The order for blocking of Electronic credit ledger (ECL) under GST contain two pre-requisite i.e. Reason to believe & recorded in writing.

The Government has introduced Rule 86A to block ineligible or fraudulently availed ITC by the taxpayers vide Notification dated 26.12.2019. As per this rule, ITC available in the ECL of the taxpayer can be blocked if commissioner has ‘reasons to believe’ that taxpayer has fraudulently availed ITC.

Steps for updating the Importer - Exporter Code (IEC)

As per the recent DGFT Notification Number 58 dated 12.02.2021, any IEC Holder is required to update their IEC electronically every year, during the period of April to June. While this updation is mandatory, due consideration has been taken not to increase any compliance burden.

Liquidated Damages

The issue circling around charging of tax in cases of ‘Liquidated Damages’ (LD) under Goods and Service Tax (GST) law has been an issue from the beginning of GST law coming into force as even in the earlier regime under Service tax (ST) the issue had cropped many times.

GST on society maintenance exempt upto Rs. 7500 per month per member

Madras High Court while quashing the Authority of Advance ruling (AAR) and Circular No. 109 dated 22.07.2019 held that RWA liable to pay GST on the members’ monthly contribution only on the amount exceeding Rs.7,500/- not on the entire amount.

Issue and Redemption of Preference Shares

Click here to know more about issue and redemption of preference share

Small Company - Applicability and Benefits

Definition of Small Company under Companies Act, 2013 amended vide Finance Bill 2021 has been made effective from 1st April, 2021.

Receiving Payments via Mandatory Electronic Modes

CBDT has prescribed Section 269SU of the IT Act,1961 requiring all companies or business entities with total sales or receipts exceeding INR 50 Crores during the immediately preceding previous year to provide facilities for accepting payments through prescribed electronic modes.

Clarification in respect of Prescribed Electronic Mode under Section 269SU of Income Tax Act,1961

To encourage digital transactions and move towards a less-cash economy, the government has introduced Section 269SU, vide the Finance (No.2) Act 2019 to provide facilities for accepting payments through prescribed electronic modes.

Statement of Financial Transaction (SFT) under Rule 114E of Income Tax Rules

The Statement of Financial Transaction (SFT) is required to be furnished in Form No. 61A and the below mentioned are the nature of transactions along with monetary limits to be reported in Form No.61A

Consequences of late filing of Income Tax return for the A.Y 2019-20

If a person liable to file an Income Tax return for A.Y. 2018-19 fails to file the same by the prescribed due date*, then Penalty shall be payable u/s 234F of the Income Tax Act, 1961 depending upon the Total Income# of the person and actual date of filing Income Tax Return.

Higher rate of TDS & TCS for Non-Filers

A new provision under section 206AB of the Income Tax Act, 1961 is made applicable with effect from 01/07/2021, based on which deductors may have to deduct TDS at higher rate in case the deductee has not filed the Income Tax returns for 2 years and subject to other conditions.

Surcharge Rates for A.Y. 2021-22 of certain assesses

The respective rate of surcharge i.e 10% or 15% or 25% or 37% mentioned below shall become applicable on the tax computed based on the total income of every assessee.

Deduction of Tax at Source on Dividend.

Dividend constitutes an important stream of income for shareholders of companies .India has now re-introduced the classical system of taxing dividend income in the hands of shareholders by abolishing DDT through Finance Act 2020. As a result, the dividend received will now become taxable.

Royalty & FTS - Increase in domestic tax rate

Earlier, income earned by way of Royalty & FTS (Fees for Technical Services) by a NR not having a PE in India was taxable under the domestic tax provisions @ 10% plus applicable surcharge and cess on gross basis. Now tax rate has increased to 20% w.e.f. 1st April, 2023 vide Finance Act, 2023.

Significant Economic Presence – Deemed Nexus for Import of Goods & Services

Though Significant Economic Presence (SEP) was originally introduced with the intention to tax digitalized businesses, SEP provisions have been worded widely to bring into ambit all types of transactions by non-resident whether digitalized or not. SEP provisions were made effective from FY 2021-22.

Gift of Foreign Securities to Resident Individual in India

Modes of permissible acquisition of Foreign Securities by way of gift to a resident individual under new set of OI Rules.

Annual Performance Report (APR) for ODI in Foreign Entity

Any Indian individual or entity undertaking ODI is obliged to file an Annual Performance Report (APR) with respect to its foreign entity based on its accounting year completed in the host country by 31st of December every year. The article features applicability and checklist for the same.

Place of Effective Management (POEM)

POEM provisions are enforced to overcome tax evasion opportunities for taxpayers creating artificial outbound sources by shifting certain insignificant events related with control and management of the company outside India and thus escaping tax instances in India.

Income arising on indirect Transfer of shares

In order to tax offshore indirect transfer deriving value from Indian business/assets/entities, India has deemed such indirect transfer to accrue in India so as to tax them in certain circumstances.

Overseas Investment under FEMA - A Comparative Analysis

Considering the recent changes in FEMA rules and regulations, we have provided significant changes and relaxations brought in for investment by Indian entities and individuals in foreign securities through side-by-side comparison of erstwhile ODI law and new ODI law.

Foreign Retirement Benefit Account – Indian Taxation

CBDT has notified Rule to address tax mismatch faced by individuals holding foreign retirement accounts, providing option to tax income on withdrawal basis instead of accrual. The Article features option available, reporting compliance & actionable for individuals holding foreign retirement accounts

Residential Status for Individuals

Considering the complex conditions for determining the residential status of an individual in India, we have provided a simplified flow chart and brief write-up to understand residential status and its impact on scope of taxable income in India.

FCA by Residents in India

Cross-border transactions, being business or personal, involve payment and receipts in foreign exchange across countries and India is a major participant in the international environment.

FAQs for NRI

Many Indians move abroad to foreign nations for various purposes such as education, employment, etc. and also settle there. When a person moves abroad, his residential status may change from Resident to Non-Resident under FEMA depending upon the number of days he resides outside India

Bank Accounts That Can Be Held By Non-Resident In India

India provides a host of investment opportunities that attracts Non-residents globally. Investing in the various avenues is permitted through normal banking channels and therefore, a valid bank account becomes absolutely essential.

Acquisition and Transfer of Immovable Property in India

India has always been a country with rich human talent who have conquered various positions globally. Indians have settled across the world and most of them continue to or wish to hold/own property in India. Further many of them invest in Indian commercial/residential properties as a good investment

GBCA Crossborder Insights -Tax & Regulatory Edge | October 2023

In an increasingly interconnected world, the prospect of studying abroad offers students a chance to broaden their horizons and owing to post covid travelling ease, there has been an increasing number of students going abroad for studies. However, this exciting abroad study opportunity comes with a web of compliance considerations that must be navigated. In view of this, we have covered the crucial aspects of FEMA implications and compliance that students need to be aware of before embarking on their global educational journey in the simplest way possible for easy understanding.

Related Party Transactions (RPTs) attract significant glare from regulators as well as investors and has implications under company law, securities regulations, and taxation laws. This newsletter covers related party transactions as defined by the Indian Companies Act, SEBI Regulations and Income Tax Act, throwing light on the regulatory framework and its implications.

Income Tax law specifically requires cross-border transactions between related parties (AEs) to be at Arm’s Length Price (ALP).This newsletter simplifies the broad meaning of Associated Enterprise (AEs) from Transfer Pricing perspective since the concept of AE forms the foundation of transfer pricing regulations. As the Transfer Pricing compliance due dates for the FY 2022-23 are approaching, we have covered brief article on various transfer pricing reporting compliance.

Navratri is here! It’s time to welcome Devi Durga at our doorstep and worship her with all the love and devotion. Let us pray that this Navratri, Maa Durga bestows us with her divine blessings. Shubh Navratri to you and your family!!!

With this we present our Bimonthly Newsletter – GBCA Crossborder Insights - Tax & Regulatory Edge focusing on various issues, amendments and recent trends in the areas of FEMA, International Tax & Transaction Advisory

Key Highlights of October 2023 Newsletter Issue are as under:

1. FEMA Implications and Compliances for Students Going Abroad

2. Related Party Transactions (RPTs)

3. Associated Enterprise under Transfer Pricing

4. Transfer Pricing – Reporting Compliances

5. Recent Updates and Case Laws/ FEMA Compounding Orders

To view this Newsletter, click here.

GBCA Crossborder Insights -Tax & Regulatory Edge | July 2023

Newsletter - June 2023

Newsletter - May 2023

 Scope of Statement of Financial Transaction (SFT)

Introduction

GBCA Crossborder Insights -Tax & Regulatory Edge | May 2023

The emergence of new technologies, transportation systems, and communication networks has led to an increase in global trade and investment. Global trade has paved the way to more opportunities and development. Cross Border trade is an important aspect of globalization, as it allows businesses to expand their markets and reach consumers in different countries. In view of this, we have covered provisions relating to Exports that one must adhere to from FEMA perspective.

Finance Bill 2023 is passed in the Parliament with certain additional amendments which were not a part of the original budget rolled out in February 2023. We have covered certain important amendments of FA 2023 pertaining to International taxation and Transaction Advisory in this edition. Furthermore, we have covered tax residency provisions for natural persons under UAE Corporate Taxation.

We welcome the new Indian financial year with lots of positivity, enthusiasm and finesse. May this financial year bring to you more success and boundless achievements.

With this we present our Bimonthly Newsletter – GBCA Crossborder Insights - Tax & Regulatory Edge focusing on various issues, amendments and recent trends in the areas of FEMA, International Tax & Transaction Advisory

Key Highlights of May 2023 Newsletter Issue are as under:

     1. Exports - FEMA perspective

     2. Taxability of MLDs and Specified Mutual Funds 

     3. Increase in Tax rate for Royalty & FTS for Non- Residents

     4. TCS on Liberalised Remittance Scheme

     5. UAE Corporate Taxation- FAQs on Tax Residence

     6. Recent Update and Case Law

Key Amendments to Finance Act, 2023

Hon'ble Finance Minister Smt. Nirmala Sitharaman had presented Finance Bill 2023 on 1st Feb, 2023, being the last full budget before the Union elections. While moving the Finance Bill in Lok Sabha for approval, significant amendments were introduced which were not forming part of the original Finance Bill tabled in Parliament on 1st February.   

We have covered few important tax amendments and its implications for your update. 

GBCA Crossborder Insights -Tax & Regulatory Edge | March 2023

GBCA Crossborder Insights - Tax & Regulatory Edge | January 2023

Cross Border Insights - November 2022

Cross Border Insights - September 2022

Newsletter - August 2022

India celebrated its 75th Independence day in style with the Tricolour unfurled across homes and institutions in the country. As a young democracy, we have indeed come a long way. It's important to remember that the Indian subcontinent comprised a number of states governed by different rulers. Boundaries were constantly redrawn and political alliances were made aplenty. 

Most historians would have thought that it would be impossible to keep together a disparate group of people in a secular India. We speak 22 (official) languages and over 700 dialects and follow a variety of religions. It is the strength of the freedom struggle that united us and keeps us together as a country. As we remember that struggle, pay homage to the fighters and celebrate our Independence - we strengthen our unity.

While we celebrated our 75th Independence day, it marked the day our neighbours in Afghanistan completed 1 year under the rule of the Taliban. The economy has contracted by approximately 30% as foreign aid stopped flowing to the country and girls have been left out of schools and women have been asked to leave jobs. Some of the things we take for granted in India are perhaps things to be grateful for.

Inflation across the world continues to bring difficulty to people. In Thailand, the price of their staple food, noodles, was increased by 33% after being held constant for 14 years. Europe is reeling under the pressures of high energy prices and things are likely to get tougher as we move towards winter and the heating requirement increases. All businesses should be mindful of sudden shifts in input costs and dislocations in buying power of their customers. 

During this pious period of Paryushan, we reflect on our conduct and our being and hope to continue to evolve on our spiritual journeys. We seek your pardon for anytime we may have hurt you. 

Newsletter - July 2022

As India prepares itself to celebrate its 75th Independence Day, the country has appointed its 15th President, Droupadi Murmu. She is the first President of India who belongs to the Tribal community and is the second woman President of the country. 

The war between Russia and Ukraine continues and it's been over 160 days since the start. There doesn't seem to be any clarity at this point how the war will end. It's interesting to note that Ukrainians that had left the country in the beginning of the war, have started returning to the country over the last few months. Exports of agricultural products from Ukraine have also restarted via Turkey. A lot of things are now looking more normal as commodity prices have eased and availability of products increases. 

Geopolitics continues to be centre stage for a lot of news. Nancy Pelosi's visit to Taiwan has caused more questions around US-China relationships and actions that China may take. The silver lining for India in this could be that China related Geopolitical news shall continue to keep Businesses across the world focused on building a China+1 strategy for sourcing and demand for products from India will continue to remain buoyant. This is a strategic shift in thinking which should build longer term supply chains from India. 

The Government has widened the GST net by a levy of 5% GSTon pre-packed and labelled food items such as cereals, pulses and flour weighing less than 25 kg. This will make some items more expensive for the common man, however, this goes towards widening of a tax base in the country to ensure that there is a contribution towards nation building activities from a broader base of people. 

India is positioned well, both internally and externally - it's time for us to make sure we capture the opportunities provided and at the same time contribute towards further growth of the country.

INDIRECT TAX (GST)

Newsletter - June 2022

Newsletter - May 2022

Cross Border Insights - June 2022

With this we present our Quarterly Newsletter – Infodive focusing on various issues, controversies and recent trends in the areas of FEMA, International Tax & Transaction Advisory.

Key Highlights of this Issue are as under:

• Foreign Retirement Benefit Account
• Acquisition and Transfer of Immovable Property
• Acquisition of Immovable Property in India
• Acquisition of Immovable Property outside India
• Tax Implications on Income from Immovable Property

Newsletter - April 2022

The war between Russia and Ukraine continues - what seemed like a swift and quick political move by Russia is getting to be a protracted war with intermittent ceasefires. As it is said, one should not try and predict anything, especially about the future. At the same time, China has put Shanghai in a lockdown over Covid fears and Sri Lanka continues to suffer economically due to poor decisions by the Government.

The power vested in the governments and a few individuals can have some significant implications for the public. Elon Musk's decision to acquire Twitter and take it private, is another example of extreme power getting vested in the hands of a few people. While Elon Musk says his intentions are to encourage freedom of speech, having the worlds 'town hall' in the hands of an individual leaves it open to his whims and has the potential for abuse. We already saw this with Facebook being used to meddle in the US elections in 2016. 

Business dynamics remain highly volatile with higher commodity prices and inflation. Interest rates seem to be inching higher too and at the same time the wage bill for a lot of companies is seeing a jump. Profit margins will need to be monitored closely and investments in capacity need to be recalibrated to see if the increased costs of capital inputs require anything to be re-planned. 

Despite the challenges, demand is great for most businesses and it is great to be able to make more human connections as Covid restrictions have been relaxed. While there is a small wave of Covid that seems to be imminent, we hope you stay safe and in good health.

Newsletter - March 2022

For most of us across the world, Covid seems to have largely abated. As we looked at getting back to our normal, the Russian attack on Ukraine has taken centre stage in the global geopolitical arena. Wars wreak havoc on the lives of people it impacts - as our intellect evolves, we should be able discuss our differences and come to solutions without war. We have a long way to go till we reach that point it seems. The loss of lives is wrong, but as with all things human, there are just a lot of complex angles to the current war. Thankfully, Russia seems to be now finally at a point of retreating its influence from some key areas in Ukraine and there is a hope that negotiations may bear fruit soon.

We have had an uncharacteristic peaceful world for the last few decades where we had a 'cold war'. This was an aberration as the history of humanity is filled with varying degrees of wars and battles being played out for resources and power in different parts of the world. The peace spurred global supply chain lines and led to increased productivity across the world and in turn the interdependence of countries for goods and services, became a reason to avoid any large scale wars. 

Covid showed us the fragility of the global just in time system for goods. Supply constraints lead to early inflation for some products which was later exacerbated by the large scale money printing and return of demand. The Russia Ukraine war has gone one step further in making businesses rethink their supply strategies. A war with this degree of military engagement was least expected by the world and going forward the disruptions caused by Covid and the War shall remain key risks that most business strategies will be forced to incorporate. This could mean that the spectre of higher productivity and lower costs that came with globalization may be behind us. 

The quote by Russian leader Lenin is most appropriate right now. “There are decades where nothing happens; and there are weeks where decades happen.” The events of the past few weeks may have a lasting impact on how countries and businesses interact with each other. It is important to be attuned to these changes and grasp opportunities that they may yield. We pray that the conflicts stop and the cost and difficulties faced by people in this war end immediately.

Newsletter - January 2022

Cross Border Insights - March 2022

Newsletter - December 2021

The year comes to a close as we spent a full year with the Corona Virus. It has been challenging during the times of the Delta variant that swept across the country with ferocity and we lost many people and later as the wave receded, we spent sometime with family during the festival months.

However, the new variant of the virus is now fully upon us and spreading very rapidly across the population. We are lucky that early observations show that this variant is largely like the seasonal flu and not like the Delta variant in severity and mortality. We pray and hope that it stays like that and all that we need to go through is some discomfort from having a cold and mild fever.

Our governments might go into protection mode and may ask us to curtail some social and commercial interactions. We need to keep an eye out for the trend in hospitalizations and deaths before panicking fully.

The new year is time for new resolutions - one resolution that I think we all should make is to focus on sustainability as a practice, rather than a buzzword, and look at sustainability in all aspects of our life.

Our consumption habits are not sustainable for the environment is something that most of us have now understood, however, we need to look at sustainability in areas like whether our business model and structure is sustainable or can be disrupted and what can be done to make it sustainable? The same can be extended for for our physical and spiritual well-being. Doing actions that sustain our health and well-being is critical.

We wish you a very happy new year and wish you and your loved ones stay safe and healthy.

Newsletter - November 2021

The advances in technology have led to us being able to quickly find out about new variants of the Corona virus and also propagate some fear and some misinformation relating to the same at the speed of thought.

We are lucky that our scientists work so hard to ensure that we stay on top of the evolution of the virus and understand the risks and remedies as soon as possible. The Omicron variety has been causing some degree of panic - while in situations like Covid-19 where it is better to be safe and early rather than sorry and late - it is good that we are back on our guard about border control and meeting people in groups. However, we should remember that despite anything being said about the efficacy, or lack thereof, of the current vaccines for the new strain of the virus, we cannot let our guard down thinking there is no hope with the vaccines, and vaccinations are a must as they and masks / social distancing are the best defence against Covid-19.

The next year is likely to see increased volatility and confusion on global markets and businesses. The US Federal Reserve is worried about inflation but at the same time would like to remain accommodative for any new coronavirus strain related economic weakness. The confusion around global liquidity will keep markets on the edge and volatility high, and supply chain disruptions and commodity prices shall also impact business margins and cash flows. 

While we have seen a great boost to margins from an uptick in sales of the organized players and also some aggressive cost cutting by them through the lockdowns, with elevated prices of inputs, it is becoming a challenging environment to conduct business with long term pricing and delivery contracts. Margins for a number of businesses may shrink next year - keep an eye on your costs and working capital requirements.

The last 18 months were largely a one way street in markets and businesses due to a variety of government mandated tail winds supporting the businesses. Large IPOs have come to tap the public markets and start ups have raised copious amounts of capital at high valuations. The business and consumer landscape has changed dramatically in this period and it may continue to evolve at a rapid pace in the coming months. Be mindful to the changes and adapt accordingly - there are large opportunities to tap - we just need to be ready and willing to see them and tap them.

December 2021

Newsletter - May 2021

Newsletter - August 2021

We have completed the Olympics 2020 in the year 2021, in a spectacle without spectators! These are different times indeed but what is important is that as humans we are doing all that is possible to achieve the most optimal outcome possible.

Reading about the Olympics brings about some interesting characteristics of the human experience. The feedback from those who made it to the podium shows that the ones that take home the Bronze are actually happier than those who take home the Silver. This is a quirk that confounds our rational approach to things. 

A Silver medal in an absolute sense is better than a Bronze medal, so logically the Silver medalists should be happier. However, in a lot of sporting formats, the Silver is won in the final match, where the sports person loses that match to win the silver, while the Bronze is often won by winning the last match. Also, in other sporting formats like a race, the two people in front of the pack are fighting to come first, while it’s the third and forth in the pack that are fighting to just be able to get a medal and a chance at the podium. Bronze winners are happy to make the Podium as they are aware that if they were slightly slower, they may have been almost as good but would be fourth and without a medal.

We have seen during the last year and a half, people that have had severe illnesses and hospitalizations but have survived, have been grateful to be alive as they saw some others succumb to the virus. At the same time, some of those that did not have the illness but were quarantined at home for safety, may have lamented someone’s vacation pictures on Instagram. Some businesses have made handsome profits and they may be looking at some of their competitors who moved earlier or had financing available and may be regretting their inability to fully replicate the success, while those that had almost written off their businesses but still managed to stay afloat are just happy to be around as the economy now opens up.

It is truly important to objectively see where you are and be grateful for the same, while ensuring that there is no complacency since what has been done well, can always be done better in the future.

Newsletter - October 2021

The UN Climate Change conference starts in Glasgow next week. The COP26 as it is called, it is an important event where companies, technologists, policymakers, environmentalists and philanthropists will congregate and set the climate change agenda. 

We are running out of time to do enough to arrest climate change and avoid its ill effects and we have seen only in the last couple of years the damage and destruction caused by unseasonal and excessive Cyclones and rainfall in many parts of world while we saw unbearable heat waves in many others.

The latest deluge in Uttarakhand and other parts of India and Nepal were another reminder that this threat is real. We are paying for this with loss of human lives, damage to wealth and the overall ecosystem.

As more people make more climate friendly choices, companies will soon have no option but to be sensitive to sustainability in their processes and products. Shifting consumer preferences is a strong way to push everyone to have an economic incentive to adopt sustainability.

India lost against Pakistan in cricket. Amongst the disappointment across India, a few people have been booked for celebrating Pakistan's victory. That's an act that cannot be excused but in this hyper polarized world, we forget that we can appreciate the effort put in by the competing team while still lamenting our loss and reflecting on what we could have done different.

Climate change is similar. We can appreciate the advances made through industrialization in the last two and the benefits and comforts that have accrued to us in the process. Advances in technology has made our life's longer and healthier and more comfortable. The side effects of that have been climate change. We are building our understanding and awareness of how to battle this and we need to reflect on what actions we need to change and what we need to take to protect our planet and our future. Decisions businesses take on products and processes and choices made by consumers shall go a long way in ensuring we meet our climate change goals.

Newsletter - June 2021

After having discussed Covid-19 for almost a year and a half, it feels that we have finally found some space to look at other things.

The supply chain disruptions caused by the pandemic has related to some supply constraints that have pushed inflation in India higher than the 6% which was supposed to be RBI’s highest tolerance level. However, since these are not demand lead and the RBI shall ensure that they continue to support growth as there is a lot to be done till we are able to reach back at our true economic potential.

Vaccine availability has eased from the initial period where we are short supplied. We need to encourage more people around us to get the vaccine as that would be critical to achieve a level of immunity that could help us avoid further ‘waves’ of the pandemic and would enable our businesses to get back to normalcy. This is a joint responsibility we all have towards a commitment to revert to a thriving economy.

Business and market volatility is likely to be higher with more surprises as the economy keeps adjusting to demand ebbing and flowing and supply chains reverting to normalcy over time. The business managers shall need to ensure that they are able to focus on the short-term volatility while planning strategically for the longer term.

Our work for the next few months is cut out, barring a new wave emerging which is a distinct possibility. Manage the short term, be strategic for the longer term, stay safe and get vaccinated.