Direct Tax

CBDT directs to exclude set-aside and reassessment/assessment proceedings from faceless assessments

[Order F No. 187/3/2020-ITA-I dated 22 September 2021]

The Central Board of Direct Taxes (CBDT) had earlier directed exclusion of assessment order in cases assigned to central charges/international tax charges or cases where pendency could not be created on Income Tax Business Application (ITBA) portal or cases with no PAN from faceless assessment.

It has now been further directed to exclude assessment of cases set aside to be done de novo or reassessment proceedings from the faceless assessment. The said exclusion is restricted to cases where the proceeding is pending with the Jurisdictional AO as of 11 September 2021 or thereafter. The time limit for completion of such proceedings expires on 30 September 2021.

CBDT extends due dates for processing of return of income

[Order F No. 225/98/2020-ITA-I dated 30 September 2021]

The CBDT had earlier directed that all validly filed returns up to Assessment Year 2017-18 with refund claims, which could not be processed under Section 143(1) of the Act and which had become time-barred, should be processed by 30 September 2021.

In view of pending taxpayer's grievances related to the issue of refund and to mitigate the genuine hardship being faced by the taxpayers on this issue, CBDT has further extended the time frame from 30 September 2021 to 30 November 2021.

CBDT exempts return filing requirements for certain nonresidents investing in the IFSC in India

[Notification No. 119/2021, 11 October 2021]

The CBDT has provided an exemption from the requirement of filing return of income to the following:

  1. A non-resident does not have any other income other than income from investment in CAT III AIF funds and is not required to obtain a PAN in India as per Rule 114AAB of the Income-tax Rules, 1962.
  2. A non-resident does not have any other income other than income from transactions carried out only in specified securities listed on a recognized stock exchange and is not required to obtain a PAN in India as per Rule 114AAB of the Income-tax Rules, 1962.

Transfer Pricing

Extension of applicability of Safe Harbour Rules to Assessment Year 2021-22

[Circular No. 159/15/2021 dated 20 September 2021]

The CBDT vide Notification10 dated 24 September 2021 has extended the applicability of the Safe Harbour Rules under Rule 10TD of the Income-tax Rules, 1962 (the Rules) to AY 2021-22 with effect from 1 April 2021.

The CBDT has notified that sub-rule (1) and (2A) under Rule 10TD of the Rules will also apply to AY 2021-22. These sub-rules were initially applicable from AY 2017-18 to AY 2019-20, which were then extended to AY 2020-21.

Safe harbour provisions currently provide for circumstances in which certain transactions like IT/ITeS/KPO, contract R&D services, manufacture of automobile components, financial transactions such as loans and guarantees, and intragroup transactions viz receipt of low value-added intragroup services are covered. If safe harbour provisions are opted for, subject to the fulfillment of certain conditions, the Indian tax authorities would automatically accept the transfer prices declared.

Indirect Tax

Clarification in relation to refund of GST

[Circular No. 162/18/2021-GST dated 25 September 2021]

Pursuant to the GST Council recommendations, the Central Board of Indirect Taxes and Customs (CBIC) has issued a clarification in respect of procedure and time limit for filing of refund claim of tax wrongfully collected and paid to the Central or State Government, as specified in Section 77(1) of the CGST Act and Section 19(1) of the IGST Act.

  • In cases where the inter-state or intra-state supply made by a taxpayer is either subsequently found/ held as intra-state or inter-state respectively, either by the taxpayer himself or by the tax officer in any proceeding, a refund shall be allowed in both cases.
  • Refund can be claimed within two years from the date of payment of tax under the correct head.
  • In a case where the taxpayer has made the payment in the correct head before 24 September 2021, then the refund application can be filed within two years from the said date.
  • However, a refund would not be available where the taxpayer has made tax adjustment by issuing a credit note in respect of such transaction.

Clarifications regarding applicable GST rates and exemptions on certain services

[Circular No. 164/20/2021-GST dated 6 October 2021]

While services provided by way of cooking and supply of food by cloud kitchens/central kitchens are covered under ‘restaurant service’ as defined in Notification No. 11/2017-Central Tax (Rate) and attract 5% GST [without ITC], ice cream sold by a parlor our any similar outlet would attract GST at 18% in as much as their activity entails supply of ice cream as goods (a manufactured item) and not as a service, even if certain ingredients of service are present.

Services by way of job work in relation to the manufacture of alcoholic liquor for human consumption are not eligible for a GST rate of 5% prescribed under Sr. No. 26 of Notification No. 11/2017-Central Tax (Rate). Instead, they would attract 18% GST.

Overloading charges at toll plazas would get the same treatment as toll charges and stand exempt from GST. On the other hand, the supply of services by way of granting mineral exploration and mining rights during the period from 1 July 2017 to 31 December 2018 attracted a GST rate of 18% in view of the principle laid down by the GST Council for residuary GST rate.

10. Notification No. 117/2021/F. No. 370142/44/2021-TPL