Direct Tax
Tax Department creates web portal for exchange of information
The tax department has recently launched a web portal, which will provide information including that of procedures related to automatic exchange of information under common reporting standard. Information is reported annually by financial institutions, which are then exchanged by India under the Common Reporting Standard. The web portal is a repository of policy and technical circulars, guidance and notifications issued by the CBDT, and provides link to relevant circulars and guidance issued by the regulatory authorities and other international bodies. The portal would not only be useful for the domestic financial institutions but will also help the foreign tax authorities and financial institutions to get information about the Indian laws, rules and procedures.
FM Nirmala Sitharaman ends MAT confusion: Reduced rate to be applicable from FY2019-20
The lower minimum alternate tax (MAT) rate announced as part of the corporation tax rate cuts in September will be applicable from the current fiscal year (2019-20 or FY20), Finance Minister Nirmala Sitharaman clarified on Monday in the Lok Sabha after an error in the Taxation Amendment Bill spooked companies. It had said the lower MAT rate of 15 per cent, down from 18.5 per cent, will be applicable from the next financial year (2020-21 or FY21), while the Ordinance had said the lower rate will be effective from the current financial year. The corrections were made by way of an official amendment.
Even those not audited must deduct TDS if total payment exceeds INR 50 lakh
The Ministry of Finance recently notified Form 26QD for TDS (tax deducted at source) return and Form 16D for TDS certificate under Sections 194M and 194N of the Income- Tax (I-T) Act. Budget 2019 had introduced two new Sections — 194M and 194N — for the purpose of TDS that became applicable from 1 September 2019. However, there was no clarity on the procedure for complying with these Sections. The Ministry of Finance has dealt with this issue through a notification dated 18 November 2019. Earlier, only individuals and HUFs subject to tax audit were to deduct the TDS, but after the notification even the ones who are not subject to tax audit are liable to deduct TDS on payments of above Rs.50 Lakhs. Personal payments and businesses not subject to tax audit were out of its purview till 1 September 2019.
Indirect Tax
ITC restricted to 10% of invoices appearing in GSTR-2A
In October 2019, the government had restricted ITC with respect to invoices not appearing in GSTR-2A to 20% of the ITC with respect to invoices appearing in GSTR-2A. This limit has now been further reduced to 10% of ITC pertaining to invoices appearing in GSTR-2A, with effect from 1 January 2020.
In October 2019, the government had restricted ITC with respect to invoices not appearing in GSTR-2A to 20% of the ITC with respect to invoices appearing in GSTR-2A. This limit has now been further reduced to 10% of ITC pertaining to invoices appearing in GSTR-2A, with effect from 1 January 2020.
Blocking of e-way bill
Now, the e-way bill functionality will be blocked for taxpayers who have not filed GSTR-1 for two tax periods. Earlier, this restriction was applicable only on non-filing of GSTR-3B.
Rate rationalization on lotteries
From 1 March 2020, state run lotteries would be taxed at the same rate as state authorized lotteries viz. 28%.
Conditions for use of amount available in electronic credit ledger
The Commissioner or GST officer (not below the rank of Assistant Commissioner) has been given the power to not allow utilization or refund of any amount in electronic credit ledger, if he has reasons to believe that the credit has been fraudulently availed or is ineligible due to the following reasons –
- The issuer/recipient of invoice is non-existent or not conducting business;
- The recipient has not received the goods/services or is not in possession of valid invoice;
- The tax charged in respect of the invoice is not paid to the government.