Direct Tax
CBDT issues additional guidelines to remove difficulties for the implementation of section 194R of the Income tax act
Circular No.18 of 2022 Dated 13 September 2022
- In continuation with Circular No.12 of 2022, the government has issued further guidelines to remove difficulties in the implementation of Section 194R. The additional guidelines aim to provide clarity on earlier guidelines issued by the Central Board of Direct Taxes (CBDT) vide Circular no. 12 of 2022, dated 16 June 2022, and remove the ambiguities and difficulties faced by the taxpayers on the implementation of the Section. Furthermore, the said Circular also clarifies that the additional guidelines don't impact the taxability of the income in the hands of the recipient of such benefit/perquisite.
- We have highlighted some of the
issues clarified as follows:
- It is clarified that the provision of Section 194R shall not be applicable to one-time loan settlement or waiver of loans granted to borrowers by the specified banking institutions.
- It is clarified that TDS is not applicable in the case of the issue of bonus shares/right shares by a company in which the public is substantially interested, as defined under Section 2(18) of the Act.
- It is clarified that where a capital asset (e.g., a car) is gifted and tax has been withheld under Section 194R, the receiver of the gift shall be eligible for depreciation on such capital asset provided he has also included the benefit as income in his return of income.
- It is again clarified that out-of-pocket expenses incurred by the service provider at the first instance and subsequently reimbursed by the service recipient is a perquisite/ benefit and hence, liable to Tax Deducted at Source (TDS) under Section 194R. It has been explained that in such cases, even the GST input credit is availed of by the service provider and not the service recipient.
- However, where the service provider qualifies as a ‘pure agent’ as per the GST valuation Rules 2017, TDS under Section 194R shall not be applicable. In the case of a pure agent, input credit on GST is availed of by the service recipient, and the service provider incurs the expense only on behalf of the service recipient.
Form 52A to be furnished by film producers u/s 285B
Notification G.S.R. 697(e) No. 109/2022/F. No. 370142/ 44/2022- TPL Dated 14 September 2022
- As per the new rule inserted by CBDT, a person carrying on the production of cinematography film or engaged in other specified activities shall be required to furnish Form No. 52A for each Previous Year (PY).
- It shall be furnished within 60 days from the end of the PY.
- Form 52A shall be furnished electronically under a digital signature or through an electronic verification code.
- “Specified activity” includes event management, documentary production, Television or OTT telecasts, etc.
CBDT issues revised guidelines for compounding of offenses
Press Release Dated 17 September 2022
- Considering the government’s policy of facilitating Ease of Doing Business, CBDT has taken steps and introduced some relaxations and changes in the compounding of offenses.
- Some of the major changes made for the benefit of taxpayers include making offenses punishable u/s 276 as compoundable.
- The scope of eligibility for compounding of cases has also been relaxed. Now, the applicant who has been convicted with imprisonment for less than two years can also apply for compounding.
- The time limit for acceptance of compounding applications has been relaxed from the earlier limit of 24 months to 36 months from the complaint’s date of filing.
- Additional compounding charges in nature of penal interest have been reduced to 1% and 2% for three months and beyond, respectively.
Indirect Tax
GST Updates
Guidelines for launching prosecution under GST law
Instruction No. 04/2022-23 Dated 1 September 2022
CBIC’s GST-Investigation Wing has issued detailed guidelines for launching criminal prosecution under the GST law, stressing inter alia that the nature of evidence collected during the investigation should be carefully assessed and should be adequate to establish beyond reasonable doubt that the person had mens rea for committing the offense. It has further prescribed that prosecution should not be instituted where the amount of tax evasion is not more than INR 50 million, except in cases of habitual evaders and arrest cases, and in cases of technical nature or where there is a difference of opinion regarding the interpretation of the law. Furthermore, for public limited companies, an investigation should not be launched indiscriminately against all Directors but should be restricted to persons overseeing the company's everyday operations. The Instructions also explain the procedure for sanction of prosecution, a procedure for withdrawal, appeal, compounding of offense, etc.
Guidelines for availing Transitional Credit through TRAN-1 and TRAN-2
Please read in detail here https://bit.ly/3Eof85a
Foreign Trade Policy (FTP)
Validity of FTP 2015-2020 extended by six months
Ministry of Commerce Press Release Dated 26 September 2022
The government has extended the FTP 2015-2020 by another six months, i.e., till March 2023, pursuant to requests from Export Promotion Councils and leading exporters.
This is in view of the prevailing volatile global economic and geopolitical situation and to undertake more consultations before coming out with the new policy.
Customs Updates
Validity of e-Scrips under RoDTEP and RoSCTL schemes extended to two years
Notification No. 79/2022-Customs (N.T) r/w Dated 14 September 2022 Circular Nos. 21/2022-Customs and 22/2022-Customs both Dated 26 September 2022
The validity of e-scrips issued under the RoDTEP and RoSCTL schemes has been extended to two years from the date of its creation in the Electronic Duty Credit Ledger. The duty credit in such e-scrips can be used for payment of customs duty on the import of goods in First Schedule to the Customs Tariff Act. It has further been prescribed that the validity of the e-scrip of two years shall not change on account of the transfer of the e-scrip. Accordingly, Regulations 6 and 7 of the Electronic Duty Credit Ledger Regulations, 2021 have been amended to this effect.
Amendments to conditions prescribed under RoSCTL and RoDTEP schemes
Notification Nos. 75/2022-Customs (N.T) and 76/2022-Customs (N.T) Dated 14 September 2022
The Rebate of State and Central Levies and Taxes (RoSCTL) and Remissions of Duties and Taxes on Exported Products (RoDTEP) schemes provided for recovery of excess duty credit from the exporter and the transferee on account of non-realization of export proceeds or for any other reason. The schemes are now amended to recover such amounts from the exporter only.
Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022
Circular No.18 /2022-Customs Dated 10 September 2022 r/w Notification No. 74/2022 - Customs (N.T) Dated 9 September 2022
CBIC has notified the new Import of Goods at Concessional Rate of Duty (IGCR) w.e.f. 10 September 2022, while retaining the basic contours of the earlier IGCR, 2017. The new Rules aim to broaden the scope of coverage of IGCR and ensure that additional data fields are effectively captured. The said Rules are not a departure from the existing procedure and accordingly, all the clarifications provided vide Circular Nos. 48/207, 10/2021, and 4/2022, will continue to be in effect unless specifically modified.
Few changes in the Rules are as follows:
- Expanding the scope to include cases where imported goods are utilized for specified end use which can be other than manufacturing or providing output services.
- Clarifying the time period of utilization to be the time period for compliance and bringing in a provision to extend the said period in certain cases for reasons beyond the importer’s control.
- Changes in the Forms to capture the details where the intended purpose is the export of goods using the goods imported.
- Changes in the Forms to better capture the different intended purposes and additional details such as Sl. No. of the Notification etc.