Restrictions on Cash Transactions

Restrictions on Cash Transactions and Penalty on Contravention

Leave a Comment / Finance / By / January 8, 2024

Restrictions on Cash Transactions: The Government of India took several measures to digitise the Indian economy by moving towards a cashless economy. The steps also helped curb black money, limit cash transactions after a certain amount and number, and identify tax invaders.

Some of these provisions of the Income Tax Act 1961, along with their threshold or transaction limit, penalty and exemption of the rules, are discussed below in this article.

Expenditures Made Through Cash Payments

Transaction Limit

Expenditures that exceed a cash payment of Rs 10,000 to a person in a single day. However, the limit for the payments made for plying, hiring or leasing of goods carriage to a person in a single day is Rs. 35,000 in cash.

Associated Section and Provision

Section 40A (3) of the Income Tax Rules has been amended to discourage the method of cash payments for expenditures. Expenditures made where the payment made to a person in a day exceeds Rs. 10,000 or Rs. 35,000 (for payment of plying, hiring or leasing of goods carriage) or else, than, by an account payee cheque or bank draft, or use of electronic clearing system through a bank account, such expenses are not allowable as a deduction under Section 40A (3) in the computation of income from business and profession, which are otherwise deductible.

Exemptions

Rule 6DD of the Income Tax Rules mentions certain exceptions where rules stated in Section 40A (3) doesn’t apply. This results in an increase in taxable income from business or profession.

Penalty for Violating the Provision

No deduction is allowable in the computation of income from business or profession regarding such cash payments. This results in increased taxable income in the calculation of profits and gains from business or profession.

Restriction on Health Insurance Premium

Transaction Limit

There is no transaction limit.

Associated Section and Provision

Section 80D of the Income Tax Rules allows the deduction, up to a maximum limit of Rs 1,00,000 on medical premium and preventive health check-ups to individuals or HUF. However, the deduction under Section 80 D, in respect of health insurance premium paid, is available only if the same has not been paid in cash.

Penalty for Violating the Provision

There is no deduction allowed from the gross total income as per section 80D.

Restrictions on Donations Made in Cash

Transaction Limit

As per section 80G, deduction under Chapter VIA of Income Tax Act 1961 is not allowed for donation made of any sum exceeding Rs. 2,000, if the donation is made in cash and not any other mode.

Associated Section

80G of Income Tax Act 1961 provides the deduction on donation to certain funds, charitable institutions etc. The donations can qualify for either 50% or 100% tax deduction without any upper limit. In contrast, some donations qualify for either 50% or 100% tax deduction subject to a maximum limit of 10%, which is adjusted on Gross Total Income.

Penalty for Violating the Provision

If the donation paid is more than Rs. 2,000, no deduction is allowed under Chapter VIA of the Income Tax Act from Gross Total Income.

Restriction on Repayment of Cash Loans, Deposits or Any Specified Sum or Advance

Transaction Limit

The amount of deposit or loan is Rs. 20,000.

Associated Section

The Section 269T of the Income Tax Act 1961 prohibits any person from repaying the loan or deposit or specified sum in cash other than by a cheque or bank draft (both are account payee) or by use of an electronic clearing system through a bank account, if –

  • The entire amount of the loan or deposit, along with the interest amount, is Rs. 20,000 or more.
  • The combined amount of the loans or deposits, along with the interest amount held by such person in his own name or jointly with any person, is Rs. 20,000 or more.

Penalty for Violating the Provision

As per section 271E, if a loan or deposit is repaid in contravention of the provisions of section 269T, then a penalty equivalent to the amount of such loan or deposit repaid may be levied by the Joint commissioner, which is payable by the payer and not the receiver. However, under section 273, the above penalty is not leviable if the assessee proves a reasonable cause for the failure in compliance with the provisions.

Exemptions

The section 269T is not applicable if the repayment of the loan or deposit is to the following parties –

  • Government.
  • Any Government company.
  • Any savings bank, co-operative bank, banking company, or post office.
  • Any corporation set up by a Central, State or Provincial Act of the Government.
  • Other institutions, associations or bodies or classes of institutions, associations or bodies that the Central Government may notify on this behalf in the Official Gazette (for reasons to be recorded in writing).

Restriction On Taking or Accepting Cash Loans, Deposits or Any Specified Sum

Transaction Limit

The amount of deposit or loan is Rs. 20,000.

Associated Section

As per section 269SS, a person shall not accept loan or deposit or any other specified sum from another person otherwise than by a cheque or bank draft (both account payee) or use of an electronic clearing system through a bank account, when –

  1. The amount of any loan or deposit or the combined amount of similar loan or deposit; or
  2. The date when the loan or deposit is taken or accepted, any loan or deposit is taken or accepted earlier by such person from the depositor is remaining unpaid and the amount or the combined amount remaining unpaid; or
  3. The amount or the combined amount referred to in statement (a) together with the amount or the combined amount referred to in statement (b) is Rs. 20,000 or more.

Note: Specified sum or advance means any sum of money in the nature of advance, by whatever name called, concerning the transfer of immovable property, whether or not the transfer takes place.

Penalty for Violating the Provision

As per section 271D, if a loan or deposit is repaid in contravention of section 269SS, a penalty equivalent to the amount of such loan or deposit repaid may be levied by the Joint commissioner, which is payable by the payer and not the receiver. However, under section 273, the above penalty is not leviable if the assessee proves a reasonable cause for the failure in compliance with the provisions.

Exemptions

The section 269SS is not applicable if the repayment of the loan or deposit is to the following parties –

  • Government.
  • Any Government company.
  • Any savings bank, co-operative bank, banking company, or post office.
  • Any corporation set up by a Central, State or Provincial Act of the Government.
  • Other institutions, associations or bodies or classes of institutions, associations or bodies that the Central Government may notify on this behalf in the Official Gazette (for reasons to be recorded in writing).

Restriction on Cash Transactions

Transaction Limit

The limit of such cash transactions is Rs. 2,00,000.

Associated Section

As per section 269ST of the Income Tax Act 1961, no person shall receive a receipt of Rs. 2,00,00 or more (in cash) by a person –

  1. In aggregate, from a person in a single day (for different bills as well).
  2. With respect to a single transaction (even on separate days).
  3. Regarding transactions relating to one event or occasion from a person (For example, an event management company receives cash of more than Rs. 2,00,000 for a private party arrangement even if separate bills are made and payments are received on different days).
  4. Otherwise, then by a bank cheque or bank draft (both account payee) or use of an electronic clearing system through a bank account.

Penalty for Violating the Provision

Section 271DA provides that if any person receives any amount contravention of the provision of section 269ST, shall be liable to pay the penalty of a sum equal to the amount of such receipt. However, the penalty is not leviable by the Joint Commissioner if the person proves that there is a good and sufficient reason for such infringement.

Exemptions

The section 269ST shall not apply to any receipt by –

  • Government or any banking company, post office savings bank or co-operative bank;
  • Transactions referred to in section 269SS – i.e., acceptance of a loan, deposits, etc.,
  • Other persons or class of people or receipts etc., that the Central Government may notify.
  • The lender from whom the loan or deposit is taken or accepted or the person by whom the loan or deposit is taken or accepted, if both have Agricultural Income and neither of them has any income that can be charged for taxation.
  • Any corporation that is established by a Central, State or Provincial Act.

It is also clarified that for loan repayment, one installment will be considered as a single transaction as per clause (b) of section 269ST, and all the installments paid for repayment shall not be aggregated for applying the provisions of section 269ST.

Section 44AE

Section 44AE of Income Tax Act | Business of Plying, Hiring/ Leasing Goods Carriages

Leave a Comment / Income Tax / By / January 8, 2024

Section 44AE: India is a democratic country, where a salaried individual is liable to pay the income tax as per their eligibility and income tax brackets. Income tax is nothing but a self-assessed tax, which means that an assessee calculates his own taxes and reports them to the government in an income tax return.

Since the individuals calculate their own taxes, most of them took this as an advantage and started disclosing low income than the actual income while filing the ITR. And to overcome this particular issue, the Indian government introduced sections 44AE, 44AD, and 44ADA, which mandate minimum income disclosure for businesspeople. In this article, let’s understand everything about Section 44AE in detail. Read on to find more.

What is Section 44AE?

Section 44AE comes under the Income Tax Act of 1961’s Presumptive Taxation Scheme. This Act forces the businesspeople to keep regular books of accounts and all their accounts audited from time to time. However, this presumptive taxation method allows the small taxpayers to avoid this time-consuming maintenance. Those who choose this option can calculate their income at a set rate and are exempt from accounting and auditing.

So basically, Section 44AE relates to a specific assessee who is in the business of plying, hiring, or leasing goods carriages; according to the provision, such income is charged under the head profit or gain from business or profession (PGBP) and on a presumption basis. Now let’s understand what is Profits and gains of business of plying, hiring or leasing goods carriages under Section 44AE and to whom does it apply.

Who is Eligible for the Presumptive Taxation Scheme?

Individuals falling under the following criteria is eligible for presumptive tax:

  • Section 44AE is eligible for all entities such as individuals HUFs, firms or corporations who are involved in the business of plying, hiring, or leasing goods carriages.
  • Entities must not own more than 10 goods carrier vehicles at any time in the financial year. If any assessed cross more than 10 vehicles then he/she cannot disclose the income under Section 44AE.

Amount of Income Considered as PGPB

The officials of the income tax department have set a minimum amount of income that must be disclosed under this section and they are listed below:

  • For Heavy Good Vehicles: For each month or part of a month, Rs. 1,000 per tonne of gross vehicle weight.
  • For Non-Heavy Good Vehicles: For each month or part of a month, Rs. 7,500 per vehicle.

Example Calculation on Income Tax Payment Under Section 44AE

Those who choose the Section 44AE presumptive taxation plan can estimate their monthly income at Rs. 7,500 per vehicle possessed, regardless of whether it is a light goods vehicle or a heavy goods vehicle. Taxes must be paid in accordance with this calculation.

For example, let’s assume that Mr.Ram has owned a 9-tonne vehicle for 9 months and 15 days, then in December he purchased a 13-tonne vehicle that he did not use until the end of the financial year. Now the calculation of presumptive taxes under section 44AE would be as follows:

9 Tonnes Vehicle = 7500 x 10 = 75000

12 Tonnes Vehicle = 1000 x 13 x 4 = 52000

Total taxable income = 75000 + 52000 = 127000

If you observe this example, we have considered 9 tonnes vehicles as 10 instead of 9, because 9 months 15days is equal to 10 months. And though the heavy vehicle is not used, the tax is applicable to it.

Exclusions Under Section 44AE

As per Section 30 to 38 of the income tax act, any businessperson who chooses presumptive taxation cannot claim any tax exemptions or deductions. The ultimate taxable income would be calculated based on an income of Rs. 7,500 per car each month. However one can claim the exemptions and deductions under sections 80C through 80U are available.

If the taxpayer is a partnership firm, then deductions for salary and interest paid to partners can be claimed under the Income Tax Act’s rules. While depreciation is not deductible, the written-down value of any asset used in the firm can be determined assuming depreciation has been claimed and authorised under Section 32.

Individuals who choose presumptive taxation, on the other hand, must pay advance tax like everyone else.

Declaration of Lower Income

If the assessee’s actual income is less than the income estimated under the Presumptive Scheme, the assessee can claim the lesser income as actual if he keeps his books of accounts in the manner prescribed by section 44AA and has them audited under section 44AB from time to time.

FAQ’s on Section 44AEE Presumptive Taxation Scheme

The frequently asked questions on profits and gains of business of plying, hiring or leasing goods carriages under Section 44AE are given below:

Question 1.
What is plying in income tax?

Answer:
Transportation business includes plying which means that the transports used on daily basis. Public transportation and route buses are examples of vehicles that are used on a daily basis and comes under plying in income tax.

Question 2.
What is Section 44AE?

Answer:
Section 44AE of the Income Tax Act, says that Small businesses involved in the business of plying, hiring, or leasing goods carriages with less than ten goods carrier vehicles can use the Presumptive taxation method to determine their taxable income for a given financial year.

Question 3.
What is the penalty for not getting the accounts audited as required by section 44AB?

Answer:
Yes, the assessing officer will impose a penalty if a person who is required to comply with section 44AB fails to have his accounts audited in respect of any year or years as required by section 44AB or fails to provide such report as required by section 44AB.

GST on DropShipping Business

GST on DropShipping Business | Meaning, DropShipping Business on Purchase and Sale of Goods

Leave a Comment / GST / By / January 8, 2024

GST on DropShipping Business: At a rapid pace, the business of dropshipping is increasing. In such a business, there is no investment and no risk of dead stock, as the person doesn’t purchase the goods in advance. Instead, the person can focus on just marketing and selling.

Note that e-commerce giant like Flipkart, Amazon is not doing dropshipping business. They are considered marketplaces. Flipkart and Amazon on their sites do not issue invoices to purchasers; instead, the seller issues the invoices. While in dropshipping business, the individual directly issues the invoices.

What Is A Business of Dropshipping?

Dropshipping is a kind of business where the seller sells the goods which they do not own at the time of selling it but then, after receiving the order, transfers the order to a third party. Then the third party delivers the order to the purchaser.

For example, an individual has a website where the person sells school bags. The person has entered into a contract with the wholesalers of a variety of school bags. The individual takes orders on its website and then transfers such orders to the wholesaler. Such a wholesaler via courier sends goods to the purchaser. The person pays the price of the product agreed upon by the wholesaler and also the courier charges. The margin-left in between is earned by the person.

GST On Dropshipping Business When Goods Are Sold Outside India

In a normal manner, the drop shipper has to charge GST when goods are sold outside India from the person in dropshipping Business (merchant). For such merchant, it will be an export sales, and he has the option to either sells without GST and file a Letter of Undertaking (LUT), or he can pay IGST at the time of sale and then afterward apply for a refund.

While the drop-shipper is invoicing to the merchant, he can benefit from Notification no. 40/2017 – Central Tax (Rate) and pay CGST and SGST at a rate of 0.05% each or 0.1% IGST, as applicable. This benefit is subject to certain conditions as given in the notification. (more on this later)

GST On Dropshipping On Goods That Are Purchased Outside India And Also Sold Outside India

In such circumstances, it is neither the import of goods nor the export of goods.

Schedule III of the CGST Act states the activities or transactions which shall be treated neither as a supply of goods nor a supply of services.

Para 7, which includes “supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India”, got added to this schedule in the CGST amendment act 2018. Therefore, if an Indian business does its business in which goods are sold outside India and are purchased outside India, such transaction is not considered a supply. And therefore, a tax of GST doesn’t occur.

According to Section 2(10) of the IGST Act, with its grammatical variations and cognate expressions, defines import of goods as

“import of goods” basically means bringing goods into India from a place outside India.

Since in such a transaction where the goods are not coming into India, it is not considered as import of goods, and therefore on a reverse charge basis, GST is not payable.

Applicability Of GST On Dropshipping ON Goods That Are Sold And Purchased Within India

A person Sam is doing dropshipping business, he enters into a contract with Rony that when the order arrives to procure goods. Now Sam gets an order from Rohan. Sam will take payment from Rohan and issue an invoice to him. Sam will send the order to Rony, which in turn sends goods to Rohan but didn’t issue an invoice in his own name. He is just sending goods to Rohan on behalf of Sam.

Rony will issue an invoice to Sam because he had sold goods to Sam and not Rohan. Sam can take an input tax credit of such invoice.

Both Rony and Sam are required to take registration if the turnover is more than the specified limit of Rs. 10/20 lakhs. Also, if sales are made in or outside the union/state territory in which the seller has a place of business, then registration is needed.

Applicability Of GST On Dropshipping ON Goods That Are Sold And Purchased Outside India

The merchant has to pay IGST if the drop-shipper is outside India on a reverse charge basis at the time of import of goods. The merchant will issue a standard GST invoice with IGST or SGST/CGST as applicable.

The merchant at the time of import of goods will receive the input tax credit of such paid IGST.

Services Used in Such Transaction

In such a transaction, a merchant may use many services. The services of the courier or freight forwarder are used to transport goods. And in many circumstances, to inspect goods (goods inspection services), the services of a third party are used to assure the quality of goods.

Now the question arises whether such services are considered as import of services?

According to the definition of Section 2(11) of the IGST Act, the import of services as:

Import of services means the supply of any service, where––

  • the supplier of service is settled outside India.
  • the recipient of the service is settled in India.
  • the supply place of service is in India.

Therefore, a transaction is considered as an import of services when all three conditions satisfy.

Section 13(5) of the IGST act states that when “services supplied in regard of goods which are obliged to be made physically available by the receiver of services to the supplier of services”, then the site of supply will be the place where services are actually performed.

Therefore, in the matter of goods inspection services, the site of supply will be the point where such inspection is made. And thus, all three conditions are not fulfilled and not entertained as import of services. GST is not needed to be paid on the basis of reverse charge.

The place of supply is considered as a location for the purpose of transportation services, where the goods are reserved to be reached. In this situation, goods are also transferred to a place outside India. Therefore such service will not be acknowledged as import of service, and GST not obligatory on reverse charge.

Notification no. 40/2017 – Central Tax (Rate) – Supply at) 0.10% GST When Goods are to be Exported

When a registered person is supplying goods to another registered supplier for export, then the seller can levy only a GST rate of 0.10%. (0.05% CGST + 0.05% SGST which combines 0.10% IGST).

There are set conditions that are required to fulfill to take such benefit. The conditions are:

  1. Within a period of ninety days, the registered recipient shall export the said goods from the date of issue of a tax invoice by the registered supplier. (If such expiring is between 20th March 2020 and 29th June 2020 of a duration of 90 days, then such goods can be supplied up to 30th June 2020).
  2. The registered recipient has to indicate the GSTIN of such supplier and the tax invoice issued by such supplier in the shipping bill or bill of export.
  3. The registered recipient with an Export Promotion Commodity shall be registered themself, or Council or Board which is recognised by the Department of Commerce of India.
  4. The registered recipient must place an order on the registered supplier for procuring goods at a concessional rate, and a copy of the same receipt of the registered supplier shall also be mentioned to the jurisdictional tax officer.
  5. The registered recipient must move the said goods from the place of the registered supplier directly to the Port, Airport or Land Customs Station, Inland Container Deport from where the said goods are to be exported or directly to a registered warehouse from where the said goods shall be a move to the Port, Inland Container Deport, Land and Airport Customs Station from where the supposed goods are to be exported.
  6. The registered recipient must provide a copy of the shipping bill or bill of export containing details of Goods and Services Tax Identification Number (GSTIN) when goods have been exported, and tax invoice of the registered supplier accompanying with proof of export report or export general manifest having been filed to the registered supplier and officer of jurisdictional tax of such supplier.
  7. Suppose the registered recipient collapses to export the ordered goods within a period of ninety days from the date of issue of the tax invoice. In that case, the registered supplier shall not be eligible for the exemption as mentioned earlier.

FAQ’s on GST on DropShipping Business

Question 1.
What is a dropshipping business?

Answer: 
Dropshipping is a business in which the seller sells the goods which he does not own at the time of selling goods but, after receiving the order, then the order gets passed to a third party. Then the third party then delivers the order to the purchaser.

Question 2.
Is GSTIN required by a person who dropships from China to the US?

Answer: No, if a person’s only business is to dropship from China to the US, then that person does not require to register.

Question 3.
Are we needed to report such sales (which is not regarded as supply in GST) in GSTR-1 and GSTR-3B?

Answer:
No, we are not obligated to report such sales, which are not regarded as supply, anywhere in GSTR-1 and GSTR-3B.

Question 5.
Do we need to report the purchases of services that do not import services?

Answer:
GSTR-3B requires to report Non-GST supplies, exempt supplies and Nil rated. This is not acknowledged as supply in the GST act, and therefore not obligated to be reported.

Question 6.
I am employed in dropshipping business only, in which I purchase goods from China and sells them to the USA. Do I am required to register under GST?

Answer: 
No, your turnover will be zero in such a case, so you are not required to take registration. However, you will be compelled to get registered if you deliver any import of service as GST is ordered to be paid by a business on an RCM basis.

Question 7.
For warehousing goods for specific days, I rented a property outside India. Will the nature of the transaction be change?

Answer:
No, the nature of the transaction will not change, and still, it will not be acknowledged as a supply.

Question 8.
For Dropshipping in India, does one need GST?

Answer:
GST registration is compulsory; if one is selling your products through an eCommerce portal. Thus, Rs. 40 lakh is the threshold Turnover limit for GST Registration for a supplier of Goods.

Question 9.
Are such sales are needed to be reported anywhere in any return?

Answer: 
Such sales are ordered to be reported in Table 5F of GSTR-9. Table 5F specifically declares that “No Supplies” are to be included here. Also, GSTR-9C and GSTR-9 are associated with matching actual returns filed with the financial statements. And the financial statement of such sales forms part.

Question 10.
Do we need to pay GST on any services taken from outside India which is not directly related to goods on a reverse charge basis? For example, when a service is taken from a website in China for selling of goods, for the goods which are transferred from the US by me.

Answer: 
Yes, GST is to be paid by a business in such case on a reverse charge basis as this is not related to the physical location of goods, and thus the place of supply will be acknowledged in India, and it converts an import of service.

Question 11.
Sara is paying tax under reverse charge for domestic purchases or based on the import of services. The sales of Sara are not liable for GST as it is not outfitted under GST. So, my input tax credit keeps on accumulating. Can Sara take a refund of such input tax credit?

Answer: 
No, a refund of the amount cannot be taken, which underlies in the electronic credit ledger. The amount claimed as an input tax credit will be in the credit ledger of Sara, and thus its refund cannot be taken.

Appeals Under GST

Appeals Under GST | Procedure, Appeat to Supreme and High Court

Leave a Comment / GST / By / January 8, 2024

Appeals Under GST: According to Section 2(4) of CGST Act, “adjudicating authority” means any authority, authorised or appointed to pass any decision or order under this Act, but does not incorporate the Excise and Customs of the Central Board, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Revisional Authority, the Appellate Tribunal and the Appellate Authority;

If appellate authority is convinced that the appellant was allowed it to be presented within a further period of one month but prevented by sufficient cause from presenting the appeal within the period as mentioned earlier of three or six months.

Appeal Before Appellate Authority

Any individual who believes that the decision or order by the adjudicating authority is not as per law then such individual can file an appeal to the Appellate Authority. Within three months of the communication of order or decision, the appeal should be filed to such an individual.

Commissioner may at its own proposal call for and inspect the record of any proceedings in which an adjudicating authority has passed a decision or order. The commissioner may command any subordinate officer to appeal to the Appellate authority. Within six months, the appeal should be filed from the date of communication of such a decision or order. In such a circumstance, such an authorised officer should be acknowledged as an appellant.

Procedure of Appeal

Such appeal, accompanied by relevant documents, should be made in Form GST APL-01. An immediate provisional acknowledgment will be issued. On filing GST APL-01 within seven days, a certified copy of the order or decision in dispute is presented. A final statement indicating the appeal number shall be published in Form GST APL-02.

Within 7 days of filing GST APL-01 along with the submission of the certified copy, the date of filing GST APL-01 shall be acknowledged as the date of filing the appeal. The date of submitting the copy is considered the date of filing the appeal; if a certified copy is submitted after seven days.

When the subordinate officer concerning the commissioner is filing an appeal, the person must submit a certified copy of the decision or order within seven days and the filed appeal in Form GST APL-03.

If any sufficient cause is determined at the event of the hearing, then a short period of time is granted to parties and adjourn the hearing by the Appellate authority. The reasons are to be documented in writing. Such adjournment may be granted a peak of three times to a party.

The appellate authority shall pass an order after inquiring, as it thinks proper, confirming, modifying or annulling the decision or order. The appellate authority shall not suggest the case back to adjudicating authority that established the order or judgment in dispute.

Suppose any order enhancing any fee or penalty or input tax credit is to be given or reducing the refund amount. In that case, the appellant should be given a reasonable opportunity of being heard.

The order shall be in writing and shall state the points for determination and decision while the appeal disposal and reasons for such decision.

A copy of the order is to be transferred to the respondent, to the adjudicating authority and appellant.

Appellate Authority

Any individual can file their appeal to:

  • the Commissioner (Appeals) where such order or decision is passed by the Additional or Joint Commissioner.
  • [any officer who is not subordinate to the rank of Joint Commissioner (Appeals)] where such order or decision is passed by the Assistant or Deputy Superintendent or Commissioner.

Any officer directed by the commissioner may appeal to:

  • [any officer who is not subordinate to the rank of Joint Commissioner (Appeals)] where the Joint or Additional Commissioner passes such order or decision.
  • the Additional Commissioner (Appeals) where such order or decision is passed by the Assistant or Deputy Superintendent or the Commissioner.

The Procedure to Appeal

In Form GST APL-05, such appeal is made, along with appropriate documents. Immediately, a provisional acknowledgment will be issued. A certified copy of the decision pr order in dispute must be submitted within seven days of filing GST APL-01, along with fees. A final acknowledgment showing the appeal number shall be published in Form GST APL-02.

Where within 7 days of filing GST APL-01, the certified copy is submitted and then the date of filing GST APL-01 shall be acknowledged as the date of filing the appeal. Suppose after 7 days, a certified copy is submitted, then the submission date of the copy is regarded as the date of filing the appeal.

The fees for restoration of an appeal or for an appeal shall be below:

  • Rs. 1,000 should be paid for every Rs. 1 lakh of input tax credit or tax involved or amount of fine, penalty or fee determined in the order against which appeal is made.
  • not more than Rs. 25,000.

There shall be no compensation for application made before the Appellate Tribunal for rectification of errors.

The application is to be made in Form GST APL-07 when made by a subordinate officer of the commissioner. Within seven days of filing the form, a certified copy of the order or decision must be submitted.

Appeal To High Court

Any individual may file an appeal to the High Court who has been aggrieved by any order or decision passed by the Appellate Tribunal. If the appeal is satisfied, the high court may admit such appeal, which incorporates a substantial question of law.

Within 180 days, the appeal is to be filed from the date on which the order appealed against is obtained by the individual. If the High Court is satisfied that there was sufficient cause for not filing it within 180 days, then the High court may entertain such appeal after the expiry of 180 days.

Where a substantial question of law is involved in any case and the High Court is satisfied with that, then the appeal shall be heard only on the question so formulated by them. However, at the hearing, the respondents can or are allowed to argue that the case does not require such a question. The high court, at its preference, may allow the appeal on any different question if it is convinced that the case involves such a question.

The High Court shall deliver such judgement after deciding the question of law, containing the grounds on which such decision is established and may grant such costs as it deems fit.

An appeal shall be heard by a bench of two or more Judges if it is filed before the High court, and according to the opinion of a majority of judges, the final order shall be decided. The Judges shall present and specify the point of law on which they differ when there is no majority and, on that point apprehended by one or more of other Judges. And then, such points will be determined according to the majority.

The sum due to the Government has to be paid as a result of an order or decision by the Appellate Tribunal as per the order, even if the appeal is filed in the High Court.

An appeal is suggested to made in Form GST APL-08.

Appeal To Supreme Court

Any person aggrieved by the Appellate Tribunal or High Court order can file an appeal in Supreme Court.

According to the provisions of the Code of Civil Procedure, 1908, relating to appeals shall apply to the Supreme Court.

The sum due to the Government has to be paid as a result of an order or decision by the Appellate Tribunal as per the order, even if the appeal is already filed in the High Court.

Circumstances in which Appeal Should be Disposed

Every appeal should be heard and then decide within a period of one year by the Appellate Tribunal from the date on which it is filed. The terms applied here is “as far as possible”. Therefore, there is no legal binding to pass such order within one year only, on Appellate Tribunal.

Certain Conditions Where an Appeal Not To Be Filed By Central Tax Officer

To regulate the filing of application or appeal, the board, on the council’s recommendations, may issue orders for fixing monetary limits by the officer of the central tax under the provisions of this Chapter.

An appeal doesn’t bind the officer not to file an appeal in similar issues or question of law when an officer does not file an appeal on one issue. Any individual signifying a party in the appeal cannot contest that the officer has not filed an appeal in a related case. Thus in the disputed issue, the decision is accepted.

Non-Appealable Orders and Decisions

No appeal shall lie against any decision taken, or order passed associates to any one or more or order passed by an officer of central tax if such decision is taken on the following matters:

  1. an order of other authority empowered or the Commissioner to direct the transfer of proceedings from one officer to another officer.
  2. an order concerning the seizing or retention of register, other documents and books of account.
  3. an order sanctioning prosecution under this Act.
  4. an order passed under section 80. (Payment of other amounts or tax in installments)

Production of Additional Evidence before the Appellate Tribunal or Appellate Authority

Any evidence, whether documentary or oral, is not allowed to produce by the appellant before the appellate authority other than the evidence produced by the person before the adjudicating authority. Similarly, that individual is not permitted to produce any evidence, whether documentary or oral, before the appellate tribunal other than the evidence produced by the person before the appellate authority.

However, in the following circumstances, an individual can produce or additional evidence is allowed:

  • when the adjudicating authority or, as the state may be, the Appellate Authority has declined to admit evidence which ought to have been accepted.
  • when the appellant was barred by sufficient cause from exhibiting the evidence which the person was called upon to produce by the adjudicating authority or, as the state may be, the Appellate Authority.
  • when the appellant was barred by sufficient cause from producing any evidence which is relevant to any ground of appeal before the adjudicating authority or, as the state may be, the Appellate Authority.
  • when the adjudicating authority or, in some instances, maybe, the Appellate Authority has addressed the order appealed against without providing sufficient opportunity to the appellant to adduce proof relevant to any ground of appeal.

Appellate Tribunal or Appellate Authority has to record in writing the reasons for admission of any additional evidence.

An officer authorised on the authority’s behalf, or the adjudicating authority has to be allowed a reasonable opportunity to examine the evidence or document or to produce any evidence or to cross-examine any witness produced by the appellant or any witness in rebuttal of the evidence produced by the appellant.

Authorised Representative

Before Appellate Authority or Appellate Tribunal, the officer, on a person’s behalf, may authorize another person to appear. However, in some instances, the main person has to appear personally for examination on affirmation or oath.

A person may designate the following individuals as authorised representative:

  1. their regular employee or relative.
  2. An advocate who is authorised to practice in any court in India and who has not been suspended from practising before any court in India.
  3. Any chartered accountant, a company secretary or a cost accountant who holds a certificate of practice and who has not been suspended from practice.
  4. An officer who is retired from the Commercial Tax Department of the Board or any State Government or Union territory, who during their service under the Government, had served in a post, not lesser the rank than that of a Group-B Gazetted officer for a term of not less than two years: under this Act, provided that such officer shall not be entitled to appear before any proceedings for a period of one year from the date of the person’s resignation or retirement.
  5. Any individual who has been in charged to act as a tax practitioner on behalf of the concerned registered person on goods and services.

Suppose an individual is found to be guilty of misconduct relative to any proceedings under this Act. In that case, the Commissioner may disqualify the person from appearing as an authorised representative after providing the person with an opportunity of being heard. This provision doesn’t practice to somebody covered in points (i) and (iii) above.

Following persons are barred from acting as authorised representative:

  • the person who has been removed or dismissed from Government service
  • the person who is convicted of an offence related with any proceedings under this Act, the Integrated Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, the State Goods and Services Tax Act, or under any of the Acts or under the existing law passed to deal with the imposition of taxes by a State Legislature, on the supply of goods or services, or sale of goods or both.
  • the person who is found guilty by the prescribed authority of misconduct.
  • the person who has been convicted as an insolvent is barred for the period until the insolvency does not get solved.

Revisional Authority

Revisional Authority may, at its own motion or upon information received by the person or on request from the commissioner, call for and examine the record of any proceedings. And suppose he considers that any order or passed by any officer subordinate to that individual is illegal, or is prejudicial to the interest of revenue, or has not taken into account certain material facts, or improper. In that case, he may stay the operation of such order or decision for such period as that person deems fit. After giving the concerned person an opportunity of being heard and after pass such order, making such enquiry, as the individual thinks just and proper.

The revisional authority shall not exercise any power if:

  • an appeal has been made against such order in the appellate tribunal, appellate authority, High court or Supreme court.
  • six months from the communication of order has not been elapsed.
  • three years or more than that have been passed after the passing of such a decision or order.
  • an order that has already been established by a revisional authority.

If an appeal is made in the appellate tribunal, appellate authority, Supreme court or High court, then any order on any point which has not been raised and decided can be given by revisional authority before the expiry of one year from the date of order of such appeal.

The Disposal Time-period of an Appeal

After hearing every appeal within a duration of a year from the date on which it is filed, its decision should be made by the Appellate Authority. The terms used here is “where it is possible to do so”; therefore, to pass such order within one year only, there is no legal binding on Appellate Authority.

Also, where issuance of order is lingered by order of a Tribunal or Court, the period of such hold shall be excluded in computing the term of one year.

Appeal before Appellate Tribunal

Any individual aggrieved by the order passed by the revisional authority under Section 108 or by appellate authority under Section 107 can file an appeal to the appellate tribunal within three months from the date of communication of such order to the individual.

Within three months, if it is convinced that there was sufficient reason for not presenting it within that period, the appellate tribunal may admit an appeal after the expiry of a period of three months.

When the taxable amount, input tax credit, fine, penalty or the difference in tax, an input tax credit is up to Rs. 50,000, then such appeal may get rejected or refuse to admit by the appellate tribunal. Hence, even if individual amounts are less than Rs 50,000, or if the total demand exceeds Rs 50,000, the appeal cannot be denied.

For the purpose of own motion call and to examine, the commissioner may hold the order of appellate authority or revisional authority. In order to apply to the Appellate Tribunal, the appellant may direct any subordinate officer. The appeal should be made or filed within six months from the date on which the order has been passed. In such a circumstance, an authorised officer should be acknowledged as an appellant.

Payment Before Appeal

When the appeal is made before Appellate tribunal by the registered individual, then such appeal can be made only after the appellant has paid the fine, fee, penalty, tax, and interest in the order, which the person has admitted. The appellant is also obligated to pay 20% of the leftover amount of tax in dispute arising from the order, in association to which appeal has been filed. This 20% remaining amount will also be the expense paid when filing an appeal before the Appellate authority.

The recovery for the balance amount shall remain deemed to stay when such amount is paid by the appellant, and it will remain deemed until the appeal’s disposal.

If any satisfactory cause is presented at the time of the hearing, then time is granted to parties and adjourn the hearing by the Appellate authority. In writing, all the presented reasons are to be recorded. A maximum of three times to a party can be provided on such adjournment.

After giving parties an opportunity by the Appellate tribunal of being heard, passes such orders as it deems fit. It can confirm, annul or modify the order or decision or may refer the case back to the appellate authority, original adjudicating authority or revisional authority with such direction as it may deem fit.

To rectify any error caused, may amend any order passed by the appellate authority. If an error is noticed by its own accord or the other party to the appeal or is brought to its notice by the commissioner within a period of three months from the order. No amendment shall be made, which will reduce a refund or input tax credit unless the party or enhancing an assessment is allowed to be heard.

Other Payment Before Appeal

When the appeal is made by the registered individual before the appellate authority, then such appeal can be made only after the appellant has paid the tax, fee, penalty, interest, and fine in the order, which he has admitted. In addition, the appellant is also obligated to pay 10% of the leftover amount of tax in dispute (maximum Rs. 25 crores) arising from the order, relative to which the appeal has been filed.

When such an amount is paid by the appellant, the recovery for the balance amount shall be deemed to stay.

TCS by E-commerce Operator GST

TCS by E-commerce Operator GST | TCS Under GST by E-commerce Operator

Leave a Comment / GST, Uncategorized / By / January 8, 2024

TCS by E-commerce Operator GST: Electronic commerce operators like Amazon, Flipkart, and Snapdeal must collect Tax Collection at Source (TCS) at the rate of one percent of the net sales of goods or services made through their platform. The operator manages tax, which is to be collected only on the amount.

Calculating Net Sales

Net sales are equal to the sales made through the platform reduced by the number of goods that the customer returns. The sales of services on which an e-commerce operator is liable to pay GST tax under section 9(5) are not included in the net sales, and thus, no tax is to be collected on such mentioned amounts. At present, cab aggregators like ola and uber are notified under section 9(5). Therefore, they are themselves liable for the collection and deposition of GST. Also, in this case, the net sales will include the amount of GST and the operator’s commission.

For example: If a supplier makes a net sale of Rs. 1,00,000, and then the Customers return Rs 10,000 worth of products; the net sale will come to Rs. 90,000, and TCS will be at 1%. In other words, Rs. 900 has to be deducted by the operator while making a payment to the supplier.

Paying of Tax and Statement Filing

The amount collected by the operator as TCS is to be deposited within the ten days, starting from the end of the month in which collection is made.

Also, details of outward supplies made, the returned reserves, and the amount assembled during the month will be filed within ten days at the end of the said month. Such a statement is to be filed in Form Type GSTR-8.

Suppose the operator discovers any omission or incorrect particulars in a statement filed, other than as a result of scrutiny, audit, inspection, or enforcement activity by the tax authorities; in that case, he shall rectify any such omission or incorrect details in the statement to be granted for the month during which such an omission or any such inaccuracies are noticed in subject to payment of interest.

No rectification as mentioned earlier or modification of any omission or incorrect details shall be allowed after any of the following dates mentioned below:

  1. The 10th of October of the next financial year
  2. The actual date of providing the relevant annual statement.

Additionally, an annual statement should be filed for every financial year on or before the 31st of December following the end of the year.

Input Tax Credit to Supplier

The supplier who has contributed the goods or any of his services through the e-commerce portal can claim such an input tax credit in his electronic cash register. The information provided by the operator is made available to the supplier in Part-C of Form Type GSTR02A after the due date of filing the GSTR-8.

If the details furnished by the e-commerce operator and the supplier do not match, the discrepancies will be communicated to both parties.

Suppose the discrepancy is not resolved by the supplier in his return or operator in his statement in the month in which the difference is communicated, in that case, such an amount will be added to the output tax liability of the supplier only where the value of external supplies furnished by the operator is more than the value of external supplies provided in the month in which the inconsistency is communicated. The supplier will also be needed to pay interest starting from the due date of payment to the date of its original amount.

Service of Notice Issued by Officer

An officer who is not below the grade of the joint commissioner may serve a notice to the operator asking for information related to supplies of goods and services during any period and the stock of goods held by suppliers in repositories or warehouses supervised by such operators and declared as auxiliary places of business by such suppliers.

The operator has to furnish the required information within 15 days of service of the made notice. If the e-commerce operator fails to deliver such information, they are liable to a pay penalty that may extend to Rs. 25,000.

Conclusion

This provision for e-commerce portals may bring many hardships to the new and upcoming portals that operate on a small scale. A person selling through such an e-commerce operator has to register under GST regardless of the turnover. The government may bind the e-commerce operator to match its total sales with GSTIN wise sales and thus ensure that only registered persons work through the e-commerce operator. And therefore, TCS is not necessary.

Depreciation Rate As Per Income Tax Act

Depreciation Rate As Per Income Tax Act On Fixed Assets for FY 2020-21

Leave a Comment / Income Tax / By / January 8, 2024

Depreciation Rates For FY 2020-21: Depreciation is a tax deduction for the reduction in the real value of a tangible or intangible asset used by a taxpayer under the Income Tax Act. It is a must to calculate the depreciation of assets used or acquired in a profession or business. This is in accordance with the Income Tax Act of 1962, which specifies varying depreciation rates for various asset classes.

What is Depreciation?

Depreciation is the term used to describe the loss in the value of an asset over time. Taxpayers can claim depreciation on assets bought and used in their profession or business when calculating gains and income from their profession or business.

Depreciation On Block of Assets

The written down method is used to evaluate the depreciation of block of assets. Block of assets are nothing but, collection of assets that belong to the same asset type. This block of assets are classified into two types and they are:

  1. Tangible Assets such as Building, Machinery, Plant, Furniture etc.,
  2. Intangible Assets such as patents, copyrights, licenses, trademarks and so on.

Depreciation Rates for Fixed Assets

The rate of depreciation for different classes of assets are tabulated below:

Asset Class Asset Type
Depreciation Rate
Building Residential buildings not including boarding houses and hotels 5%
Building Boarding houses and hotels 10%
Furniture Any fittings/furniture including electrical fittings 10%
Plant and machinery Motor cars excluding those used in a business of running them on hire 15%
Intangible assets Franchise, trademark, patents, license, copyright, know-how or other commercial or business rights of similar nature 25%
Plant and machinery Lorries/taxis/motor buses used in a business of running them on hire 30%
Plant and machinery Computers and computer software 60%
Plant and machinery Books owned by assessee carrying on a profession not being annual publications 60%
Building Purely temporary constructions like wooden structures 100%
Plant and machinery Books owned by assessee carrying on a profession being annual publications 100%
Plant and machinery Books owned by assessee carrying on business in running lending libraries 100%

Depreciation Rates As Per Income Tax Act

The depreciation rates as per the income tax act for both Part A & Part B tangible assets are given below:

Depreciation Rate for Tangible Asset Class Building

Sl.No Asset Class – Building
Asset Type
Depreciation Rate
1 Buildings used primarily for residential reasons (excluding boarding houses and hotels) 5%
2 Buildings apart from those used primarily for residential reasons and not covered by sub-items 1 (above) and 3 (below) 100.00%
3 Buildings procured on or after September 1, 2002, for installing plant and machinery forming part of water treatment system or water supply project and which is used for the purpose of the business of providing infrastructure facilities under clause (i) of subsection (4) of section 80-IA 100.00%
4 Purely temporary erections like wooden structures 100.00%

Depreciation Rates for Asset Class Furniture and Fittings

Sl.No Asset Class -Furniture and Fittings
Asset Type
Depreciation Rate
1 Furniture and fittings including electrical fittings 10.00%

Depreciation Rate Chart for Asset Class Plant and Machinery

Sl.No Asset Class – Plant and Machinery
Asset Type
Depreciation Rate
1 Plant and machinery excluding those covered by sub-items (2), (3) and (8) below 15.00%
2 Motor cars, excluding those used in a business of running them on hire, procured or put to use on or after April 1, 1990 15.00%
3(i) Airplanes, Aero Engines 40.00%
3(ii) Motor taxis, motor buses and motor lorries used in a business of running them on hire 30.00%
3(iii) A commercial vehicle which is procured by the assessee on or after October 1, 1998, but before April 1, 1999, and is used for any period of time prior to April 1, 1999, for the purpose of profession or business in agreement with the third proviso to clause (ii) of sub-section (1) of section 32 40.00%
3(iv) New commercial vehicle procured on or after October 1, 1998, but prior to April 1, 1999, in replacement of condemned vehicle of more than 15 years of age and is used for any period of time prior to April 1, 1999, for the purpose of profession or business in agreement with the third proviso to clause (ii) of sub-section (1) of section 32 60.00%
3(v) New commercial vehicle procured on or after April 1, 1999, but before April 1, 2000, in replacement of condemned vehicle of more than 15 years of age and is put to use prior to April 1, 2000, for the purposes of profession or business in agreement with the second proviso to clause (ii) of sub-section (1) of section 32 60.00%
3(vi) New commercial vehicle procured on or after April 1, 2001, but before April 1, 2002, and is put to use before April 1, 2002, for the purpose of profession or business 50.00%
3(vii) Molds used in plastic and rubber goods factories 30.00%
3(viii) Air pollution control equipment Felt

  • filter system
  • Electrostatic precipitation systems
  • Scrubber
  • counter current / packedbed / venture / cyclonic scrubbers
  • Dust collector systems
  • Evacuation system and ash handling system
 100.00%
3(ix) Water pollution control equipment Aerated detritus chambers (including air compressor)

  • Mechanical screen systems
  • Mechanically skimmed grease and oil removal systems
  • Flash mixing equipment and chemical feed systems
  • Mechanical reactors and mechanical flocculation
  • Mechanically aerated activated sludge / diffused air systems
  • Biofilters
  • Aerated lagoon systems
  • Air floatation systems
  • Methane
  • recovery anaerobic digester systems
  • Steam/air stripping systems
  • Marine outfall systems
  • Urea Hydrolysis systems
  • Activated carbon column
  • Bio
  • disc or rotating biological contractor
  • Marine outfall systems
  • Ion exchange resin column
  • Centrifuge for dewatering sludge
 30.00%
3(x) (a) Solid waste, control equipment Cryolite / mineral / lime / caustic / chrome recovery system
(b) Resource recovery and solid waste recycling systems		 100.00%
3(xi) Plant and machinery used in semi-conductor industry covering all integrated circuits (ICs) (not including hybrid integrated circuits) ranging from small scale integration (SSI) to large scale integration / very large scale integration (LSI/VLSI) as also discrete semiconductor devices like diodes, triacs, thyristors, transistors, etc., except those covered by entries (viii), (ix), (x) of this sub-item and sub-item (8) below 30.00%
3(xi)a Life-Saving medical equipment D.C Defibrillators for pacemakers and internal use

  • Colour Doppler
  • Haemodialysis
  • Cobalt therapy unit
  • Vascular Angiography System including Digital subtraction Angiography
  • Heart-lung machine
  • Spect Gamma Camera
  • Magnetic Resonance Imaging System
  • Ventilator used with anesthesia apparatus
  • Ventilator except those used with anesthesia
  • Surgical laser
  • Gamma knife
  • Fibreoptic endoscopes including audit resectoscope/pediatric resectoscope, arthroscope, peritoneoscopes, fibreoptic flexible nasal pharyngo, micro laryngoscope, video laryngo, fiberoptic flexible laryngo bronchoscope.
  • Bronchoscope, video oescophago gastroscope, video oescopghago bronchoscope, fibreoptic flexible oesophago gastroscope
 40.00%
4 Containers made of plastic or glass used as refills 50.00%
5 Computers including computer software 60.00%
6 Plant and machinery, used in processing, weaving and garment sector of the textile industry, which is bought under TUFS on or after April 1, 2001, but prior to April 1, 2004, and is put to use prior to April 1, 2004 50.00%
7 Plant and machinery procured and installed on or after September 1, 2002, in a water treatment system or a water supply project and put to use for the purpose of the business of providing infrastructure facility under clause (i) of sub-section (4) of section 80-IA 100.00%
8 1. Wooden parts used in artificial silk manufacturing machinery 100.00%
2. Match factories, wooden match frames
3. Cinematograph films, bulbs of studio lights 100.00%
4. Saltworks, condensers, reservoirs, salt pans, etc., made of clayey, sandy or earthy material or any other similar material 100.00%
5. Quarries and mines 100.00%
Sand stowing pipes, winding ropes, tubs and haulage ropes
Safety lamps
6. Flour mills, rollers
7. Sugar works, rollers 80.00%
8. Steel and iron industry, rolling mill rolls 80.00%
9. Energy-saving devices 80.00%
(A) Furnaces and specialised boilers
(i) Fluidized bed boilers / ignifluid 80.00%
(ii) Continuous pusher type furnaces and flameless furnaces
(iii) High efficiency boilers
(iv) Fluidized bed type heat treatment
(B) Instrumentation and monitoring system for monitoring energy flows 80.00%
(i) Digital heat loss meters
(ii) Automatic electrical load monitoring systems
(iii) Infrared thermography
(iv) Microprocessor based control systems
(v) Meters for measuring heat losses, steam flow, furnace oil flow, power factor and electric energy meters
(vi) Exhaust gas analysers
(vii) Maximum demand indicator and clamp-on power meters
(viii) Fuel oil pump test bench
(C) Waste heat recovery equipment 80.00%
(i) Air pre-heaters and recuperators
(ii) Feedwater heaters and economizers
(iii) Thermal energy wheel for low and high-temperature heat recovery
(iv) Heat pumps
(D) Co-generation systems 80.00%
(i) Controlled extraction, back pressure pass out, extraction cum condensing turbines for cogeneration along with pressure boilers
(ii) Organic Rankine cycle power systems
(iii) Vapour absorption refrigeration systems
(iv) Low inlet pressure small steam turbines
(E) Electrical equipment 80.00%
(i) Synchronous condenser systems and shunt capacitors
(ii) Relays (automatic power cut off devices)
(iii) Power factor controller for AC motors
(iv) Automatic voltage controller
(v) Solid state devices for controlling motor speeds
(vi) FACT (Flexible AC Transmission) devices, Thyristor controlled series compensation equipment
(vii) Thermally energy-efficient stenters
(viii) Series compensation equipment
(ix) TOD (Time of Day) energy meters
(x) Intelligent electronic devices/remote terminal units, computer software/hardware, bridges/router, other required equipment and associated communication systems for data acquisition systems and supervisory control, distribution management systems and energy management systems for power transmission systems
(xi) Special energy meters for ABT (Availability Based Tariff)
(F) Burners 80.00%
(i) Zero to ten percent excess air burners
(ii) Burners using air with high preheat temperature (above 300 degrees Celsius)
(iii) Emulsion burners
(G) Other equipment 80.00%
(i) Mechanical vapour recompression
(ii) Wet air oxidation equipment for recovery of heat and chemicals
(iii) Automatic microprocessor-based load demand controllers
(iv) Thin film evaporators
(v) Fluid couplings and fluid drives
(vi) Coal based producer gas plants
(vii) Super-charges/turbo charges
(viii) Sealed radiation sources for radiation processing plants
10. Gas cylinders including regulators and valves 60.00%
11. Glass manufacturing concerns, Direct fire glass melting furnaces 60.00%
12. Mineral oil concerns 60.00%
(i) Plant used in field operations (above ground) distribution, returnable packages
(ii) Plant used in field operations (below ground), but not including kerbside pumps including fittings and tanks used in field operations (distribution) by mineral oil concerns
13. Renewable energy devices 60.00%
(i) Pipe type and concentrating solar collectors
(ii) Flat plate solar collectors
(iii) Solar cookers
(iv) Air/fluid/gas heating systems
(v) Solar water heaters and systems
(vi) Solar crop drivers and systems
(vii) Solar steels and desalination systems
(viii) Solar refrigeration, air conditioning systems and cold storages
(ix) Solar pumps based on solar-photovoltaic and solar-thermal conversion
(x) Solar power generating systems
(xi) Solar-photovoltaic panels and modules for water pumping and other applications
14. Windmills and any other specially designed devices that operate on windmills (installed on or after April 1, 2014) 80.00%
15. Any special devices including electric pumps and generators operating on wind energy (installed on or after April 1, 2014) 80.00%
16. Books owned by assessees carrying on a profession
(i) Books, being annual publications 100.00%
(ii) Books, excluding those covered by entry (i) above 60.00%
(iii) Books owned by assessees carrying on business in running lending libraries 100.00%

Depreciation Rates for Asset Class Ships

Sl.No Asset Class – Ships
Asset Type
Depreciation Rate
4(i)
Ocean-going ships including tugs, survey launches, dredgers, barges and other similar ships used primarily for dredging purposes and sighing vessels with a wooden hull
4(ii) Vessels ordinarily operating on inland waters, not covered by sub-item (iii) below 20.00%
4 (iii) Vessels ordinarily operating on inland waters being speed boats 20.00%

Now that we are aware of Depreciation rates as per companies act for Part A tangible assets. Now let’s look at the rate of depreciation rates for Part B intangible assets.

Depreciation Rates for Intangible Assets (Part B)

The asset type such as patents, know-how, trademarks, franchises, copyrights, licenses or any other commercial or business right of similar nature will have a rate of depreciation at 25%.

Who Can Claim Depreciation?

Individuals meeting the following criteria will be eligible to claim the depreciation.

  • The assessee must own the assets in full or in part.
  • The assets must be used in the taxpayer’s business or profession. If the assets are utilised for other reasons in addition to the business, the depreciation allowed will be proportionate to the use of the business purpose.
  • Depreciation can be claimed by co-owners up to the value of the assets owned by each co-owner.

FAQ’s on Depreciation Rate

Question 1.
Can I claim depreciation on the cost of land?

Answer:
No, you cannot claim depreciation on the cost of land.

Question 2.
What is the depreciation rate on the computer as per the income tax act?

Answer:
As per the income tax act, the depreciation rate on computers is 40%.

Question 3.
Which is the depreciation rate formula?

Answer:
We can use the Straight-line method or the Written down method to calculate the depreciation rate. The straight-line methods formula which is used to calculate the rate of depreciation is (Cost of Asset – Salvage value of Asset)/ Depreciation Rate per Year.

File request for refund of excess TDS deposited by Deductor

File Request for Refund of Excess TDS Deposited by Deductor

Leave a Comment / TDS / By / January 6, 2024

File Request for Refund of Excess TDS Deposited by Deductor: If an excess of tax, more than the actual amount, is deposited, a Deductor can make a request for a refund of the excess TDS that he has deposited through TRACES. (From 2007 to 2008). In addition, an online utility is accessible for various Form types of 24Q, 26Q, 27EQ, 26QB, 27Q and 27Q.

The List for Filing a Raising Refund Request through TRACES for Form Type 26B

  1. A Digital Signature on TRACES should be registered for an authorised person.
  1. Against the TAN or PAN of the Deductor, there should be no remaining outstanding balance.
  2. As per TAN Master, the PAN of the Deductor and their TRACES profile should be the same.
  3. Refunds can only be requested for the OLTAS challans where the amount unclaimed is larger than Rs.100.00 for each challan.
  4. The maximum refund amount allowed will be considered the minimum challan amount in the challan receipt’s history.
  5. You will not be able to claim the credit of any challan that is used in the refund requests of any statement except the available residual balance.
  6. Before the appeal process for a refund of the challan, all statements in which it has been claimed are processed.
  7. Against TAN and any TAN(s) associated with the PAN of the Deductor, no outstanding balance should remain.

A Stepwise Guide to File a Request for Refund

Step 1: Logging into Traces.

Step 2: Selecting the option “Request for Refund” under the Statements or Payments category.

Step 3: Clicking the “Proceed” button on the refund checklist.

Step 4: Selecting the type of challan that is meant for a refund.

  1. The refund request for challan or challan(s) u/s of section 195
  2. The refund request for challan or challan (s) u/s other than section195.
  3. A separate request is needed for the challan u/s 195

Step 5: Selecting at least a single reason from the five given options in the section below to raise a refund request.

Step 6: Clicking on the option “View Challan Details” after entering the details of the challan against which the refund is requested.

Step 7: After reviewing all details of the challan and its consumption details (if any). Confirm all checkboxes and click “I Agree” to proceed with your request.

Step 8: The Challan will be added to the request list, and the Deductor can add a maximum of 5 challans per request. After that, click on “Proceed”, and all of the challans are added.

Step 9: Reviewing the name and the communication address of the Deductor (which should be the same as the TRACES profile). The Deductor should provide the following bank details:

  1. The Bank Name
  2. Number of the Bank Account
  3. The IFSC Code
  4. Account type

Note: – If the refund amount is more than 50,000, it will be transferred to the bank account mentioned by the Deductor at the time of submission of the refund request.

Step 10: The verification details will be displayed. Then, click on the “Proceed” button for final submission or on the “Back” button to cancel or make any changes.

Step 11: After reviewing the summary displayed on the screen, click on the “Submit Request Refund” option. Then, in case of any edits, click on “Edit” for the specified segment.

Step 12: Signing the application via digital signature is the next important step.

Step 13: Printing the acknowledgement that is generated for Form 26B.

Step 14: Delivering printed acknowledgement to your Jurisdictional Assessing Officer within 14 days, starting from the date of transmission of the data electronically, is the last step and failing this step will lead to the rejection of your refund request.

Transfer of ITC In Case of the Transfer of Business

Transfer of ITC In Case of Transfer of Business

Leave a Comment / Income Tax / By / January 6, 2024

Transfer of ITC In Case of Transfer of Business: There have been many mergers and transfers of businesses before and after the GST implementation, which occurred on 1st July 2017. The transferors after the date will have ITC available. They need to pass these on to their successors or transferee when they want to merge or transfer their business.

All companies who have transferred their business under GST need to furnish the details correctly while filling up Form GST ITC 2 through their official portal. They also need to place a request to transfer the unused input tax credit to the electronic credit ledger.

How to File ITC 2 on GST Portal

People who have merged their businesses or made new acquisitions can fill up ITC 2 form to transfer the Input Tax Credit or ITC balance to their electronic credit ledger from one GSTIN to another GSTIN.

Who Needs to File Form ITC 2?

If there is a transfer of a business owner through sales, mergers or demergers, a taxpayer with registration can transfer the input tax credit left to their electronic credit ledger. The successor or the transferee needs to file a declaration in Form GST ITC 2. It is the duty of the transferee to file it, and there is no time limit within which they have to file the form under the set of rules or act. The full description of the problem is in the article.

Suppose multiple mergers, demergers or amalgamations have taken place in a business after the GST implementation on 1st July 2017. In that case, the transferor of the company should have some unutilised ITC in the electronic credit ledger. The new business owner can claim it by filing GST ITC 2 and transfer it to their new business. After they file this form, the authorities will verify its credibility and transfer the funds to the account of the successor’s electronic credit ledger.

Contents of Form GST ITC 2

The form contains sections for the declaration of mergers, demergers and amalgamations, leases, or transfer of businesses under Section 18, subsection 3. People have to fill in the following details compulsorily.

  1. Essential Details: GSTIN of the transferor, legal name of the transferor, trade name, GSTIN of the transferee, legal name of transferee and their trade name, if any.
  2. ITC Transfer Details: Amount of the central tax, state tax, UT tax, etc.
  3. CA or the Cost accountant Details: The details of the chartered accountant who verified the facts.

Requirements for Filing Form GST ITC 2 on the Official GST Portal

There are a few pre-requisites for filing Form number GST ITC 2. The details are as follows.

  1. Both the transferor and the transferee who acquires the business should have a valid GST registration.
  2. The transferor should have their ITC available in their electronic credit ledger.
  3. The transferor must file all the applicable GST returns for the past financial years or periods.
  4. If there are any pending transactions related to the merger, the transferee has to accept, reject or modify all of them as they see fit. Furthermore, if there are any liabilities associated with the past returns, the transferor has to pay them off.
  5. If there is a transfer of business, then there should be valid provisions for the transfer of liabilities available. The transfer of liabilities is regarding the stayed demand of tax, litigation, and recovery; a certified chartered accountant or a cost accountant should verify all the details.

The process of transferring unutilised ITC can be divided into two parts which are as follows.

  1. The transferor has to file GST ITC 2 stating the amount of unutilised ITC.
  2. The transferee accepts or rejects the unutilised ITC on the GST portal in the last section of the form.

Steps for the Transferor

Step 1: Log in to the common GST portal

Step 2: Go to services, then click on the returns option. Finally, click on ITC forms and open From ITC 2.

Step 3: Click on the ‘Prepare Online’ button on the ITC 2 tile.

Step 4: Input the details of the transferee and update the GSTIN of the transferee. Enter the expense that you want to transfer under each head. Open Form GST ITC 2, and the amount of unutilised ITC will automatically get filled in the form from the electronic credit ledger. Then the transferor can transfer the entire or the partial ITC amount as they require.

Step 5: Update the following details for the Chartered Accountant or the Cost Accountant who certified the details.

  • Name of the firm
  • Name of the chartered accountant or cost accountant
  • Membership number of the certifying firm
  • Date of issue of the certificate

Step 6: Attach a copy of the certificate and click on ‘save.’ A message will pop up stating that the details have been saved successfully.

Step 7: Proceed to file using the EVC or DSC. Select the declaration checkbox and select the authorised signatory from the list that drops down. File the form using the DSC or EVC option.

Step 8: Click on the ‘proceed’ warning message and enter the OTP you receive and click on ‘verify.’ You will get a confirmation message.

Steps to Follow After Filing Form ITC 2 by the Transferee

After the transferor fills up the form, the transferee can either accept or reject it through the following steps.

  1. Log in to the GST portal and go to services, then user services and then to ITC 2 Pending for action. The form will open.
  2. Click on ARN, and the details will show.
  3. The transferee can accept or reject the transfer.
  4. If they click on ‘accept’, a confirmation message will pop up, and they can click on the declaration check box, select the authorised signatory, and proceed to file with the DSC or EVC.

If the transfer is successful, they will receive a confirmation message. The transferee can then navigate to the ITC 2 pending for action link and confirm that they have changed the transfer status from ‘pending’ to ‘accepted.’ It marks a successful transfer of the electronic credit ledger from the transferor to the transferee. They can download the form if they want for future purposes and documentation.

TDS on Purchase of Property from Non-Resident

TDS on Purchase of Property from Non-Resident

Leave a Comment / TDS / By / January 6, 2024

TDS on Purchase of Property from Non-Resident: Section 195 of the IT Act of 1961 is associated primarily with Tax Deducted at Source (TDS) for non-resident Indians.

Per Section 195 of the Act, an Indian tax citizen who acquires assets from a non-resident must deduct the amount of TDS and deposit the money with the Government Of India.

Whatever amount of fee is charged, the remittance documentation is legally mandatory.  Any sum owed to Tax is the expenditure incurred that has the element of income and gross amount, the entirety of which may or may not accurately reflect revenue or profits.

Table of Contents

Who is Liable for Deducting Tax under Section 195?

Any individual responsible for the payment of a non-resident who is neither a business nor a foreign business must essentially deduct income tax at the prevailing rates.

What is the TDS Percentage that Applies to this Section?

TDS rates fundamentally alter based on whether the asset is a long-term asset or a short-term asset.

  • If the asset is possessed by the owner for longer than two years, the profit on selling counts as “Long term Capital Gains,” and TDS is levied at 20% along with the additional surcharges and cess.
  • However, suppose the asset is possessed by the owner for a shorter than a period of two years. In that case, the profit on selling automatically falls under “short term capital gains”, and TDS is charged as per the Income Tax Rates bracket contingent on the total income of the seller. Generally, TDS is deducted at 30% plus appropriate surcharge and cess.

What Is the Payment Structure?

  • Any interest incurred (not being the Interest indicated in section 194LB, 194LC, and 194LD).
  • Some other amount taxable under this Act’s stipulations (but not revenue taxable under the section “Salaries”).

Computation of the Sum From Which TDS Should Be Withheld

Section 195  stipulates that TDS be levied exclusively on revenue earned by a non-resident. In simple terms, the buyer can only deduct TDS on just the quantity of capital gain realized by the non-resident, not on the gross proceeds from the sale.

According to Section 195(2), when the entire sum payable to the non-resident is not subject to taxation for non-residents, he may petition his Assessing Officer to evaluate the acceptable fraction of the total amount taxable. The Income Tax Officer must assess the taxable profit and issue certified documentation indicating the exact amount of the capital gain.

The seller cannot conduct the determination of taxable income and, therefore, must be necessarily undertaken by the Income Tax Officer.

If the documentation is not readily accessible, it is recommended to deduct TDS on the total amount of the sales profits applying the highest tax rate bracket (not neglecting the surcharge and cess).

TDS on Purchase of Property

When Should TDS be Collected under Section 195?

When such total revenue is transferred to the payee’s account or when the transaction is carried out, whichever happens before.

Credit to Interest, payable account, Suspense account, or any other term will be widely deemed to be a credit of such earnings to the payee’s account for this specific purpose.

Payment for this specific function can be made in cash, via cheque or drafts, or any other viable method.

If the Government, a public sector bank, or a public financial institution needs to pay Interest, the tax deduction is allowed only when the payments are made in cash, by cheque, drafts, or any other form.

Precautions and Adherence while Buying Assets from an NRI

  • TDS is simply liable for the acquisition of assets from an NRI independent of the transaction size. TDS is applicable even when the asset is priced well below Rs. 50 lakhs.
  • To deduct the cost TDS, a purchaser must essentially acquire a TAN (Tax Deduction Account Number). If the asset is bought from a Resident Indian, no TAN is obligatory. Alternatively, TAN is legally necessary if the property is obtained from a Non-Resident Indian.
  • TDS must be necessarily deposited within seven days of completing the month for which it was computed. For illustration, if TDS is withdrawn on July 28th, the payment is payable on August 7th.
  • The TDS deducted must be submitted initially using Challan No./ITNS 281.
  • TDS returns must be filed within 31 days following the end of the quarters from which TDS was levied using TDS Form 27Q.
  • TDS authorization documentation must be issued within 15 days of the TDS return’s due date.

What is the Maximum Bound?

Zero, which denotes that there is no maximum restriction.

However, the Tax must be subtracted from the total amount payable to taxation. Consequently, if no amount of money is liable to taxation in India, no tax must be deducted.

There is no TDS under Section 195 on amounts of income taxed under the header ‘Salaries’ or payments fully included under Sections 194LB, 194LC, or 194LD. TDS will be collected at the exact point of payment or credit, whichever happens, earliest.

How to Get Clients for your CA Practice

How to Get Clients for your CA Practice?

Leave a Comment / Education / By / January 6, 2024

How to Get Clients for your CA Practice: Needless to say, the professional credibility of a Chartered Accountant (CA) is often measured and evaluated by the number of clients they are working with. Even though CA, as a profession, is a high-paid career option, many aspects must be taken care of by an individual to get hold of more clients, especially those looking to hire chartered accountants and even willing to pay generously for the services.

To begin with, CAs must start realizing that in this digital age, many companies and individuals are looking for chartered accountants online, which pinpoints to the fact that CA professionals have to strengthen their presence online.

However, as a code of manner, chartered accountants are usually refrained from advertising their expertise and even clients as an unwritten code, whereby making it slightly trickier for them to get hold of a respected clientele from a digital channel.

However, in the upcoming sections, we shall look at a few things that every Chartered Accountant must and should do for increasing active clients.

Add in Partners along with this Convert Standalone Practice into a Full-Fledged Firm

Needless to say, clients usually hire accountants associated with an esteemed CA firm. Hence, for a CA to get hold of more clients, he or she must to expand his standalone practice. However, the firm looks excellent only if partners are working together in unison.

In the case of Chartered Accountancy, it is often difficult to add in professionals as everyone else is looking to create their own identity too.

One way to approach this would be to prepare a dedicated revenue-sharing structure that looks helpful to all the interested parties.

However, each aspect has to be separated based on the workload shared, contributed capital and even the well-founded work experience. Another profitable way of approaching this would be creating a profit-sharing model on the basis of clientele and deliverables.

Group The Clients

All your clients are not going to be equal. It is always suggested to group the clients on the basis of certain factors such as revenue, profitability, positive exposure, effectiveness, great connections, etc.

In short, one needs to find their ideal clients before they start running after the clients. It is not essential that one need to consider only financial aspects when building their clients.

There might be clients who are less profitable but might help one in creating a firm reputation. It is always better to look for clients in the area of one’s specialty. One can prepare a list of contacts from which they can ask for work.

One can contact their principals too. They will offer work if they are impressed by one’s work during their internship.

Concentrate on the Online Portals as well as Social Platforms

For a Chartered Accountant, it eventually comes down to the existing structure of fee and the eagerness of the clients to pay a desired amount of money. However, since there is a lot of pre-existing competition around, CAs have to upgrade their expertise by learning about the new tricks of the trade.

In addition to this, it is essential to demonstrate their knowledge in the form of relevant articles over online professional platform aggregators. In addition to this, having a decent social following also comes in handy in generating awareness.

The next 20 years are all about marketplaces and on-demand services. We are talking about a globally internet-connected workforce and how CAs and other business professionals adapt to technology. These digital platforms will determine how the Legal & Tax Industry provides the next million or billion.

Furthermore, Accounting and Legal Process outsourcing is a massive industry in the subcontinent, given the cheap workforce price.

Hence, strong digital marketplaces will offer CAs exposure to international business opportunities as well. Many online platforms empower digital age CAs, Accountants, Lawyers, and other business experts with business development and tools to manage their business.

Make Great Alliances With The Qualified And Trusted Professionals

The clients might be in connection with many other different firms for various services such as legal representation, investment advice, recruitments, technology, etc.

If one starts helping them with these services by providing referrals, they will get attracted to them. When one builds new alliances with trusted professionals, they can refer their clients to them, and in the same way, one can get new clients with these referrals.

Nowadays, people don’t have much time, so they want their services to get handled under one roof. When on starts helping their clients in saving their time, they might stay connected longer with them.

At the beginning-quality work to the client, they will like to shift the entire work to them and keep it under one CA. This way, one can open the doors of continuous income for themselves.

Moreover, one can do the meetings with their seniors in the CA profession; they could guide them in the right way to success or might introduce them further with some new clients.

Provide your contact numbers to these professionals so that they will contact you whenever they have some great work opportunities for you.

Create a Niche Market is Better

Many Chartered Accountants fail to carve out a niche arena and spend hours communicating with clients with diverse requirements. While networking is a highly potent tool when talking about getting a lot of customers, CAs need to realize that exploring into every micro area of work isn’t something that is expected to pay dividends.

Rather, a CA working on a specific niche is much better placed when it comes to getting recommendations, even from professionals about different sectors. For instance, if a CA specializes in bookkeeping services, they must start promoting this niche in order to get more clients instead of concentrating on various specializations.

Practice Effective Networking

Networking is highly effective and gives one positive result if one knows how to make the most out of the situation. Networking events are the most effective way of increasing one’s clients in today’s modern digital age.

It will offer excellent opportunities to meet new prospects. If networking is done right, one’s business growth is inevitable. The essential thing is one must be completely prepared before attending the networking events.

One needs to have complete knowledge about the other attendees before they go there. One can arrange the attendees’ list. Think about the advantages that one can provide to such clients.

Try to meet well-established people in such events and follow up on these meetings after the event. One can even contact government officials and visit the offices frequently. It will help in maintaining a good relationship with them, and one can open the doors for getting long-term business from them.

Be Dedicated to Your Work and Keep Yourself Updated

A dedicated Chartered Accountant (CA) needs to be more than ready to put in the hard work. Firstly, they must look to learn new things every day, which can be something on the lines of elaborate taxation and company agreement or something as simple as bookkeeping services.

Therefore, each piece of knowledge is essential when it comes to attracting their clients and making it easier for them to look for chartered accountants (CAs) online and even across offline platforms.

Nothing compares to knowledge when it comes to getting a hold of a more extensive clientele. Hence, Chartered Accountants (CAs) who are looking to get more clients to need to make arrangements to update the existing knowledge that they have sets precisely for staying relevant.

For someone looking forward to hiring chartered accountants, upgraded knowledge serves as a necessary criterion. With that being said, CAs that having upgraded skill sets must also make them public in order to reach a broader audience base.

Strong Professionalism and Ethics

With repeated financial mismanagement news in large and small organizations and repeated breaches of ethical codes, CA’s are under regulatory watch now more than ever. Upholding solid moral values is a must-have attribute for all the CAs.

They need to keep them up-to-date on new developments in the Accounting sphere, especially when it comes to ethical codes and standards. So, they must routinely track websites of think tanks and regulatory bodies to enroll in workshops for this sphere.

Adherence to the ICAS saying ‘Quaere Verum’, which implies ‘seek the truth’, has to be a must for all the CAs.

Inference

It goes without mentioning that a CA is a supreme commander when it comes to the handling of the client’s Tax & Accounting needs.

However, as the competition increases with each passing day, it has become even more critical for the upcoming and even existing CAs to follow the mentioned strategies to expand their existing client base and stay relevant.

GST On Goods Transport Agency

GST On Goods Transport Agency | Application, Rate and Registration

Leave a Comment / GST / By / January 6, 2024

GST On Goods Transport Agency: Transportation is one of the principal parts of an economy. Now there are many confusions among the GST provisions, and one of the confusion is on the applicability of GST on Goods Transport Agency. Every individual who deals in goods transport needs to list their service. It is already listed among the list of services in which GST is payable on reverse charge when any services are provided to a registered person.

GST Application On GTA

As per Notification no. 12/2017-Central Tax (Rate) Serial No. 18 dated 28.06.2017, individual tempo or truck operators who do not issue consignment notes from GST are exempted. Therefore, it is mandatory for goods transport agencies who issue consignment notes or use the transport fleet of others. They are working only as an agency are liable to pay GST.

If goods are transported using non-motorized vehicles, such as rickshaws, such individuals are exempted from GST payment.

Rate Of GST

Goods Transport Agency is entitled to a GST rate of 5%. In such cases, it is not allowed to take the input tax credit (ITC) on the amount paid for GST on goods or services or both, which are used in supplying such services.

If the person wants to take the input tax credit (ITC) on the amount of GST paid, then the person can opt for an option where the person is required to pay GST at 12% and then can opt for an input tax credit on all inputs. [As per Central Government Vide Point no. (iii) Of Notification No. 20/2017-Central Tax (Rate) dated 22.08.2017]. In such cases, the Goods Transport Agency (GTA) is liable to pay GST on all services provided by the agency, and a reverse charge won’t be applicable.

Services Taxable At NIL Rate

There are certain services that are taxable at the NIL rate for GTA and are as follows:

  • Agricultural produce
  • Any relief materials for casualties of calamities, natural or man-made disasters, mishaps, or accidents.
  • Salt, milk, and food grains, including rice, flour, and pulses.
  • Organic manure for agricultural purposes.
  • Equipment related to military or defense purposes.
  • Magazines and newspapers registered with the Registrar of Newspaper.
  • Such goods where consideration is charged for transporting all goods for a single consignee is not more than ₹750.
  • Such goods where consideration is charged for the transportation of goods on a consignment basis in a single carriage is not more than ₹1,500.
  • Any services provided to an unregistered person by a goods transport agency, including an unregistered taxable person other than persons covered under a reverse charge basis.

Charging Of GST Under Reverse Charge Basis

Below provided is the list of persons liable to taxes on a reverse charge basis if the goods transport agency has not paid GST at the rate of 12% for the supply of services.

  • Any corporate body that is established by or under any law.
  • Any factory governed by or registered under Factories Act, 1948.
  • Any society registered under the Societies Registration Act, 1860 or any law for the time being in force in any parts of India.
  • Any person registered under the Central Goods and Services Act or the State Goods and Service Act or the Union Territory Goods and Services Act, or the Integrated Goods and Services Act.
  • Any co-operative society registered or established under any law.
  • Any partnership firm registered under any law or not, including the association of persons.
  • Any unregistered casual taxable person.

For those categories which do not fall above, it is the liability of the goods transport agency to pay GST.

Goods Transport Agency

Registration Requirements

Individuals with a turnover of more than ₹20 lakhs in a financial year are liable to register for GST. This limit of turnover is reduced to ₹10 lakhs for special category states.

However, as per Central Government vide Notification No. 5/2017-Central Tax dated 19/06/2017, it is exempted for such persons who are supplying taxable goods or services or both. The total tax is liable to be paid on a reverse charge basis by the recipient of such goods or services or both, even if the turnover exceeds the exemption limit.

Therefore, if a Goods Transport Agency provides all its services to a registered person only, then such Goods Transport Agency is not liable to register even if the turnover exceeds the specified exemption limit of ₹20 lakhs or ₹10 lakhs.

According to Section 23(2) of CGST Act, if a person or an individual is engaged exclusively in the business of transporting or supplying goods or services or both that are not liable to taxation or are wholly exempted from tax, it is not mandatory for such person or individual to take registration. For example, if a Goods Transport Agency is engaged in supplying services to farmers regarding agricultural produce, it is not mandatory for such an agency to register.

The goods transport agency is not entitled to the benefits of the composition scheme.

How To Confirm Inter-State Or Intra-State Supply Through Place Of Supply?

Section 7(3) of the IGST Act states that the supply of services shall be treated as inter-state trade or commerce when the location of the supplier and the place of supply are in–

  • Two different Union Territories;
  • Two different States;
  • Between a State and a Union territory,

The supply is considered an intra-state supply when the supplier’s location and supply are in the same state or union territory.

The place of supply on transportation of goods by road is determined by the following:

  • If the supply of goods is made to a registered person, then the location of such person;
  • If the supply of goods is made to a person other than a registered person, then the location of handing over such goods for transportation.

Duties Of Transporter for E-way Bill

The transporter is required to generate a new E-way bill beforehand in Form GST EWB-01 if there is a transfer of goods from one vehicle to another in the course of transit.

Conveyance details need not be furnished when the transported goods from the transporter’s place to the business place are less than 10 km.

If the transporter transports multiple consignments of goods in one vehicle, then the indication of serial numbers of e-way bills generated is required of each such consignment. The transporter also has to generate a new consolidated e-way bill in FORM GST EWB-02 before the transportation of such goods.

The transporter needs to generate Form GST EWB-01 based on bill of supply, invoice or delivery challan when the consignor of goods does not generate the e-way bill, and the value of goods exceeds ₹50,000.

A special class of transporters needs to obtain a special Radio Frequency Identification Device (RFID) and get the said device embedded onto the conveyance vehicle and map the e-way bill to the RFID tag before transporting goods as and when notified by the commissioner.