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November 2017, Vol 52
Outsourcing & Consul�ng
Accoun�ngTax RegulatoryPayrollCorporate Services
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Contents
IncomeTaxby:
Manish Parekh
GST (Goods &Service Tax)
by:
Bhavesh ShahInterna�onal
Taxa�on
by:
Anuya SawantPratap Magare
by:
Pinkesh JainCompany Law
IncomeTaxContributed by:
Manish Parekh [email protected]
1
India adopts repor�ng rules to crack
aggressive corporate tax planning
India has no�fied final rules for mul�na�onal group companies (MNCs) in India to report specifics of their global
parents’ opera�ons as part of a global ini�a�ve to end instances of aggressive corporate tax planning. Details
filed by the mul�na�onal company’s local arm in India, together with the finer details of the parent’s opera�ons
in every market which Indian authori�es can source from the group’s home country under tax trea�es, will help
the government know how businesses manage flow of funds across borders to keep tax outgo low.
(Source : h�p://www.livemint.com/Companies/G8PAbxMFLR0q29cUuKFTmL/India-adopts- repor�ng-rules-to-
crack-aggressive- corporate-t.html)
Read More
CBDT Chief Lambastes Income Tax
Department For Failure To Redress Public
Grievances InTimely &
Proper Manner
Sushil Chandra, the Chairman, CBDT & Special Secretary to the Government of India, has addressed an irate
le�er dated 14th November, 2017 to all Pr. Chief Commissioners and Director Generals in which he has expressed
grave dissa�sfac�on at the failure of the department to redress public grievances (CPGRAMs) in a �mely & proper
manner.
The learned Chairman has pointed out that redressal of public grievances is one of the primary focus areas of the
Government and it is being monitored at the highest level and that he has wri�en DO le�ers to all the Pr. Chief
Commissioners delinea�ng the steps to be taken for expedi�ous resolu�on of the grievances.
“However, in spite of all these efforts by the Board, it is a ma�er of concern that total pending grievances as on
13.11.2017 are as high as 1492,” the learned Chairman has observed.
Facts and figures to show the tardiness of the Department in the disposal of grievances have been set out.
“This high pendency reflects poorly on the efforts made by the field officers,” it is lamented.
It is also observed that the “High receipt of CPGRAMS grievances indicates that the resolu�on of grievances
under e-Nivaran is far from sa�sfactory”.
At the end, a stern warning has been issued to the Pr. Commissioners and Directors Generals to ensure that all
officers & agencies are properly briefed so as to reduce the avenues of grievances. It is also emphasized that
efforts should be made to strengthen the func�oning of the ASK centres ensuring �mely e-nivaran of grievances
so that there is li�le or no need for public to resort to filing grievances on CPGRAMS.
(Source : h�p://www.itatonline.org/info/cbdt-chief- lambastes-dept- for-failure- to-redress- public-grievances-
in- �mely-proper- manner/)
IncomeTaxContributed by:
Manish Parekh [email protected]
2
Income Tax Department to issue no�ces to suspicious
cash depositors
The Income-Tax (I-T) Department will soon issue no�ces to those who have deposited “suspicious” amounts of
money in banks a�er demone�za�on and have not responded to the taxman’s preliminary communica�on, the
CBDT has said. Chairman Sushil Chandra said despite closing of the I-T returns filing �me period, a number of
en��es and individuals failed to file their returns, as required under the ‘Opera�on Clean Money’ ini�ated by the
government to check black money a�er demone�za�on..
(Source: h�p://www.business-standard.com/ar�cle/economy- policy/i-t- to-issue- no�ces-to- suspicious-cash-
depositors- 117111500059_1.html)
Supreme Court ruling lets I-T department
open closed cases
Many individuals and small businesses could now find the tax office raking up old wounds and chasing tax
demands they believed had been long forgiven. To minimize feuds between the income- tax (I-T) department and
small taxpayers, the revenue authori�es had in the past decided that for tax demands below certain limits, the
department would not wage legal ba�les to recover dues. These limits were fixed in February 2011 and were
raised in December 2015. A recent Supreme Court ruling will now change this for many. The apex court has ruled
that “the Central Board of Direct Taxes (CBDT) cannot issue any circular having retrospec�ve opera�on.”
(h�ps://economic�mes.india�mes.com/news/poli�cs-and- na�on/supreme-court- ruling-lets- i-t-department-
open- closed-cases/ar�cleshow/61349694.cms)
Back
3
Highlights of Recommenda�ons
made by the GST Council in the 23 rd
Mee�ng atGuwaha� on 10th
November 2017
• Return filing : The GST Return filing process to be further simplified, summary of changes in filing requirement
and due dates is as under:
GST (Goods& Service Tax)
Read More
Anuya Sawant [email protected]
Contributed by:
Pratap Magare [email protected]
(These are the
recommenda�ons yet to be
no�fied by the authori�es)
Period / Month GSTR-3B along
with payment
GSTR-1
Taxpayers with
annual aggregate
turnover up to Rs.
1.5 crore (Quarterly)
Taxpayers with
annual aggregate
turnover more than
Rs. 1.5 crore
(Monthly)
GSTR-2 GSTR-3
July 2017
August 2017
September 2017
October 2017
November 2017
December 2017
January 2018
February 2018
March 2018
25-Aug-2017
20-Sep-2017
20-Oct-2017
20-Nov-2017
20-Dec-2017
20-Jan-2017
20-Feb-2017
20-Mar-2017
20-Apr-2017
31-Dec-2017
15-Feb-2017
30-Apr-2017
31-Dec-2017
31-Dec-2017
31-Dec-2017
31-Dec-2017
10-Jan-2018
10-Feb-2018
10-Mar-2018
10-Apr-2018
10-May-2018
The �me period for
filing GSTR-2 and
GSTR-3 for the months
of July 2017 to March
2018 would be worked
out by a Commi�ee of
Officers
Notes:
1) Late fee is waived in all cases where return in FORM GSTR-3B is not filed within due date for the months of July,
August and September, 2017. Where such late fee was paid, it will be re-credited to their Electronic Cash
Ledger under “Tax” head instead of “Fee” head so as to enable them to use that amount for discharge of their
future tax liabili�es.
2) For subsequent months, i.e. October 2017 onwards, the amount of late fee payable by a taxpayer whose tax
liability for that month is ‘NIL’ will be Rs. 20/- per day (Rs. 10/- per day each under CGST & SGST Acts)
instead of Rs. 200/- per day (Rs. 100/- per day each under CGST & SGST Acts).
From / Period Par�culars Due Date
GSTR-4July to Sept 17
Quarterly return for registered person op�ng for composi�on levy 24-Dec-2017
GSTR-5July 2017
Return for Non-resident taxable person 11-Dec-2017
GSTR-5AJuly 2017
Details of supplies of online informa�on and database access orretrieval services by a person located outside India made tonon-taxable persons in India
15-Dec-2017
GSTR-6July 2017
Return for input service distributor 31-Dec-2017
Transi�onal Input Tax Credit / Stock Statement 31-Dec-2017TRAN-1
(for original as well as revised Form TRAN-1)
Other GST Returns:
• Manual Filing: Facility for manual filing of Advance Ruling applica�on to be introduced
4
• Further benefits for service providers:
Exports of services to Nepal and Bhutan have already been exempted from GST. It has now been decided that
such exporters will also be eligible for claiming Input Tax Credit in respect of goods or services used for effec�ng
such exempt supply of services to Nepal and Bhutan.
In an earlier mee�ng of the GST Council, it was decided to exempt those service providers whose annual
aggregate turnover is less than Rs. 20 lakhs (Rs. 10 lakhs in special category states except J &K) from obtaining
registra�on even if they are making inter-State taxable supplies of services. As a further measure towards
taxpayer facilita�on, it has been decided to exempt such suppliers providing services through an e-commerce
pla�orm from obtaining compulsory registra�on provided their aggregate turnover does not exceed twenty
lakh rupees. As a result, all service providers, whether supplying intra-State, inter-State or through e- commerce
operator, will be exempt from obtaining GST registra�on, provided their aggregate turnover does not exceed Rs.
20 lakhs (Rs. 10 lakhs in special category States except J &K).
Back
GST (Goods& Service Tax)
Anuya Sawant [email protected]
Contributed by:
Pratap Magare [email protected]
• Other:
Major relief in GST rates on certain goods and services
Changes to Composi�on Scheme
Benefits for Diploma�c Missions/UN organiza�ons
5
CBDT issues clarifica�on related
to guidelines for establishing
‘Place of Effec�ve Management’ in India
The Finance Act, 2015 introduced the concept of ‘Place of Effec�ve Management’ (POEM) under the provisions
of Sec�on 6(3) of the Income-tax Act, 1961 (the Act). On 24 January 2017, Central Board of Direct Taxes (CBDT)
issued the guiding principles (POEM guidelines) for determina�on of POEM of a company. Various stakeholders
have raised concerns that as per the guidelines, POEM may be triggered in the cases of certain mul�na�onal
companies with regional headquarter structure merely on the ground that certain employees having mul�-
country responsibility or oversight over the opera�ons in other countries of the region are working from India
and consequently, their income from opera�ons outside India may be taxed in India.
Recently, the Central Board of Direct Taxes (CBDT) has issued a circular clarifying that as long as the regional
headquarter operates for subsidiaries/group companies in a region within the general and objec�ve principles of
global policy of the group laid down by the parent en�ty in the field of payroll func�ons, accoun�ng, human
resource func�ons, IT infrastructure and network pla�orms, supply chain func�ons, rou�ne banking opera�onal
procedures, and not being specific to any en�ty or group of en��es per se; it would not cons�tute a case of Board
of Directors of companies standing aside and such ac�vi�es of regional headquarter in India alone will not be a
basis for establishment of POEM for such subsidiaries/group companies. The CBDT has also clarified that the
provisions of General An�-Avoidance Rule may get triggered in such cases where the above clarifica�on is found
to be used for abusive/aggressive tax planning.
(CBDT Circular No. 25 of 2017 dated 23 October 2017)
Interna�onalTaxa�on
Contributed by:
Bhavesh Shah [email protected]
Due date for furnishing Country by Country
Report for first fiscal year in India extended
to 31 March 2018
In keeping with India’s commitment to implement the Organiza�on for Economic Co-opera�on and
Development’s recommenda�ons in Ac�on Plan 13 of the Base Erosion and Profit Shi�ing project, the Finance
Act, 2016 introduced Sec�on 286 of the Income-tax Act, 1961 (the Act) providing for furnishing of Country-by-
Country Report (CbCR) in respect of an Interna�onal Group.
Sub-sec�on (2) of sec�on 286 of the Act provides for furnishing the CbCR by the ‘due date’ specified under
sec�on 139(1) of the Act for furnishing the return of income for the relevant accoun�ng year i.e. 30 November.
Financial Year (FY) 2016-17 will be the first repor�ng year for furnishing of CbCR. Keeping in mind the hardships
taxpayers might face in the first year of CbCR filing, Central Board of Direct Taxes vide its circular dated 25 October
2017, has extended the due date for furnishing CbCR for FY 2016-17 to 31 March 2018.
(CBDT Circular No. 26 of 2017 dated 25 October 2017)
Payment for gran�ng distribu�on right of
‘Adwords program’ is taxable as ‘royalty’
under the Income-tax Act as well as India-
Ireland tax treaty
Based on the facts and in the circumstances of the case, recently, the Bangalore Bench of the Income-tax
Appellate Tribunal (the Tribunal) in the case of Google India Private Limited (the taxpayer/ Google India) dealt
with the issue whether payment by the taxpayer to Google Ireland Ltd. under ‘Adwords Program’ Distribu�on
agreement is royalty. The Bangalore Tribunal held that the said payment is taxable as royalty under the provisions
of the Income-tax Act, 1961 as well as under the India-Ireland tax treaty. The Tribunal observed that it is not
merely an agreement to provide the adver�sement space but is an agreement for facilita�ng the display and
publishing of an adver�sement to the targeted customer with the help of various patented tools and so�ware.
The taxpayer is having the access to various data and it uses the informa�on for the purposes of selec�ng the ad
campaign and for maximising the impression and conversion of the customers to the ads of the adver�sers.
(Google India Private Ltd. v. ACIT (IT(TP)A.1511 to 1518/Bang/2013) – Taxsutra.com)
Read More
6
Indian subsidiary of a foreign company
providing back office support services does
not cons�tute aPE in India under India-
USA tax treaty – Supreme Court
Based on the facts and in the circumstances of the case, recently, the Supreme Court in the case of E-Funds IT
Solu�on Inc. (the taxpayer) dealt with an issue whether the subsidiary of a US company for back office support
services cons�tutes a Permanent Establishment (PE) in India under the India-USA tax treaty (the tax treaty). The
Supreme Court relied on its own decision in case of Formula One World Championship Ltd. and observed that
there must exist a fixed place of business in India, which is at the disposal of the foreign companies, through
which the business has been carried on. The appellate authori�es did not give any findings with respect to
availability of fixed place of business at the disposal of the taxpayer. No part of the main business and revenue
earning ac�vity of the taxpayer is carried on through a fixed business place in India which has been put at its
disposal. Indian company only renders support services which enable the taxpayer in turn to render services to its
clients abroad. This outsourcing of work to India would not give rise to a fixed place PE in India.
With respect to service PE, the Supreme Court observed that the requirement of Ar�cle 5(2)(l) of the tax treaty is
that an enterprise must furnish services ‘within India’ through employees or other personnel. None of the
customers of the taxpayer are located in India or have received any services in India. All its customers receive
services only in loca�ons outside India. Only auxiliary opera�ons that facilitate such services are carried out in
India. The first condi�on provided under Ar�cle 5(2)(l) is not sa�sfied. Therefore, the taxpayer does not have
Service PE in India.
(ADIT v. E-Funds IT Solu�on Inc. (Civil Appeal No. 6082 of 2015) (SC) – Taxsutra.com)
Interna�onalTaxa�on
Contributed by:
Bhavesh Shah [email protected]
Back
CompanyLawContributed by:
Pinkesh Jain [email protected]
7
Companies (Registered Valuers and Valua�on)
Rules, 2017
In exercise of the powers conferred by sec�on 247 read with sec�ons 458, 459 and 469 of the Companies Act,
2013 (18 of 2013), the Central Government hereby makes the Companies (Registered Valuers and Valua�on)
Rules, 2017.
These rules may be called the “Companies (Registered Valuers and Valua�on) Rules, 2017.”
They shall come into force on the date of their publica�on in the Official Gaze�e.
For complete text of above rules, refer
h�p://www.mca.gov.in/Ministry/pdf/RegisteredValues_19102017.pdf
Back
Extension of Due date of filling AOC-4 and
XBRL:
All Companies required to prepare or voluntarily preparing their financial statements in accordance with
Companies (Indian Accoun�ng Standards) Rules, 2015 for financial year 2016-2017 are required to file their
statements only in XBRL format. It has been decided to extend the last date for filling of AOC-4 XBRL for such
companies for the financial year 2016-2017 without addi�onal fees �ll 31 st March, 2018. The filling should be
made by these companies accordingly when the Ind AS based XBRL taxonomy is deployed, for which a separate
in�ma�on would be given to all stakeholders.
For text of the no�fica�on, refer:
h�p://www.mca.gov.in/Ministry/pdf/GeneralCircular13_26102017.pdf
Also the due date for filling e-forms AOC-4 and AOC-4 (XBRL non Ind AS) and the corresponding AOC-4 CFS e-
forms has been extended to 28.11.2017.
h�p://www.mca.gov.in/Ministry/pdf/GeneralCircular14_28102017.pdf
Commencement of Sec�on 247:
In exercise of the powers conferred by sub-sec�on (3) of sec�on 1 of the Companies Act, 2013 (18 of 2013), the
Central Government hereby appoints the 18th October, 2017 as the date on which the provisions of sec�on 247
of the said Act shall come into force.
h�p://www.mca.gov.in/Ministry/pdf/CommencementNo�fica�on_20102017.pdf
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