According to UN Department of Economic and Social Affairs, the COVID – 19 Pandemic is affecting
global supply chain & International Trade badly.Global economy is expected to shrink up to 1% in
Veekay Law Chambers, LLP sincerely hope that you and your peers are safe and healthy given the situation with COVID-19. During these uncertain times, we are committed to proactively communicate with all our clients and stakeholders and extend our support, as we navigate through these complexities together.
This update covers the relief measures announced by the government till date under the following categories :-
1. Goods and Services Tax (GST)
2. Reserve Bank of India (RBI)
3. Direct Tax
4. Ministry of Corporate Affairs (MCA)
5. Insolvency and Bankruptcy Code, 2016
6. Securities & Exchange Board of India (SEBI)
A year ago, on 29th March 2019, the Central Board of Indirect Taxes (CBIC) introduced Notification No.03/2019-Central Tax (Rate) applicable from 01st April, 2019 bringing in a major reform in the Real Estate and Construction industry.
Asia’s third largest economy has been locked down for three weeks since March 25, 2020, putting millions of daily wage earners and lakhs of businesses in unprecedented hardship.
VIVAD SE VISHWAS SCHEME – Date extended to 30 th June, 2020 from 31 st March, 2020. No 10% additional charge will be levied for all applications made till this date.
MCA clarified that spending of CSR funds for Covid-19 is eligible CSR activities under notified disaster under Schedule VII of Companies Act 2013
The advent of the GST regime brought into existence a unique system of Indirect Tax – one which involved the payment of taxes under 3 different head i.e. CGST, SGST, IGST. The reasoning behind such a decision was astute and practical since GST law in India came into existence through subsuming various state level laws and with the promise that the states would not lose any revenue. This resulted in the creation of Central GST belonging to the Central Government and State GST belonging to the State Government for Intra-state supplies and Inter GST to be collected by the Central Government and shared with the State Governments for Inter-state supplies.
India is all set to introduce E-invoicing for B2B transactions from 1st April 2020. This is a revolutionary change being brought in to ensure the smooth flow of ITC from one supply
chain to another and also maintain vigilance by the authorities on mis-use of ITC. E-invoicing is not a new concept and is already adopted in many countries and quite
efficiently as well. Countries such as Hong Kong & Taiwan have a strong E-invoicing base with fully digital methods being implemented since 2000. Whereas nations like Japan,
USA and Korea have a system on E-invoicing that is similar to what India has planned from April 2020; mostly restricted to large corporations. China, on the other hand, is yet to
bring in any sort of E-invoicing and only follows digitisation of certain documents for sharing and transmissions. Hence, India will be the largest nation among the existing lot to
bring in E-invoicing and hopefully ensure a smooth and reliable process for this.
The CBIC notified the date for blocking of E-way bills on non-filing of GST returns as 21st November, 2019. The rule for blocking of E-way bills was inserted in Notification no. 74/2018 – Central Tax dated 31st December, 2018. The restriction on E-way bills is intended by the CBIC as a way of disciplining tax payers who were irregular in filing GST returns and delaying payment of GST liability.
The Central Board of Indirect Taxes & Customs (CBIC) made a calculated decision to amend the GST rules
pertaining to claim of Input Tax Credit (ITC) by way of insertion of sub rule 4 in Rule 36 of the CGST Rules,2017. The amendment is effective from 09th October,2019 and is crucial to tax payers as for the very first time, the CBIC has decided to restrict ITC based on GSTR 2A at the time of filing GSTR 3B itself, unlike before, where the restriction was carried out by way of
calling for information and/or notice.
The 37th GST council meeting held on 20th September, 2019 was, in the recent past, a muchawaited council meeting and on its conclusion was met with praise and euphemism for its decisions. The GST council meeting was crucial to all the taxpayers regarding compliance related issues, to hotel and food industry; to manufacturers of certain goods; to service providers in warehousing, pharma and freight industries and to service recipients of authors,
musicians and cab services.
The introduction of GST on 1st July 2019 meant that all forms of Indirect taxes prior to GST were subsumed and would no longer be in force. However, assesses would still not be done with Service Tax and VAT as assessments under the old tax regime were still to continue into FY 2019-20 as Service tax and VAT were still in force for part of the FY 2017-18. But now it seems that it’s not just the assesses who want to leave behind the old tax regime to focus on GST.
A composition scheme introduced exclusively for Service providers having aggregate annual turnover in preceding financial year up to Rs. 50 lakhs. Turnover, here, will not include value of supplies made by way of extending deposits, loans or advances for which interest is receivable.
On 18th April 2019, the Telangana High Court pronounced a major verdict for M/s Megha Engineering & Infrastructures Ltd that changed the way interest was to be charged under GST laws. The verdict stated that Interest would be charged on the Total Outward GST liability before setting-off Input Tax Credit against such Output GST. The verdict was significant enough to see a rise in the number of notices to taxpayers for payment of interest due to delay in filing GSTR 3B.
As per Section 17(5) of the CGST Act, 2017 Input Tax Credit (ITC) on works contract services and goods or services received by any person in relation to an immovable property (not being a plant and machinery) are ineligible to be claimed by the taxable person receiving them. This ineligibility is applicable regardless of whether such goods or services are obtained in the course of business or furtherance of business.
The nuances of the GST council’s decision to lower GST rates for Residential property was finally revealed in a series of notifications on 29th March, 2019. The initial announcement was met with scepticism by the Real Estate industry and with cheers by the home buyers but finally the reactions were varied.
The introduction of GST reportedly resulted in a slump in the real-estate with many projects having a low take off in their construction. This was mainly due to compliance concerns, uncertainties in the and lack of clarifications in GST law. One of the most affected areas is the ‘Affordable Housing Schemes’ that is undertaken by various developers.
GST laws have undergone a major change in the form of CGST Amendment Act, 2018 and these changes were made effective from 1st February, 2019. One of the major changes that has brought relief and reduced the number
of litigations is the exclusion of Schedule III activities from Exempt supplies for apportionment of Input Tax Credit purposes.