GST Registration

Statutory Provisions for GST Registration

Section 2(94) –Registered Person

Section 2(94)-“registered person” means a person who is registered under section 25 but does not include a person having a Unique Identity Number;

Section 22 –Persons liable for Registration

Every supplier shall be liable to be registered under this Act in the State or Union territory, from where he makes a taxable supply of goods or services or both -if his aggregate turnover in a financial year exceeds the prescribed limit.

the prescribed limit.

1. Special Category States  – Puducherry, Meghalaya, Mizoram, Tripura, Manipur, Sikkim, Nagaland, Arunachal Pradesh and Uttarakhand. – Rs.20 Lakh

2. Other States/ Uts –Rs.40 Lakhs.

• Aggregate Turnover –Section 2(6) -value of all taxable supplies + exempt supplies + exports of goods or services + inter-State supplies of persons (to be computed on PAN India Basis , excludes central tax, State tax, Union territory tax, integrated tax and cess, excludes value of inward supplies on which tax is payable by a person on reverse charge basis)
• The expression “aggregate turnover” shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals
• The supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker;

	Situation	Effective date
A	Where the application for registration has been submitted with in a period of 30 days from the date on which the person becomes liable to registration	The date on becoming liable for registration.
1	General Rule	Where the aggregate turnover crosses the prescribed limit for registration.
2	Transfer of business, whether on account of succession or otherwise, to another person as going concern,	The date of such transfer or succession.
3	Transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, demerger of two or more companies pursuant to an order of a High Court, Tribunal or otherwise	The date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal
B	Where an application for registration has been submitted by the applicant after the expiry of 30 days from the date of his becoming liable to registration	The date of the grant of registration.

Documents Required for GST registration

List of documents that you will need for registering your business under GST :

• Permanent Account Number (PAN) of the applicant
• Copy of your aadhaar card
• Proof of business registration or incorporation certificate
• Identity and address proof of promoters/directors with a photograph
• Bank account statement/cancelled cheque
• Authorization letter/board resolution for authorized signatory
• Digital signature

Section 23 –the persons not liable for registration.

• Any person engaged exclusively in the business of supplying goods or services which are not liable to tax or wholly exempt from tax.
• An agriculturist, to the extent of supply of produce out of cultivation of land
• Specify the category of persons as may be notified.

Section 24–Compulsory Registration

• Persons making any inter-State taxable supply; 
• Casual taxable persons making taxable supply; 
• Persons who are required to pay tax under reverse charge;
• Person who are required to pay tax under sub-section (5) of section 9 –electronic commerce operator of notified services [ Refer Notification No.17/2017-CTR dtd.28-06-2017]
• Services by way of transportation of passengers by a radio-taxi, motorcab, maxicaband motor cycle;
• Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act.
• Services by way of house-keeping, such as plumbing, carpentering etc, except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act 
• Persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise
• Input Service Distributor, whether or not separately registered under this Act; 
• Persons who supply goods or services or both,other than supplies specified under sub-section(5)of section 9, through such electronic commerce operator who is required to collect tax at source under section 52 
• Every electronic commerce operator 
• Every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered person
• Such other person or class of persons as may be notified by the Government on the recommendations of the Council

  Notified Exempted Persons

• Job workers engaged in making inter-State supply of services (other than supply of services in relation to the goods mentioned against serial number 151 in the Annexure to rule 138 of CGST Rules) to a registered person if they are other wise not crossing threshold exemption limit for registration or has not obtained the voluntary registration [Notification No.7/2017- I.T, dated 14-9-2017]
• “Handicraft goods” supplier below the annual threshold limit of 20 lakh/10 Lakh, engaged in inter-State supplies [NotificationNo.8/2017-I.T., dated 14-9-2017]
• Exemption from Registration to persons making inter-State supplies of taxable services having aggregate turnover below prescribed limit [NotificationNo.10/2017-I.T., dated 13-10-2017]
• Exemption from Registration to persons only supplying goods and services and liable to RCM under section 9(3) [NotificationNo.5/2017-CentralTax, dtd.19-06-2017]

Section 28 -Amendment in Registration

Application for amendment in Registration / UIN to be made within a period of 15 days of such change. GST-REG-14

Core Field: approve the amendment within a period of 15 working days from the date of the receipt of the application

• Legal name of business, 
• Address of the principal place of business or any additional place(s) of business,
• Addition, deletion or retirement of partners or directors, Karta, Managing Committee, Board of Trustees, Chief Executive Officer or equivalent, responsible for the day to day affairs of the business 

Non Core Field –Amendment to be done immediately on submission of application.

• Any change in the mobile number or e-mail address of the authorised signatory submitted under this rule, as amended from time to time, shall be carried out only after online verification through the common portal
• Rejection of amendment (GST-REG-05) is subject to opportunity of being heard, clarification can be obtained in Form GST-REG 03 and is required to be furnished in GST-REG 04
• Deeming fiction: If the proper officer fails to take any action within a period of 15 working days from the date of submission of the application or within a period of seven working days from the date of the receipt of the reply to the notice to show cause, certificate of registration shall be deemed to be amended.

 Section 29 –Cancellation of Registration

 Reasons for Cancellation – [Suo Motu or on application]

• The business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of
• There is any change in the constitution of the business
• The taxable person, other than the person registered under sub-section (3) of section 25, is no longer liable to be registered under section 22 or section 24
• [ In above cases, the cancellation is prospective]

Reasons for Retrospective Cancellation of registration

• A registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed
• A person paying tax under section 10 has not furnished returns for three consecutive tax periods
• Any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months
• any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration
• Registration has been obtained by means of fraud, wilful misstatement or suppression of facts

 Rule 21 provides some more grounds for cancellation of registration

• Does not conduct any business from the declared place of business
• Issues invoice or bill without supply of goods or services in violation of the provisions of this Act, or the rules made thereunder
• Violates the provisions of section 171 of the Act or the rules made thereunder [Anti-Profiteering Provisions]
• Opportunity of being heard and notice for the purpose of cancellation is mandatory in all cases.

How to save Income Tax

Taxpayer can save his Income Tax by way of proper investment of money, but most of them are not know the how the tax save right way. This article will help you to know the options available for an individual where they can invest & also save their taxes.

There are so many deductions available through which taxpayer can save tax. Utilize the investment properly for his tax saving plan. Some of the most regular deductions are Deduction under Section 80C, Deduction under Section 80D, Deduction under Section 80E, deduction Under Section 80TTA and deduction Under Section 80TTB. In this article we will discuss section wise deduction: 

Deduction under Section 80C

• Deduction U/s 80C of Rs 1,50,000/- per year can be claimed as deduction from your total taxable income. It means, you can reduce up to Rs 1,50,000/- from your total taxable income.
• This deduction benefit is available to an Individual or an HUF.
• A maximum of Rs. 1,50,000/- can be claimed for the Assessment year.
• If you have paid excess taxes or liable to pay tax then invest your money in in LIC, 5 years FixedDeposit, Principal repayment of housing loan, NSC, Sukanya Samridhi Account, Public Provident Fund, Mutual fund SIP, National Pension Scheme, paid school fees of children (upto 2 Child) or any other investments eligible for 80C deduction claim in Income Tax return then you can claim refund or reduce liability to pay tax. Details about all investment wise are as under:

          LIFE INSURANCE

• Insurance premium on policy that cover your life or lives of your spouse & children are eligible for 80C deduction.
• For traditional plans, pure term plan is most beneficial - if the premium amount is 10% of sum assured then they are eligible for tax deduction.
• In small amount of term plan premium you get more benefit. 

          5 YEARS FIXED DEPOSITS

• You can make a fixed deposit (amount upto Rs. 1,50,000) in bank or post office for lock in period of five year and can save your tax. No Tax saving benefit for deposit other than 5 years Tax saving FD.
• At the end of the tenure you will get the maturity amount ( FD Amount + Interest earned)
• You can interest earn on that is avg. 5-6%.

         PRINCIPAL REPAYMENT  OF  HOUSING LOAN AND INTEREST 

• You can purchase a home for resident purpose and take benefit of rent saving and tax saving on principal repayment of loan under section 80C (upto Rs. 1.5 Lakhs) and interest upto Rs. 2 lakhs can also save your tax under section 24.
• Under the current situation there is lower interest rate on home loan and also you get the Interest subsidy upto 2.67 lakhs for 20 year loan tenure.
• This option is the most beneficial to taxpayer in the current situation.

          NATIONAL SAVING CERTIFICATE (N.S.C) 

• N.S.C issued by Government of India offered by Indian post it’s a 5 year- safe saving Certificate.
• The yearly interest accrued in this scheme is considered to be reinvested hence eligible for tax deduction under section 80C.
• Investment in this scheme is locked in period for 5 years.
• Its an un-complicated scheme giving competitive return compared with bank deposit & fixed income options.
• No TDS in this scheme by Post office.
• Current interest rate is 6.80%.

          SUKANYA SAMRIDDHI YOJANA (S.S.Y)

• S.S.Y is for upto 2 girl child who is less than 10 years to fund their education & wedding expenses.
• Minimum yearly deposit required is of Rs. 1000 and maximum upto Rs. 1,50,000/-
• The account matures when the girl turns 21 year, 50% of withdrawal is allowed when girl turns 18 year.
• This scheme is totally tax free, Interest earned and withdrawals are Tax free and maturity amount is completely tax free.
• Current interest rate is 7.60%.

          PUBLIC PROVIDENT FUND (P.P.F) 

• P.P.F is safe Investment offered by government through banks/post office.
• P.P.F is suitable for both Salaried & Self- Employed individuals.
• P.P.F has lock in period of 15 years, early withdrawals of 50% are allowed at the end 5 years.
• This scheme is totally tax free, Interest earned and withdrawals are Tax free and maturity amount is completely tax free. 
• Interest rate are announced by Govt. at beginning of each quarter.
• Current interest rate is 7.10%.

         EQUITY LINKED SAVING SCHEME (ELSS) 

• ELSS are notified Tax Saving Schemes from Mutual Funds.
• In that lock in period of 3 years (Short lock in period compared to other investment option) & is eligible for 80C benefits..
• You can invest as low as Rs. 500 of SIP or lump sum amount.
• If investment in SIP, then each installment required to complete 3 year of lock in period.
• ELSS has ability to generate wealth over long term.

        NATIONAL PENSION SYSTEM (N.P.S) 

• N.P.S is market linked scheme offered by P.F.R.D.A for accumulating Retirement money.
• With N.P.S you can claim additional deduction of 50,000 under section 80CCD(1B) under income-tax over & above deduction of 1,50,000 under section 80C.
• Minimum investment of Rs 1000 in year, helps to earn market linked return at low fees.
• At maturity you have to invest at least 40% of accumulated amount to purchase pension fund, you need not pay any tax on this amount. You can withdrawal Balance 60% of accumulated amount and its completely tax free.

Deduction under Section 80D 

Taxpayer can claim the tax deduction under section 80D if you have paid any premium on mediclaim policy (Health Insurance) under section 80D taken for: 

• Yourself, Your spouse, Dependent children, yours parents (parents need not be dependent on you) 

           Maximum of Deduction: 

• In case of the individual, Rs. 25,000 for himself and his family
• If individual taxpayer or his/her spouse is 60 years old or more then deduction of Rs 50,000 available.
• An additional deduction benefit for insurance of parents (father or mother or both, whether dependent or not) is to the extent of Rs. 25,000 if less than 60 years old and Rs 50,000 if parents are 60 years old or more.
• For super senior citizens  whose 80 years old or more medical expenditure up to Rs 50,000 shall be deduction. 
• In case of HUF, the maximum deduction is Rs. 25,000.

Deduction under Section 80TTA 

Section 80TTA provides a deduction of Rs 10,000 on interest income on Saving Account. This deduction benefit is available to Individual assesse or HUF assesse (other than those taxpayer who has covered in Section 80TTB). 

This deduction is allowed on interest earned:

• From a savings account with a bank, co-operative society & post office.
• Maximum Deduction – The maximum deduction is limited to Rs 10,000. If your interest income is less than Rs 10,000/- then entire interest income will be your deduction. If your interest income is more than Rs 10,000, your deduction shall be limited to Rs 10,000. (You have to consider your total interest income from all banks where you have accounts).
• How to claim the deduction – Firstly add your total interest income in head ‘income from other sources’ in your Return and then deduct the deduction under section 80TTA. 

Deduction under Section 80TTB 

This section will provide deduction in respect of interest on fixed deposits. This section is available to Resident individual who is of the age of 60 years or more at any time during the relevant previous year 

This deduction is allowed on interest earned:

• From a savings account with a bank,
• From a savings account with a co-operative society carrying on the business of banking,
• From a savings account with a post office.
• Maximum Deduction – The maximum deduction is limited to Rs. 50,000. If your interest income is less than Rs 50,000 then entire interest income will be your deduction. If your interest income is more than Rs 50,000, your deduction shall be limited to Rs 50,000. (You have to consider your total interest income from all banks where you have accounts).
• How to claim the deduction – First add your total interest income under the head ‘income from other sources’ in your Return and then consider the deduction under section 80TTB.

Breif Highlights of Finance Act on Residential Status & Capital Gain

 RESIDENTIAL STATUS

Changes in conditions relating to residence status in finance Act, 2020

Currently, an individual is resident in India in a previous year if (i) he is in India for a period or periods amounting to 182 days or more in that year; or (ii) he is in India for 365 days or more in the 4 years preceding that year and he is in India for a period of 60 days or more in that year.

Moreover, in case of a citizen of India or a person of Indian origin who is outside India and comes on a visit to India in a previous year, the threshold of 60 days (referred to in earlier paragraph) is relaxed to 182 days. This limit of 182 days is now reduced to 120 days.

Similar relaxation in respect of a citizen of India who leaves India in a previous year as a member of the crew of an Indian ship or for the purposes of employment outside India remains unchanged.

An individual is a resident but not ordinarily resident if he has been non-resident in 9 out of the 10 previous years preceding that year or has during the seven previous years preceding that year been in India for an overall period of 729 days or less.

Similar provisions exist for a manager of an HUF for determining the not ordinarily resident status of such an HUF.

Another related amendment for determining not ordinary resident is in respect of Indian citizens who are non-residents in India but are not liable to tax in any other country or territory by reason of their domicile, residence or any other criteria of similar nature and earning total income from India exceeding Rs. 15 Lakhs in previous year excluding the foreign sources then such citizens are deemed to be residents in India and consequently they become not ordinary resident provided their stay in India for period amounting in all to 120 days or more but less than 182 days. However, if his stay in India is more than 182 days then the OR/NOR shall be determined as per to old provision.

Hence, it is anti-abusive provision for Indian citizens who shift their stay in low or no tax jurisdiction to avoid payment of income tax in India and hence it is clarified vide Press release dated 02.02.2020 that new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries.

CAPITAL GAIN

Increase in tolerance limit – Sections 43CA, 50C and 56(2)(x)

Presently, if the amount of consideration received or accruing as a result of transfer of land or building or both, held as a capital asset, is less than its stamp duty value then section 50C provides that stamp duty value shall be taken to be full value of consideration.

Similarly, if the amount of consideration received or accruing as a result of transfer of land or building or both, held as stock-in- trade, is less than its stamp duty value then section 43CA provides that stamp duty value shall be taken to be full value of consideration.

Upon receipt of land or building or both, for a consideration which is less than its stamp duty value, the difference between the stamp duty value and the amount of consideration is chargeable to tax under section 56(2)(x).

Presently, section 43CA, section 50C as well as section 56(2)(x) provide for a tolerance limit of 5% of the consideration i.e. if the difference between the stamp duty value and the amount of consideration received or accruing as a result of transfer is up to 5% of the amount of consideration then stamp duty value is not to be taken as full value of consideration / the difference between the stamp duty value and the amount of consideration is not to be charged. The tolerance limit of 5% provided for has been increased to 10%.

Capital Gains provisions on Segregation of Portfolios of Mutual Fund Schemes – Sections 49 and 2(42A)

Section 49 provides for cost of acquisition for capital assets which became the property of the assessee under specified circumstances. Further, section 2(42A) provides for period of holding of a capital asset by an assessee for it to be a short-term capital asset.

In the event of downgrade in credit rating of debt and money market instruments in portfolio of mutual fund schemes (referred to as a ‘credit event’), the Securities and Exchange Board of India (vide its Circular SEBI/HO/IMD/DF2/CIR/P/2018/160 dated 28th December 2018) has permitted the Asset Management Companies (AMC) an option to segregate the portfolio of such schemes. The objective of creating a segregated portfolio of debt and money market instruments by mutual funds schemes is to ensure fair treatment to all investors in case of such a credit event and to deal with liquidity risk. Where an AMC decides to segregate a portfolio on the occurring of a credit event, all existing investors in the scheme on segregation are allotted equal number of units in the segregated portfolio as held in the main portfolio.

The said SEBI Circular defines the term ‘main portfolio’ to mean the scheme portfolio excluding the segregated portfolio. The term ‘total portfolio’ means the scheme portfolio including the securities affected by the credit event, which in effect is the sum total of the segregate and main portfolio.

It is now provided that in determining whether units in a segregated portfolio are short-term capital assets, the period for which the original units in the main portfolio were held by the assessee will be included.

Further, the cost of acquisition of such units in a segregated portfolio shall be the cost of acquisition of the units held by the assessee in the total portfolio in proportion to the net asset value of the asset transferred to the segregate portfolio out of the net asset value of the total portfolio immediately before the segregation of portfolios. The cost of acquisition of the original units in the main portfolio shall also be suitably reduced by the amount derived as cost of the units of the segregated portfolio.

These provisions are similar to those applicable to allocation of cost of acquisition of shares on demerger of a company.

This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the Assessment Year 2020-21 and subsequent assessment years.

Cost of acquisition in case of land or building as on 1.4.2001 – Section 55

Presently, section 55 provides that where capital asset became property of the assessee before 1.4.2001, the assessee has an option to adopt fair market value of the asset transferred as on 1.4.2001 to be its cost of acquisition. Similarly, where the capital asset has been received by the assessee in a mode mentioned in section 49(1) i.e. by way of gift, inheritance, will, etc., and the capital asset became property of the previous owner before 1.4.2001 then the assessee has an option to adopt fair market value of the asset as on 1.4.2001 to be its cost of acquisition.

Section 55 has now been amended to provide that if the capital asset transferred is land or building or both then its fair market value on 1.4.2001 cannot be greater than its stamp duty value on that date, wherever available.

This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the Assessment Year 2020-21 and subsequent assessment years.

How to Calculate Net Working Capital (NWC)

How to Calculate Net Working Capital (NWC)

Welcome to Taxmaninfo friends, today we are going to learn a concept that is net working capital formula now let's understand what exactly this is the net working capital formula is the total current assets divided by the total current liabilities. 

Now this is just the formula again this is a very important formula for not only for the Board of Directors order to be stakeholders but investors have a really a great pinpoint on this particular form on this particular ratio so why it is important let's evaluate let's start with the basics. 

Let's understand the formula first and then move to the next thing in simple terms the net working capital denotes the short term you can say the short term liquidity of the company we can do the net capital calculation simply by adding the current assets by and deducting the current liability let's have a look at the formula and try and understand the networking Capital is equal to your total current assets less your total current liabilities.

Let's understand an example on this and we'll try and evaluate the things let's say there's a company called Reliance or let's say there's a company called HUL they have some Details like sundry creditors as let's say Rs.45,000 and they have Sundry Debtors has Rs.55,000 we have another item in this that is Inventories which will be close enough to Rs. 40,000 and prepaid salaries which is let's say Rs.15,000 be final then the most final thing that is the outstanding advertisements which is let's say Rs.5,000.

So find out the networking capital of HUL see in the above example we have been given the both the current assets and the current liability. First we need to separate the current asset from the current liabilities then we need the total up the or need to sum up the current assets and also the current liability and we'll get we need to find the difference between the current assets and current liabilities. So what does the current assets include your current asset includes your Sundry Debtors, your inventories, any prepaid salaries and in case of current liabilities it includes your sundry creditors and any outstanding advertisement or salary expenses.

So let's sum up and find the net working capital or let's first find out the total current assets the total current assets is going to be your debtors, your inventories and your prepaid salaries and your current liabilities is going to be your Sundry Creditors plus any outstanding advertisement expense so your net working capital is going to be your current assets less your current liabilities which is Rs.60,000 (55000+40000+15000-45000-5000).