Extension of due dates for filing GST returns

In view of the disturbances caused to daily life by Cyclone Titli in the district of Srikakulam, Andhra Pradesh, and by Cyclone Gaza in eleven districts of Tamil Nadu viz., Cuddalore, Thiruvarur, Puddukottai, Dindigul, Nagapatinam, Theni, Thanjavur, Sivagangai, Tiruchirappalli, Karur and Ramanathapuram, the competent authority has decided to extend the due dates for filing various GST returns as detailed below:

Sl. No.	Return/Form	Extended due date	Taxpayers eligible for extension
1	FORM GSTR-3B for the months of September and October, 2018	30th November, 2018	Taxpayers whose principal place of business is in the district of Srikakulam in Andhra Pradesh
2	FORM GSTR-3Bfor the month of October, 2018	20th December, 2018	Taxpayers whose principal place of business is in the 11 specified districts of Tamil Nadu
3	FORM GSTR-1 for the months of September and October, 2018	30thNovember, 2018	Taxpayers having aggregate turnover of more than 1.5 crore rupees and whose principal place of business is in the district of Srikakulam in Andhra Pradesh
4	FORM GSTR-1 for the month of October, 2018	20th December, 2018	Taxpayers having aggregate turnover of more than 1.5 crore rupees and whose principal place of business is in the eleven specified districts of Tamil Nadu
5	FORM GSTR-1 for the quarter July-September, 2018	30th November, 2018	Taxpayers having aggregate turnover of upto 1.5 crore rupees and whose principal place of business is in the district of Srikakulam in Andhra Pradesh
6	FORM GSTR-4 for the quarter July to September, 2018	30th November, 2018	Taxpayers whose principal place of business is in the district of Srikakulam in Andhra Pradesh
7	FORM GSTR-7 for the months October to December, 2018	31st January, 2019	All taxpayers

Task Force for drafting a New Direct Tax Legislation

In order to review the Income-tax Act, 1961 and to draft a new direct tax law in consonance with the economic needs of the country, a Task Force was constituted by the Government of India in November, 2017.

In partial modification of the earlier order, the Government has appointed Shri Akhilesh Ranjan, Member (Legislation), CBDT as Convenor of the Task Force. Other members of the Task Force remain unchanged.

The Task Force shall submit its report to the Government by February 28, 2019.

Key takeaways from Companies (Amendment) Ordinance, 2018

In order to strengthen the regulatory framework, The Government takes Ordinance route to bring amendment to the Companies Act, 2013. The key takeaways have been discussed hereunder:

1. Central Govt. gets the power to change the financial Year

Currently if Companies are required to change the Financial Year, they have to file an application with the NCLT. Now, the Central Govt. has the power to entertain the applications from a company, being a holding/ subsidiary/ associate company of a company incorporated outside India, to follow a different financial year for the purpose of consolidation of its accounts outside India.

2. Receipt of Share Money and Verification of Address must to obtain certificate of commencement

Companies with share capital, which are incorporated after date on which this ordinance comes into force, can’t start the business unless a declaration is filed by them with the Registrar of Companies that every subscriber has paid the value of the shares and its registered office has been verified. Any failure in filing such declaration would be one of the grounds to strike off the name of the companies.

3. Physical verification of registered office

A Registrar may physically verify the registered office of the company and if any default is found in complying with the requirement of maintenance of registered office, he may initiate action for the removal of name of the company from the register of companies.

4. Time for registration and modification of charges

The Ordinance reduces the maximum time period for registration and modification of charge with the ROC from existing 300 days to 60 days from date of creation/modification.

5. Hike in penalty for not appointing Key Managerial Personnel

It is mandatory for specified companies to appoint Key Managerial Personnel (i.e., CEO, CFO and CS) under Section 203. Currently, any failure in appointing the KMP would result in levy of penalty of Rs. 1 Lakh to Rs. 5 Lakhs on the company and up to Rs. 50,000 on every officer-in-default. The Ordinance now levies an absolute penalty of Rs. 5 lakhs on the company and penalty of Rs. 50,000 on every Officer-in-default. In case of continuous default there would be an additional penalty of Rs. 1,000 per day for each day subject to maximum of Rs. 5 lakh.

6. Removal of imprisonment provision for certain defaults

As per existing provisions, every officer-in-default shall be prosecuted with an imprisonment for term of 6 months and penalty if company fails to file the annual return before the specified period. The Ordinance removes the provisions of imprisonment of an officer-in-default in case of non-compliance of Section 92.

Similarly, the Ordinance removes the imprisonment provision against all directors of the company in default for non-filing of copy of financials to ROC.

7. Penalty for failure to issue statement along with notice about voting by proxy

Section 105(2) requires every company (with share capital), or where Article of Association provides for voting by proxy, to provide a statement along with notice for calling general meeting that a member is entitled to attend and vote or to appoint a proxy.

Any failure to comply with this requirement results in levy of penalty of up to Rs. 5,000.

The Ordinance levies the absolute penalty of Rs. 5,000 for such non-compliance.

8. Penalty on non-filing of resolutions and agreements to ROC

The Ordinance introduces a penalty of Rs. 500 per day in case of continuing failure of non-filing of resolutions or agreements as specified under Section 117(3) in addition to penalty of Rs. 1 lakh to Rs. 5 lakh against company and Rs. 50, 000 against every officerin-default including liquidator of the company.

CBDT releases Direct Tax Statistics

Continuing the practice of placing key statistics relating to direct tax collections and administration in public domain, the Central Board of Direct Taxes (CBDT) has further released time-series data as updated up to FY 2017-18 and income-distribution data for AY 2016-17 and AY 2017-18. The key highlights of these statistics are as under:

• There is a constant growth in direct tax-GDP ratio over last three years and the ratio of 5.98% in FY 2017-18 is the best DT-GDP ratio in last 10 years.
• There is a growth of more than 80% in the number of returns filed in the last four financial years from 3.79 crore in FY 2013-14 (base year) to 6.85 crore in FY 2017-18.
• The number of persons filing return of income has also increased by about 65% during this period from 3.31 crore in FY 2013-14 to 5.44 crore in FY 2017-18.

There has been continuous increase in the amount of income declared in the returns filed by all categories of taxpayers over the last three Assessment Years (AYs). For AY 2014-15, corresponding to FY 2013-14 (base year), the return filers had declared gross total income of Rs.26.92 lakh crore, which has increased by 67%to Rs.44.88 lakh crore for AY 2017-18, showing higher level of compliance resulting from various legislative and administrative measures taken by the Government, including effective enforcement measures against tax evasion.

The total number of taxpayers (including corporates, firms, HUFs, etc.) showing income of above Rs. 1 crore has also registered sharp increase over the three-year horizon. While 88,649 taxpayers disclosed income above Rs. 1 crore in AY 2014-15, the figure was 1,40,139 for AY 2017-18 (growth of about 60%). Similarly, the number of individual taxpayers disclosing income above Rs. 1 crore increased during the period under reference from 48,416 to 81,344, which translates into a growth of 68%.

The average tax paid by corporate taxpayers has increased from Rs.32.28 lakh in AY 2014-15 to Rs.49.95 lakh in AY 2017-18 (growth of 55%). There is also an increase of 26% in the average tax paid by individual taxpayers from Rs.46,377/- in AY 2014-15 to Rs.58,576/- in AY 2017-18.

During the three-year period under reference, the number of salaried taxpayers has increased from 1.70 crore for AY 2014-15 to 2.33 crore for AY 2017-18 (up by 37%). The average income declared by the salaried taxpayers has gone up by 19% from Rs.5.76 lakh to Rs.6.84 lakh.

During the same period, there has also been a growth of 19% in the number of non-salaried individual taxpayers from 1.95 crore to 2.33 crore and the average non-salary income declared has increased by 27%from Rs. 4.11 lakh in AY 2014-15 to Rs. 5.23 lakh in AY 2017-18.

The availability of the time-series data and the income-distribution data of fairly long periods in the public domain will be found to be useful by the academicians, scholars, researchers, economists and the public at large in studying long-term trends of various indices of the effectiveness and efficiency of direct tax administration in India.

The new releases are available alongwith older publications at www.incometaxindia.gov.in.

IBBI notifies the Insolvency and Bankruptcy Board of India (Mechanism for Issuing Regulations) Regulations, 2018

The Insolvency and Bankruptcy Code, 2016 (Code) is a modern economic legislation. Section 240 of the Code empowers the Insolvency and Bankruptcy Board of India (IBBI) to make regulations subject to the conditions that the regulations: (a) carry out the provisions of the Code, (b) are consistent with the Code and the rules made thereunder; (c) are made by a notification published in the official gazette; and (d) are laid, as soon as possible, before each House of Parliament for 30 days.

Given the importance of subordinate legislations for the various processes under the Code, it is essential that the IBBI has a structured, robust mechanism, which includes effective engagement with the stakeholders, for making regulations. Section 196 (1) (s) of the Code requires the IBBI to specify mechanisms for issuing regulations, including the conduct of public consultation processes, before notification of regulations. In sync with this philosophy and the statutory requirement, the IBBI notified the Insolvency and Bankruptcy Board of India (Mechanism for Issuing Regulations) Regulations, 2018 (Issuing Regulations) to govern the process of making regulations and consulting the public .

The Issuing Regulations provide that for the purpose of making or amending any regulations, the IBBI shall upload the following, with the approval of the Governing Board, on its website seeking comments from the public-

• draft of proposed regulations;
• the specific provision of the Code under which the Board proposes regulations;
• a statement of the problem that the proposed regulation seeks to address;
• an economic analysis of the proposed regulations;
• a statement carrying norms advocated by international standard setting agencies and the international best practices, if any, relevant to the proposed regulation;
• the manner of implementation of the proposed regulations; and
• the manner, process and timelines for receiving comments from the public.

The IBBI shall allow at least twenty-one days for public to submit their comments. It shall consider the public comments received and upload the same on its website along with a general statement of its response on the comments, not later than the date of notification of regulations. If the Governing Board decides to approve regulations in a form substantially different from the proposed regulations, it shall repeat the process under the Issuing Regulations. The regulations shall be notified promptly after it is approved by the Governing Board and the date of their enforcement shall ordinarily be after thirty days from the date of notification unless a different date is specified therein.

However, where the IBBI is of the opinion that certain regulations are required to be made or existing regulations are required to be amended urgently, it may make regulations or amend the existing regulations, as the case may be, with the approval of the Governing Board, without following the above process of consultation.

The Issuing Regulations are effective from 22nd October, 2018. These are available at ww.mca.gov.in and www.ibbi.gov.in

Clarification on the manner of filing the Quarterly Return by Composition Dealers in FORM GSTR-4

It has been brought to notice that doubts regarding the manner of filing the quarterly return by Composition Dealers in FORM GSTR-4 in the absence of auto-population of the details of inward supplies (other than supplies attracting reverse charge) received from registered suppliers exist amongst taxpayers.

In this regard, it is to clarify that the taxpayers who have opted to pay tax under the composition levy shall not furnish the data in serial number 4A of Table 4 of FORM GSTR-4. The required changes in the CGST Rules, 2017 would be notified shortly.

Last date to avail Input Tax Credit in respect of invoices or Debit Notes relating to such invoices pertaining to period from July, 2017 to March, 2018.

There appears to be misgiving about the last date for taking Input Tax Credit (ITC) in relation to invoices or debit notes relating to such invoices pertaining to period from July, 2017 to March, 2018. Such uncertainty seems to stem from the Government’s decision to extend the last date for furnishing of details of outward supplies in FORM GSTR-1 from time to time.

According to Section 16 (4) of the CGST Act, 2017, a registered person shall not be entitled to take ITC in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under Section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such Debit Note pertains (hereinafter referred to as “the said invoices”) or furnishing of the relevant Annual Return, whichever is earlier.

With taxpayers self-assessing and availing ITC through return in FORM GSTR-3B, the last date for availing ITC in relation to the said invoices issued by the corresponding supplier(s) during the period from July, 2017 to March, 2018 is the last date for the filing of such return for the month of September, 2018 i.e. 20th October, 2018.

It is clarified that the furnishing of outward details in FORM GSTR-1 by the corresponding supplier(s) and the facility to view the same in FORM GSTR-2A by the recipient is in the nature of taxpayer facilitation and does not impact the ability of the taxpayer to avail ITC on self-assessment basis in consonance with the provisions of Section 16 of the Act. The apprehension that ITC can be availed only on the basis of reconciliation between FORM GSTR-2A and FORM GSTR-3B conducted before the due date for filing of return in FORM GSTR-3B for the month of September, 2018 is unfounded as the same exercise can be done thereafter also.

It may, however, be noted that the Government has extended the last date for furnishing of return in FORM GSTR-3B for the month of September, 2018 for certain taxpayers who have been recently migrated from erstwhile tax regime to GST regime vide Notification No. 47/2018- Central Tax dated 10th September, 2018. For such taxpayers, the extended date i.e. 31st December, 2018 or the date of filing of Annual Return whichever is earlier will be the last date for availing ITC in relation to the said invoices issued by the corresponding suppliers during the period from July, 2017 to March, 2018.

All the taxpayers are encouraged to take note of the legal requirements and be compliance savvy.