Direct Tax

Curbing black money: Tax on cash withdrawals and estate tax on inherited property

The Narendra Modi government in its second term will put in place measures to further curb black money generation. The policymakers seem to have started considering possibility of re-introducing the much-flayed instrument of the banking cash transaction tax (BCTT) to discourage cash transactions.

This move of the government is seen as a measure to discourage the use of paper currency, crack down on black money and promote use of digital payments for all manners of transaction.

Further, the tax authorities are considering levying the estate tax on inherited property in line with global practices. The objective behind its reintroduction is said to bring an equilibrium in distribution of wealth and controlling the unfettered inheritance and boosting the tax revenue. Clarity on this aspect is expected on the upcoming budget.

India notifies tax info exchange pact with Marshall Islands

The tax information exchange agreement (TIEA) was signed on 18 March 2016 with Marshall Islands. The TIEA has been notified by India on 21 May 2019. The agreement enables exchange of information, including banking and ownership information, between the two countries for tax purposes. Additionally, representatives of one country may undertake tax examinations in the other country. The said agreement will enhance mutual cooperation between India and the Marshall Islands by providing an effective framework for exchange of information on tax matters which will help curb tax evasion and tax avoidance.

New income tax rules: No escape just by paying penalty

Tightening the screw on tax evaders, the revised guidelines issued by the Income Tax (I-T) Department have made serious offences under black money and benami laws "generally" non-compoundable. This means that a person or entity would not be able to settle a case of tax evasion by just paying the tax demand, penalty and interest. The new guidelines apply to all cases for compounding received on or after this date. The Central Board of Direct Taxes (CBDT) has listed 13 cases, where the offences are not to be generally compounded, and has directed its senior officers to circulate the revised guidelines for compliance by concerned authorities. Offences forming category 'A' include failure to pay tax deducted / collected at source under Chapter XVII-B or failure to pay dividend distribution tax.

Budget 2019: Modi Govt. may extend tax reliefs to SEZs to attract companies fleeing to China

The finance ministry is considering extension of the tax reliefs for the special economic zones (SEZs) in the coming budget in a bid to attract companies fleeing China to avoid adverse impact of the trade war with the US. The Budget 2016 had laid out a sunset clause for these exemptions as per which firms can sign in for the SEZ scheme only till 31 March 2020. The government has been considering extending the scheme by another five years or so.

Indirect Tax

Decisions in the 35th GST Council meeting

Extension in due date of GST compliances

Particulars Period Revised due date
Annual Return - GSTR-9
Financial year 2017-18
31 Aug 2019
Audit - GSTR-9C
Financial year 2017-18
31 Aug 2019
GST ITC - 04
July 2017 to June 2019
31 Aug 2019

Blocking of e-way bill for non-compliant businesses postponed

[Notification No. 25/2019 - Central Tax]

The applicability of Rule 138E of the CGST Rules, which blocks the functionality of generating e-way bills for businesses that do not file GST returns for two consecutive tax periods has been postponed to 21 August 2019.

Blocking of e-way bill for non-compliant businesses postponed

The e-invoicing system, which will allow generating invoices on the GST common portal has been approved in-principle by the GST Council. The e-invoice will also act as the e-way bill, and further would be auto-populated as the outward supplies of the business in the GST returns. The Phase I requiring e-invoicing of B2B invoices is proposed to be rolled out voluntarily from 1 January 2020.

Tenure of NAA extended by two years

The tenure of the National Anti-Profiteering Authority (NAA) has been extended by two years. Furthermore, the Council has also approved levying a penalty of up to 20% in case of non-deposit of the profiteered amount by the business.

GST rates on electric vehicles

The proposal for reduction of GST rates on the sale of electric vehicles, electric chargers for such vehicles, and the leasing of electric vehicles has been sent to the Fitment Committee for their consideration. The Committee will deliberate on the issue and submit its recommendation to the GST Council.

Approval to transition plan to new GST return filing

The GST Council in its 31st meeting had approved the new return filing system. Now, the Council in its 35th meeting has recommended its implementation in a phased manner as follows:

Period Taxpayer type Action point date
For October and November 2019
Small taxpayers (annual turnover of up to 50 million)
Stop filing monthly GSTR-3B and pay tax vide PMT-08
Large taxpayers (annual turnover of more than 50 million)
Start filing ANX-1 from October 2019 and stop filing monthly GSTR-1
FORM GST ANX-2 would not be required to be filed. However, it can be viewed by the taxpayer without allowing any changes.
For October and November 2019
Small taxpayers
File ANX-1, ANX-2, and RET-1 for the period October 2019 to December 2019
Large taxpayers
File ANX-1, ANX-2, and RET-1 from January 2020