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Saturday, July 22, 2017

5 Myths and their reality about GST

Myths about GST
5 Myths and their reality about GST
GST has been finally implemented throughout the India from 1st July 2017. But as there is a lack of information about the new tax system, myths about the same is increasing in the market.

In this article, we are going to talk about the 5 myths of GST and reality about the same. If you have any other confusion about the GST you can contact us through the comment section below and will be happy to solve the issue.

Eating out is more expensive now

Not necessarily. Earlier there was a service tax of 6 % on the total bill amount (for AC restaurants) and a VAT which varied from one state to another. 

One nation one tax was just a political jumla

This is probably the most common GST myth doing regular rounds of social media. Many people are confused with the terms SGST, CGST, and IGST.

The main source of confusion is SGST and CGST. However, the truth is that both SGST and CGST are part of the same tax. If the rate is 18 % percent, for instance, SGST denotes the part that goes to the state and CGST is the part that goes to center.

You need to pay GST twice if you pay electricity bills through credit cards

Doubly untrue. First of all, there is no GST on electricity. Also, there is no GST on making expenditure through credit cards.

Out of all GST myths, this one is as false as it gets.

Tax rates are much higher now and India has the highest GST rate of 28 %

It only appears so. Earlier there were many different indirect taxes which have been merged into one now. That is the reason that the combined rate appears much higher now, when in fact, it is not.

As for the tax rate of 28 %, India has different slab rates for different items out of which 28 % is the highest. It is applicable to items like small cars and SUVs.

81 % percent of items fall under the slab rate of 18 % or lower.

It is noteworthy that many food items come under the tax slab of 0 % and alcohol is outside the purview of GST altogether. There are many food items which were taxed at the rate of 5 % and now fall under the 0 5 tax slab. Palmyra jaggery, salt of all types, and cereal grains are some such items.

I need the internet all the time to do business under GST

This is another myth about the GST which we heard from many people, which is totally incorrect. But the reality is the internet would be needed only while filing a monthly return of GST.

Saturday, May 13, 2017

“The Real Estate (Regulation and Development) Act, 2016”(RERA)

The Real Estate
“The Real Estate (Regulation and Development) Act, 2016”(RERA)
The Real Estate (Regulation and Development) Act, 2016 (RERA) has finally given India’s real estate sector its first regulator. RERA seeks to bring clarity and fair practices that would protect the interests of buyers and also impose penalties on errant builders.

So what is RERA?
Here is a look at the real estate regulator and how it will impact the real estate market. According to RERA, each state and Union territory will have its own regulator and set of rules to govern the functioning of the regulator. Centre has drafted the rules for Union territories including the national Capital. While many states are still behind on schedule for notification of RERA rules, many have notified rules and a regulator will start functioning. Some of these states are Haryana, Uttar Pradesh and Maharashtra.

RERA seeks to address issues like delays, price, quality of construction, title and other changes.
Delays in projects are the biggest issue faced by buyers. The reasons are many and the impact is huge. Since the last 10 years, many projects have seen delays of up to 7 years. Projects launched after the turn of this decade have faced delays as well. Some have run into obstacles even before a brick was laid. The reasons include diversion of funds to other projects, changes in regulations by authorities, the environment ministry, national green tribunal etc. and other bodies like those involved in infrastructure development and governing transport. In many places, land acquisition becomes an issue. Errant builders often sell projects to investors without the approval of plans, unauthorized increase in FAR, bad quality of construction, projects stuck in litigation etc.

Key provisions of RERA

1.    The promoter of a real estate development firm has to maintain a separate escrow account for each of their projects. A minimum 70 per cent of the money from investors and buyers will have to be deposited. This money can only be used for the construction of the project and the cost borne towards the land.
2.    To provide clarity to buyers, developers will have to keep them informed of their other ongoing projects.
3.    RERA requires builders to submit the original approved plans for their ongoing projects and the alterations that they made later. They also have to furnish details of revenue collected from allottees, how the funds were utilized, the timeline for construction, completion, and delivery that will need to be certified by an Engineer/Architect/practicing Chartered Accountant.
4.    It will be the responsibility of each state regulator to register real estate projects and real estate agents operating in their state under RERA. The details of all registered projects will be put up on a website for public access.
5.    RERA talks about the quality of construction in projects. Over the last few years, buyers have protested about poor of flats. The regulator will ensure protection to buyers in this matter for five years from the date of possession. If any issue is highlighted by buyers in front of the regulator in this period including in quality of construction and the provision of services, the developer will have to rectify the same in a matter of 30 days.
6.    Developers can’t invite, advertise, sell, offer, market or book any plot, apartment, house, building, investment in projects, without first registering it with the regulatory authority. Furthermore, after registration, all the advertisement inviting investment will have to bear the unique RERA registration number. The registration no. will be provided project-wise.
7.    After registering the project, developers will have to furnish details of their financial statements, legal title deed and supporting documents.
8.    If the promoter defaults on delivery within the agreed deadline, they will be required to return the entire money invested by the buyers along with the pre agreed interest rate mentioned in the contract based on the model contract given by RERA.

9.    If the buyer chooses not to take the money back, the builder will have to pay monthly interest on each delay month to the buyer till they get delivery.
10. After developers register with the regulator, a page will be created for the builder on the regulatory authority’s website. The developer will be given login credentials using which it will upload all the information regarding the registered projects on the regulator’s website. The number, type of apartments, plots and projects and their completion status will be updated at a maximum quarterly basis.
11. To add further security to buyers, RERA mandates that developers can’t ask more than 10 per cent of the property’s cost as an advanced payment booking amount before actually signing a registered sale agreement.
12. The regulator will have the power to fine and imprison errant builders based on a case by case basis. The imprisonment can go up to a period of three years for a project.
13. Promoters of on-going projects/projects under construction have an option for not registering in RERA, if they obtain Completion Certificate within 3 months from the date of RERA coming to effect.

Hope RERA as defined brings transparency and flexibility in Real Estate Sector.
In next article, we will talk on RERA Registrations, its liabilities and penalties. Please do read the article for awareness and information.

Tuesday, April 4, 2017

5 biggest myths about Tax in India

5 biggest myths about Tax in India
Indian has lots of myths about the tax deduction and filling, today in this article we are going to break some of the myths you might have.

There is so much which a businessman needs to explain to the investors

A businessman may have five minutes to present to an investor, so it is advisable if he gets rid of the 75-page presentation.

The businessman is required to keep the following key questions in his mind:

  • Did he clearly spell out the investment which he wanted from them and the return which they would get from him?
  • Did he get the questions during or after his presentation? Could he answer them all and if not, did he go back after and provided the answers?
  • If the investors said no, did he ask if the deal could be good for anyone else they knew? The world of investors is a tight-knit one, and it is usually the fact that one group knows what another group looks for in a deal.
  • Did he take the time to thank the investors for their time?
  • Did he take the time to really capture their feedback, and did he follow up?

The businessman must be sure to explain how his product or service is different than anything else out there, and how it creates demand with a market segment, and how the businessman can sell it for more than it costs to produce. For example, the law requires you to obtain a license like a food license, import export code. You can easily show that a market for your product exists.

There’s no money out there!

Between angel investors, venture capitalists (VCs), traditional borrowing sources (such as banks), government and university grants, and non-traditional funding sources (like crowdfunding), there are billions of dollars that are available to fund ideas, startups, NGOs, emerging brands and even successful companies that are looking to grow.

The real issue which is related to this myth is not that there is not funding, but rather the myth is that people do not know where they must look for the funding.

The Local and state governments, as well as many academic institutions, have resources such as programs supporting entrepreneurship which are available to apply for.

If my tax has already been deducted it cannot be recovered later on.

If the tax deducted at source is more than the actual tax liability, then you can claim the refund for the TDS by filing your income tax return. Even in case your tax liability is lower than the tax actually deducted you can claim the refund for the excess tax deducted from your income.

I don't need to disclose my previous salary amount to my current employer.

This is a common problem wherein most employees avoid mentioning any details about their previous employer to their present employer. Because of this, the new employers have no details about the previous salary, making them deduct tax at source as if the employee has no other source of income. That is incorrect. The employee must realize that the tax must be paid on the total amount of salary received in the previous year. When the two salaries are added together, it usually results in the employee entering into a higher tax bracket.

The process of e-filing one's income tax return is not mandatory.

Filing returns have been made mandatory for any taxpayer having a total income of Rs 5,00,000 or more. Total income is arrived at after deducting all the relevant deductions under chapter via one's gross total income. A taxpayer earning less than Rs 5,00,000 can also e-file their income tax returns or use the option of filing returns manually, however the same is not recommend.

Sunday, March 19, 2017

Proposed Amendments in Section 271 F and Section 234 F for avoiding hardships to taxpayers

Section 271 F
Proposed Amendments in Section 271 F and Section 234 F for avoiding hardships to taxpayers
The Finance Bill, 2017 proposes to levy fees of Rs.5,000 in a case where the return is furnished after the due date but on or before 31St December of the relevant assessment year and Rs.10,000, in other cases. However, it is also proposed to restrict the fees to Rs.1,000, where the total income does not exceed five lakh rupees.

Current provisions provide for a penalty of Rs.5,000 under section 271 F in the case where the return is furnished after the end of relevant assessment year provided there is no reasonable cause for such delay.

The proposal is made with a view to ensure that returns are filed within the due dates specified in section 139(1). However, fees proposed under section 234F will be leviable on all assesses who have furnished return beyond the due date specified under section 139(1) irrespective of the reason for such delay and whether all the taxes have been paid through TDS or Advance Tax.

Also, the assessee cannot justify his cause for delay under any appeal against the same as there is no proposed provision to consider the reasonable cause for delay on the part of the assessee.

 Delay in the filing of return is in contravention of law for which penalty should be attracted. The same can be waived if reasonable cause is proved.


It is suggested that proposed fees under section 234F for delayed filing of return may be withdrawn and necessary amendments are made in section 271F.

Approval of Central Goods and Service Tax and Integrated Goods and Service Tax by GST Council

Approval of Central Goods and Service Tax and Integrated Goods and Service Tax by GST Council 
The Goods and Services Tax GST) Council, in its meeting held today at Vigyan Bhawan in New Delhi under the Chairmanship of the Union Minister for Finance & Corporate Affairs, Shri Arun Jaitley has approved the draft CGST Bill and the draft IGST Bill as vetted by the Union Law Ministry. This clears the deck for the Central Government to take these two Bills to the Parliament for their passage in the ongoing Budget Session.

Some of the main features of the two Bills, as finalized by the GST Council, are as follows:

i. A State-wise single registration for a taxpayer for filing returns, paying taxes, and to fulfill other compliance requirements. Most of the compliance requirements would be fulfilled online, thus leaving very little room for physical interface between the taxpayer and the tax official.

ii. A taxpayer has to file one single return state-wise to report all his supplies, whether made within or outside the State or exported out of the country and pay the applicable taxes on them. Such taxes can be Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Union Territory Goods and Services Tax (UTGST) and Integrated Goods and Services Tax (IGST).

Must Read: GST Deadline extended till 1st July, 2017

iii. A business entity with an annual turnover of up to Rs. 20 lakhs would not be required to take registration in the GST regime unless he voluntarily chooses to do so to be a part of the input tax credit (ITC) chain. The annual turnover threshold in the Special Category States (as enumerated in Article 279A of the Constitution such as Arunachal Pradesh, Sikkim, Uttarakhand, Himachal Pradesh, Assam and the other States of the North-East) for not taking registration is Rs. 10 lakhs.

iv. A business entity with a turnover up to Rs. 50 lakhs can avail the benefit of a composition scheme under which it has to pay a much lower rate of tax and has to fulfill very minimal compliance requirements. The Composition Scheme is available for all traders, select manufacturing sectors and for restaurants in the services sector.

v. In order to prevent cascading of taxes, ITC would be admissible on all goods and services used in the course or furtherance of business, except on a few items listed in the Law.

vi. In order to ensure that ITC can be used seamlessly for payment of taxes under the Central and the State Law, it has been provided that the ITC entitlement arising out of taxes paid under the Central Law can be cross utilised for payment of taxes under the laws of the States or Union Territories. For example, a taxpayer can use the ITC accruing to him due to the payment of IGST to discharge his tax liability of CGST / SGST / UTGST. Conversely, a taxpayer can use the ITC accruing to him on account of payment of CGST / SGST / UTGST, for payment of IGST. Such payments are to be made in a pre-defined order.
vii. In the Services sector, the existing mechanism of Input Service Distributor (ISD) under the Service Tax law has been retained to allow the flow of ITC in respect of input services within a legal entity.

Must Read: GST-Council, not able to make consensus on tax structure

viii. To prevent lock-in of the capital of exporters, a provision has been made to refund, within seven days of filing the application for a refund by an exporter, ninety percent of the claimed amount on a provisional basis.

ix. In order to ensure a single administrative interface for taxpayers, a provision has been made to authorize officers of the tax administrations of the Centre and the States to exercise the powers conferred under all Acts.

x. An agriculturist, to the extent of supply of produce out of cultivation of land, would not be liable to take registration in the GST regime.

xi. To provide certainty in tax matters, a provision has been made for an Advance Ruling Authority.

xii. Exhaustive provisions for Appellate mechanism have been made.

xiii. Detailed transitional provisions have been provided to ensure migration of existing taxpayers and seamless transfer of unutilized ITC in the GST regime.

xiv. An anti-profiteering provision has been incorporated to ensure that the reduction of tax incidence is passed on to the consumers.

xv. In order to mitigate any financial hardship being suffered by a taxpayer, Commissioner has been empowered to allow payment of taxes in installments.

The remaining two Bills namely, State Goods and Services Tax (SGST) Bill and the Union territory Goods and Services Tax (UTGST) Bill, which would be almost a replica of the CGST Act, would be taken-up for approval after their legal vetting in the next meeting of GST Council scheduled on 16 March 2017.

Monday, January 30, 2017

GST Deadline extended till 1st July, 2017

GST Deadline extended till 1st July 2017
Finance Minister Shri Arun Jaitley has addressed the media after 9th GST Council meeting and said that GST deadline is deferred to 1st July 2017 and Center and States has come to Consensus on all pending issues. Some of the highlights of his media briefing are as follows: -

1. The entire taxation base will be shared between the assessment and machinery of the Centre and the states.

2. Those above turnover 1.5 crores would be assessed in the ratio of 50:50 between Centre and state.

3. All assesses with GST turnover of Rs. 1.5 crore or less, 90 per cent of them will be assessed by 
States & 10 per cent by administrative machinery of Centre. The agreement hammered out was based on a proposal by Tamil Nadu.

4. Each assessee would be assessed by one authority only.

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