directions:

• In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.

• In cases where the limitation would have expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply

2. However, once again due to ongoing rise in Covid-19 cases, the Hon’ble Supreme Court in furtherance thereof, have issued Order dated 27 April 2021 wherein the Court restored its earlier Order dated 23 March, 2020 thereby extending the period of limitation until further orders^[2] under both general and special laws.

3. One of the questions which arise is whether the above directions of Hon’ble Court would also apply to indirect tax matters. As the above Order extends the period of limitation under both general and special laws, it could be very well concluded that it shall also apply to indirect tax matters.

Limitation period under Goods and Service Tax (‘GST’):

4. The Central Board of Indirect Taxes (‘CBIC’) has issued Notification^[3] in exercise of the powers conferred under Section 168A of the Central Goods and Service Tax Act, 2017 (‘CGST Act’) granting following relief for completion / compliance by any authority or any person (viz., Passing order, issuance of notices, filing of appeal, reply or application or furnishing of any report, etc.

• Extension of time limit for completion / compliance of any action notified under the GST law which falls during the period 15 April 2021 to 30 May 2021 to 31 May 2021.

However, such relief is not available for actions falling under certain provisions mentioned in the exclusion list for Time of Supply, Registration, filing of GST Returns, issuance of Tax Invoice, Levy of Interest and Late fee, E-way bill, penalties, Arrest, Detention / Seizure etc.

• The time limit for completion of any action in relation to verification of registration applications by the tax authorities falling between 1 May, 2021 to 31 May, 2021 has been extended upto 15 June, 2021.

• Time limit for passing an Order, where notice for rejection of refund claim has been passed, which falls between 15 April, 2021 to 30 May, 2021 has been extended to fifteen days from receipt of reply from the registered person or 31 May, 2021, whichever is later.

Question under consideration:

5. The moot question arises is whether the taxpayer can take recourse to Hon’ble Supreme Court Order to file an appeal who have failed to do so by 31 May 2021 or in whose case the time limit to complete the action i.e., filing the appeal does not fall within the period 15 April 2021 to 31 May 2021?

Our Analysis:

6. It is pertinent to note that the above Orders have been issued by Hon’ble Supreme Court in exercise of powers under Article 142 read with Article 141 of the Constitution of India and are therefore binding on all Courts/ Tribunal and authorities.

7. Further, the notification issued under GST is in exercise of powers under Section 168A^[4] of the CGST Act, 2017 which grants power to Government to extend timelines in Special Cases i.e., due to force majeure and the expression “force majeure” as provided in Explanation to said section means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of the Act.

8. Therefore, it needs to be evaluated whether the notification issued under statutory provisions contained in GST is in contradiction to the directions issued by Hon’ble Court under Article 142 of the Constitution. In this regard, reference could be drawn to the judgement of Supreme Court in Delhi Judicial Service Assn vs State of Gujarat^[5] wherein it was held as under:

“No enactment made by the legislature can limit or restrict the constitutional power of the Supreme Court under Article 142, though the Court must take into consideration the statutory provisions regulating the matter in dispute.”

The above view was reaffirmed by the Court in Union Carbide Corporation Etc. Vs Union of India^[6]  wherein the Court held that:

“The proposition that a provision in any ordinary law irrespective of the importance of the public policy on which it is founded, operates to limit the powers of the Supreme Court under Article 142(1) is unsound and erroneous. … Perhaps, the proper way of expressing the idea is that in exercising powers under Article 142 and in assessing the needs of ‘complete justice’ of a cause or matter, the Supreme Court will take note of the express prohibitions in any substantive statutory provision based on some fundamental principles of public policy and regulate the exercise of its power and discretion accordingly.”

Although statutory provisions are not a limitation for exercise of constitutional powers by the Supreme Court under Article 142, the Court while exercising such power to do complete justice must consider them. In the present case, the directions have been issued to minimize the hardship faced by litigants-public which would have arisen in case of lapse of proceeding on account of being time-barred, thus, even though the notification provides a specific time limit, the vires of notification can be subject to challenge before the Courts on account of the specific Order of Hon’ble Supreme Court issued under Article 142 of the Constitution.

9. Further, we would also like to highlight that an Instruction was issued by the Ld. Principal Secretary/ Commissioner of Commercial Tax, Chennai^[7] with respect to cancellation of registration under Section 29 of CGST Act, 2017 wherein relaxation (to apply for Revocation of Cancellation) is provided to taxpayers in light of Supreme Court Order. The Instruction further states that the said suo moto Order binds the Proper Officer (being quasi–judicial authority) as well as the Deputy Commissioner, GST Appeals & Joint Commissioner, GST Appeals (being judicial authorities).

Conclusion:

10. Therefore, in our opinion the taxpayer can take a recourse to Hon’ble Supreme Court Order in case the taxpayer is unable to comply with the timelines or where the period of complying/ completing the action does not fall under the period as specified in said notification.

Disclaimer: All the above views, and thoughts expressed in the content belong solely to the author.

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^[1] In Suo Motu Writ Petition (Civil) No. 3 of 2020

^[2] The Hon’ble Court has listed the matter on 19 July, 2021 for next hearing

^[3] Notification no. 14/2021 – Central Tax dated 01 May 2021

^[4] Inserted vide the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020

^[5]  1991 AIR 2176, 1991 SCR (3) 936

^[6] 1992 AIR 248, 1991 SCR Supl. (1) 251

^[7] Instruction no. P/35/2021-ADC(RRC and M)-CCT-CTD dated 7 April, 2021

Some notifications issued by the Department to providing relief in current Pandemic Situation (Covid-19) in the country to the taxpayers on 1^st May, 2021

Notification No. 08/2021- Central Tax- Relaxation in Interest for the month of March -2021 & April -2021:

Notification No. 09/2021- Central Tax-Waiver of Late Fees for specified taxpayers and specified tax periods:

Notification No. 10/2021- Central Tax-Extension in due date of filling of GSTR-4  (Composition Scheme) for Financial year 20-21 to 31^st May, 2021   

Notification No. 12/2021- Central Tax-Extension in due date of filling of GSTR-4  (Composition Scheme) for Financial year 20-21 to 31^st May, 2021   

Taxpayers having Turnover Exceeding 5 Crore in Preceding Financial Year

(Big Taxpayers required to file GSTR-3B and GSTR-1 on monthly basis)

Period	Return Type	Due Date	Return Filing Date	Interest	Late Fee
March-21	GSTR-3B	20-04-2021	Till 05-05-2021	9 % for first 15 days	Nil
			After 05-05-2021	9 % for first 15 days than 18% thereafter	Rs. 20/50 per day
April-21	GSTR-3B	20-05-2021	Till 04-06-2021	9 % for first 15 days	Nil
			After 04-06-2021	9 % for first 15 days than 18% thereafter	Rs. 20/50 per day
April-21	GSTR-1	11-05-2021	Till 26-05-2021	Not Applicable	Nil
			After 26-05-2021	Not Applicable	Rs. 20/50 per day

Taxpayers having Turnover Upto 5 Crore in Preceding Financial Year

(Small Taxpayers required to file GSTR-3B and GSTR-1 on quarterly basis)

Period	Return Type	Due Date	Return Filing Date	Interest	Late Fee
Jan 21-March-21	GSTR-3B	22-04-2021	Till 07-05-2021	Nil for first 15 days	Nil
			Between 08-05-2021 to 22-05-2021	9 % for first 16th day to 30th day	Nil
			After 22-05-2021	9 % for first 16th day to 30th day than 18% thereafter	Rs. 20/50 per day
April-21	IFF	13-05-2021	Till 28-05-2021	Not Applicable	Nil

Composition Taxpayers

Period	Return Type	Due Date	Return Filing Date	Interest
Jan 21-March-21	CMP-08	18-04-2021	Till 03-05-2021	Nil for first 15 Days
			Between 03-05-2021	9 % for first 16th day to 30th day
			After 18-05-2021	9 % for first 16th day to 30th day than 18% thereafter
Jan 21-March-21	GSTR-4	30-04-2021	31-05-2021	Not Applicable

Notification No. 11/2021- Central Tax-Extension in due date of filling of ITC-04  for Financial year 20-21 to 31^st May, 2021:

ITC-04 is a declaration furnishing by the principal manufacturer in respect of the goods dispatched to Job workers for Job Work with certain conditions.

ITC-04 is a quarterly form. It must be furnished on or before 25th day of the month succeeding the quarter. According to the provision for Jan-21 to Mar-21 quarter, the due date is 25th April-21. But in the above notification, this due date of 25th April-21 is extended to 31st May-21.

Notification No. 13/2021- Central Tax-Compliance of Rule36(4) for the month of April-21 deferred till May-21 & IFF for April shall be available till 28^th May,21:

The CGST Rule-36(4)restrict taxpayer to claim ITC of 5% of the eligible credit available in respect of invoices or debit notes as per details uploaded by the suppliers.

Now as per this notification ITC claims to 5% of GSTR-2B (Auto populated) in GSTR-3B is relaxed for April 2021. The taxpayer can apply this rule cumulatively for both April-2021 and May -2021 while GSTR-3B for May 2021.

Further this notification extended due date to file IFF for the month of April-2021 by taxpayer opted QRMP scheme open to file originally from 1^st May -2021 to 13^th May-2021 now extended to 1^st May -2021 to 28^th May-2021.

Notification No. 14/2021- Central Tax-Extension of dates of various compliances till 31^st May-2021:

Notification under section 168A of CGST Act due date of compliance which falls during the period from the 15th April 2021 to 30th May 2021  extended to 31st May 2021.

Exception of above:

1. On section 39 but except Sub Section(3)- TDS Return u/s 51 (GSTR-7), Sub Section (4)- Return by Input service distributor (GSTR-6) and Sub Section (5)- Non- resident Taxpayer (GSTR-5)

It means the extension is allowed in all three sub sections as mentioned above.

2. Section 68 as far as E-way bill is concerned

3. Section 10 (3) – Composition Scheme shall lapse if turnover exceeds the prescribed limit.

Section 25- Procedure for registration.

Section 27- Provisions related to Casual taxable Person and Non- Resident taxable person

Section 31- Tax Invoice

Section 37- Furnishing details of outwards supplies

Section 47- Levy of Late Fee

Section 50- Interest on delayed payment of Tax

Section 69- Power to Arrest

Section 90- Liability of Partners of the firm to pay tax

Section 122- Penalty for certain offenses

Section 129- Detention, seizure, and release of goods and conveyance in transit.

What is Corporate Social Responsibility?

CSR is a responsibility of a Company’s towards the community and environment in which it operates. CSR is a way of conducting business, by which corporates contribute to the social good.

Companies contribute for the betterment of our society out of the profit as a mandatory provision under section 135 of Companies Act, 2013 for betterment of our society.

Applicability of CSR Provisions:

Every Company including its holding or subsidiary during the immediately preceding financial year having:

• Turnover of Rs. 1000 crore or more, or
• Net worth of Rs. 500 crore or more, or
• Net Profit of Rs. 5 crore or more.

This provision also apply to the foreign companies having branch office in India and fulfills the above mention conditions.

However, if a company ceases to meet the above criteria for 3 consecutive financial years then the company need not required to comply with these Provisions till such time it meets the specified criteria.

Composition of CSR Committee:

Every Company which fulfills the above mentioned CSR provision shall be required to constitute a CSR Committee.

• Committee Consist of 3 or more directors, out of that at least one director shall be an independent director. However, if the company is not required to appoint an independent director then shall have 2 or more directors in the Committee.
• CSR Committee Consist of 2 directors in case of a private company.
• CSR Committee Consist of at least 2 persons in case of a foreign Company of which one person shall be its authorized person resident in India and another nominated by the foreign company.
• However, if the expenditure of the company against CSR is not more than Rs. 50 lakhs, then it is not required to form the committee.

Functions of CSR Committee:

The Corporate Social Responsibility Committee shall,—

(a) Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as per Schedule VII,

(b) Recommend the amount of expenditure to be incurred on the activities referred to in clause (a),

(c) Monitor the Corporate Social Responsibility Policy of the company from time to time.

Responsibility of Board of Directors:

The Board of every company referred to in sub-section (1) shall,—

(a) After taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the Company and disclose contents of such Policy in its report and also place it on the Company’s website, if any, in such manner as may be prescribed; and

(b) Ensure that the activities as are included in Corporate Social Responsibility Policy is undertaken by the company or not; and

(c) Ensure that the company spends, in every financial year, at least 2% of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy.

(d) If the company fails to spend such amount, the Board shall, in its report, specify the reasons for not spending the amount as clause (o) of sub-section (3) of section 134 of the Companies Act.

For the term above “average net profit” shall be calculated as per the provisions of section 198:

	PARTICULARS	FY
	Net profit after tax*
Add	Allowed Credits
	Profit on sale of Immovable Property (Original Cost – WDV)
Less	Credits Disallowed
	Premium on Shares or Debentures
	Profit on sale of Forfeited Shares
	Profit on sale of Immovable Property (Sale Value – Original Cost)
	Surplus in measurement of asset or liability at fair value
Less	Expenses Allowed
	All the usual working charges
	Director’s Remuneration
	Bonus or Commission paid to Staff
	Tax on excess or abnormal profits
	Tax on business profits imposed for special reasons
	Interest on Debentures
	Interest on Loans
	Expenses on Repairs (other than Capital Expenditure)
	Contributions made under section 181 (Bonafide Charitable Trusts)
	Depreciation
	Prior period items
	Legal liability or compensation or damages
	Insurance Expenses
Add	Expenses Disallowed
	Income Tax
	Compensations, damages, or payments made voluntarily
	Capital Loss on sale of undertaking or part thereof (Not include losses on sale of asset)
	Expenditure in P&L on measurement of asset or liability at fair value

Activities permitted under CSR:

• Eradicating extreme hunger and poverty;
• Promotion of education;
• Promoting gender equality, and empowering women;
• Reducing child mortality;
• Improving maternal health;
• Combating human immunodeficiency virus, acquired, immune deficiency syndrome, malaria, and other diseases;
• Ensuring environmental sustainability;
• Rural development projects
• Slum area development.
• Protection of national heritage, art, and culture
• Employment enhancing vocational skills, social business projects;
• Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development, and
• Relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women, and such other matters as may be prescribed.

Other Important Point:

The Company shall give preference to the local areas around it where it operates, for expenditure earmarked for Corporate Social Responsibility activities.

CSR is not a donation or charity so 80G deduction not allowed on this expenditure.

However, if the expenditure of the company against CSR is not more than Rs. 50 lakhs, then it is not required to form the committee.

Penalty Provision:

The Government has amended the provision of Section 135 through the Companies (Amendment) Act, 2019 and inserted penalty provisions for companies as well as officers in default as follows;

a) Penalty for Companies: The company shall be punishable with a fine which shall not be less than 50,000 rupees and it may extend to 25 lakh rupees, and

(b) Penalty for Officer in default: Every officer of such company who is in default shall be punishable with imprisonment for a term which may extend to 3 years or with a fine which shall not be less than 50,000 rupees but it may extend to 5 lakh rupees, or with both.

Income tax Benefits:

It is very much clear that expenditure incurred as CSR is not incurred wholly and exclusively for the purpose of carrying on business so not allowed as tax deduction. But if such expenditures are in nature described in Section 30 to 36 of the Income Tax Act, 1961 shall be allowed as deduction.

THE ABOVE AMENDMENT SHALL BE APPLICABLE FROM 1ST APRIL, 2015

E- Invoicing:

‘E-Invoicing’ is a system in which B2B (Business to Business) invoices are authenticated electronically on the GST portal. Under the electronic invoicing system, a unique identification number will be issued against each and every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN). 

Invoice Registration Portal (IRP) is launched for the purpose of real time data sharing GST portal and E invoicing portal that eliminate the manual data entry in GSTR-1 as well as Part 1 of E way bills.  However, GST department issued an update on 1st February 2021 that while pulling the e-invoice data into the GST System, details of some invoices were not getting auto- populated into the GSTR-1. Complete data will take some more time to update. Hence taxpayers are advised not to wait for the complete auto-population of data, and instead proceed with preparing and filing the GSTR-1, by the due date, based on the data as per their records.

Applicability:

E- Invoicing is applies from 1^st Oct-20 to all taxpayers whose aggregate turnover has exceeded Rs.500 crore limit in any of the preceding financial years from 2017-18 to 2019-20 (Notification No.61/2020). Further, from 1st January 2021, the above limit is changed to 100 crore (Notification No.88/2020). Further, from 1st April 2021, the above limit is changed to 50 crore (Notification No. 5/2021).

Not Applicable to:

E-Invoicing is not applicable to Specified Businesses such as SEZ Unit, Insurer, Banking Company, Financial Institution, NBFC, GTA Service, Passenger Transport Service, and Admission to Multiplex for Films.

Eligibility for ITC:

If the Supplier of Goods and Services are required to issue E-Invoices and not comply with this requirement then no ITC is available to the Purchaser.  For this condition, it’s very difficult for the buyer to ascertain whether E- invoicing is applies to supplier or not. It’s better to take an Undertaking from the supplier.

Generation :

All the ERP software provides API backlinking of the ERP with the E-invoicing portal on real time basis to authenticate the invoice by a single click but under manual process, Bulk E- invoicing offline tool should be used and the JSON file uploaded in the IRP portal.

HSN Code Applicability:

CBIC (The Central Board of Indirect Taxes) issued Notification No. 12/2017-Central Tax dated 28^th June, 2017, to show specified digits of Harmonised System of Nomenclature (HSN)/ Service Accounting Code (SAC) Code on the tax invoices for supply of goods or services. Further, the above notification was amended vide Notification No. 78/2020 – Central Tax, dated 15^th October, 2020 to mandate 4/6- digit HSN/SAC Code on supply of goods or services on the tax invoices w.e.f. April 1, 2021:

Sr. No	Aggregate T/O in Preceding F.Y	No Of Digits of HSN Code upto 31st Mar-21	No Of Digits of HSN Code from 1st April-21
1	Upto 1.5 Crores	0	4
2	1.5 Crores to 5 Crores	2	4
3	More than 5 Crores	4	6

Thereafter,  Notification No. 90/2020 – Central Tax, dated December 01, 2020  issued to provide for the class of supply of ‘Chemicals’ whose HSN Code are required to be mentioned at 8-digit on the tax invoices.

Along with above notification 8 digits of HSN code is mandatory in case of export and imports under the GST.

Penalty:

Under section 125 – General Penalty of the Central Goods and Services Tax Act, 2017 n case of non-mentioning or mentioning wrong HSN code under the Goods and Service Tax Act, the maximum penalty of INR 50,000/- ( INR 25000/- for CGST and SGST each) shall be levied.

For the correct HSN code do visit on https://cbic-gst.gov.in/gst-goods-services-rates.html.