Effective tax rate on complex, building, flat etc.

It is brought to the notice of buyers of constructed property that there is no GST on sale of complex/ building and ready to move-in flats where sale takes place after issue of completion certificate by the competent authority. GST is applicable on sale of under construction property or ready to move-in flats where completion certificate has not been issued at the time of sale.

Effective rate of tax and credit available to the builders for payment of tax are summarized in the table for pre-GST and GST regime.

Period	Output Tax Rate	Input Tax Credit details		Effective Rate of Tax
Pre- GST	Service Tax: 4.5% VAT: 1% to 5% (composition scheme)	Central Excise on most of the construction materials: 12.5% VAT: 12.5 to 14.5% Entry Tax: Yes	No input tax credit (ITC) of VAT and Central Excise duty paid on inputs was available to the builder for payment of output tax, hence it got embedded in the value of properties. Considering that goods constitute approximately 45% of the value, embedded ITC was approximately 10- 12%.	Effective pre-GST tax incidence: 15- 18%
GST	Affordable housing segment: 8%, Other segment: 12% after 1/3rd abatement of value of land	Major construction materials, capital goods and input services used for construction of flats, houses, etc. attract GST of 18% or more.	ITC available and weighted average of ITC incidence is approximately 8 to 10%.	Effective GST incidence, for affordable segment and for other segment has not increased as compared to pre- GST regime.

Housing projects in the affordable segment such as Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing scheme of State Government etc., attract GST of 8%. For such projects, after offsetting input tax credit, the builder or developer in most cases will not be required to pay GST in cash as the builder would have enough ITC in his books of account to pay the output GST.

For projects other than affordable segment, it is expected that the cost of the complex/ buildings/ flats would not have gone up due to implementation of GST. Builders are also required to pass on the benefits of lower tax burden to the buyers of property by way of reduced prices/ installments, where effective tax rate has been down.

Direct Tax Collections for F.Y. 2018-19 up to November, 2018

The Provisional Figures of Direct Tax Collections up to November, 2018 show that gross collections are at Rs. 6.75 lakh crore which is 15.7% higher than the gross collections for the corresponding period of last year.

Refunds amounting to Rs.1.23 lakh crore have been issued during April, 2018 to November, 2018, which is 20.8% higher than refunds issued during the same period in the preceding year. Net collections (after adjusting for refunds) have increased by 14.7% to Rs. 5.51 lakh crore during April - November, 2018. The Net Direct Tax collections represent 48% of the total Budget Estimates of Direct Taxes for F.Y. 2018-19 (Rs. 11.50 lakh crore).

So far as the Growth Rate for Corporate Income Tax (CIT) and Personal Income Tax (PIT) is concerned, the Growth Rate of Gross Collections for CIT is 17.7% while that for PIT (including STT) is 18.3%. After adjustment of refunds, the Net Growth in CIT collections is 18.4% and that in PIT collections is 16.0%. It is pertinent to mention that collections of the corresponding period of F.Y. 2017-18 also included extraordinary collections under the Income Declaration Scheme (IDS), 2016 amounting to Rs.10,833 crore (Third and last instalment of IDS), which do not form part of the Current Year’s collections.

Due Date for Filing FORM GSTR-9, FORM GSTR-9A and FORM GSTR-9C extended till 31st March, 2019

The competent authority has decided to extend the Due Date for filing FORM GSTR-9, FORM GSTR-9A and FORM GSTR-9C till 31st March, 2019. The requisite FORMs shall be made available on the GST common portal shortly. Relevant Order is being issued.

Earlier, FORM GSTR-9 and FORM GSTR-9A were notified vide Notification No. 39/2018-Central Tax, dated 04.09.2018 while FORM GSTR-9C was notified vide Notification no. 49/2018-Central Tax, dated 13.09.2018 as part of the CGST Rules.

Status of GST Refunds

Total GST refunds to the tune of Rs 91,149 crores have been disposed by CBIC and State authorities out of the total refund claims of Rs 97,202 crores received so far. Thus, the disposal rate of 93.77 per cent has been achieved. The pending GST refund claims amounting to Rs 6,053 crores are being expeditiously processed so as to provide relief to eligible claimants. Refund claims without any deficiency are being cleared expeditiously.

In case of IGST refunds, about 95 % (Rs 48,455 crores) of the total IGST refund claims (Rs. 50,928 crore) transmitted to Customs from GSTN as on 28.11.2018 have already been disposed. The remaining claims amounting to Rs. 2,473 crores are held up on account of various deficiencies which have been communicated to exporters for remedial action.

In the case of RFD-01A (ITC Refunds plus other refunds) claims, out of the total refund claims of Rs. 46,274 crores received in the jurisdictional tax offices, the pendency as on 03.12.2018 is Rs. 902 crores with Centre and Rs 2,678 crore with States. Provisional/final order has been issued in case of refunds amounting to Rs. 37,406 crores. In claims amounting to Rs. 5,288 crore, deficiency memos have been issued by respective GST authorities and action will be taken after receipt of replies from the claimants.

Efforts are being made continuously to clear all the pending refund claims, where ever requisite information is provided and found eligible. Co-operation of the exporter community is solicited to ensure that they respond to the deficiency memos and errors communicated by Centre and State GST as well as Customs Authorities and also exercise due diligence while filing GSTR 1 and GSTR 3B returns as well as Shipping Bills.

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.