Blog

The Government of India has been introducing changes to the GST law to make it more user friendly. As a part of this measure we have seen a simplified return scheme (you can read about  changes here https://integrabooks.co/changes-in-gst-law-return-filing-including-annual-returns/) being introduced from April 2020.

Another significant measure is the introduction of online processing of GST refunds. GST refunds have been a major contention for exporters ever since the introduction of GST. There were problems of jurisdiction of tax payers and huge paperwork to be filed for refunds. (You read about manual refunds here https://integrabooks.co/manually-file-gst-refund/)

In a significant process  improvement, a new online refund processing system has been announced to be begin from 26th September 2019. The changes introduced are as follows:

1. . Refund applications filed by the taxpayers in RFD-01 form shall be processed electronically/ online by the tax-officer and all communications between the tax officers and the taxpayers shall take place electronically. 
2. Refund amount shall be disbursed by accredited bank of Central Board of Indirect Taxes and Customs (CBIC) through the Public Financial Management System (PFMS) after bank account validation.

The details of changes in various forms are illustrated below in the tables:

Form	RFD-01
Description	Refund Application
Action by	Taxpayer
Previous Processing Workflow	The taxpayers were filling refund application in form RFD-01A online.
Electronic/ Online Processing	1.The RFD-01A form has been disabled on the portal. 2.The taxpayer shall be able to file his refund application in form RFD-01 now. 3.However, the taxpayer shall be able to view the status of RFD-01A applications also along with the new ones. 4.The bank account details mentioned in the refund application shall be validated by PFMS after filing of RFD-01. The taxpayers must ensure that the bank account details selected in the refund application are valid and correct. 5.The taxpayer shall be able to view the status of bank account validation on his dashboard. It will also be communicated through e-mail/ SMS.

 

Form	RFD-02
Description	Acknowledgement
Action by	Tax Officer
Previous Processing Workflow	The tax officer issued RFD-02 manually.
Electronic/ Online Processing	1.The tax officer shall issue RFD-02 electronically to the taxpayer. 2.The taxpayer shall be able to view the acknowledgement in RFD-02 on his dashboard. 3.The taxpayer will also receive communication through email and SMS.

 

Form	RFD-03
Description	Deficiency Memo
Action by	Tax Officer
Previous Processing Workflow	The tax officer issued RFD-03 manually and there was no auto recredit of ITC/cash.
Electronic/ Online Processing	1.The tax officer shall issue RFD-03 electronically to the taxpayer. 2.With the issuance of RFD-03, the ITC/ cash will get re credited to the electronic credit/ cash ledger of the taxpayer. 3.The taxpayer shall be able to view the deficiency memo in RFD-03 on his dashboard. 4.Once RFD-03 has been issued against an ARN, the taxpayer is required to file a fresh refund application. 5.The taxpayer will receive communication through email and SMS.

 

Form	RFD-04
Description	Provisional Refund Order
Action by	Tax Officer
Previous Processing Workflow	The tax officer issued RFD-04 manually.
Electronic/ Online Processing	1.The tax officer shall issue RFD-04 electronically to the taxpayer. 2.The taxpayer shall be able to view the provisional sanction order in RFD-04 on his dashboard. 3.The taxpayer will receive communication through email and SMS.

 

Form	RFD-05
Description	Payment Order
Action by	Tax Officer
Previous Processing Workflow	The tax officer issued RFD-05 manually and sent a copy to the central  nodal authority and state AAs respectively for disbursement.
Electronic/ Online Processing	1.The tax officer shall issue RFD-05 electronically to the taxpayer. 2.The tax officer is not required to send the copy of RFD-05 to the central nodal authority and state AAs. 3.The taxpayer shall be able to view the payment order in RFD-05 on his dashboard. 4.The bank account details mentioned in the refund application shall be validated by PFMS after issuance of RFD-05 by the tax-officer. 5.The taxpayer will receive communication through email and SMS.

 

Form	RFD-06
Description	Final Refund Sanction/Rejection Order
Action by	Tax Officer
Previous Processing Workflow	The tax officer issued RFD-06 manually.
Electronic/ Online Processing	1.The tax officer shall issue RFD-06 electronically to the taxpayer. 2.The taxpayer shall be able to view the final sanction/ rejection order in  RFD-06 on his dashboard.

 

Form	RFD-07B
Description	Withholding Order
Action by	Tax Officer
Previous Processing Workflow	The tax officer issued RFD-07B manually.
Electronic/ Online Processing	1.The tax officer shall issue RFD-07B electronically to the taxpayer. 2.The taxpayer shall be able to view the withhold order in RFD-07B on his dashboard. 3.The taxpayer will receive communication through email and SMS.

 

Form	RFD-08
Description	Show Cause Notice
Action by	Tax Officer
Previous Processing Workflow	The tax officer issued RFD-08 manually.
Electronic/ Online Processing	1.The tax officer shall issue RFD-08 electronically to the taxpayer. 2.The taxpayer shall be able to view the show cause notice in RFD-08 on his dashboard. 3.The taxpayer is expected to give reply to the SCN within 15 days of receipt of the SCN. 4. If the taxpayer doesn’t respond within 15 days of the issuance of SCN, the tax officer can take action on the refund application. 5.The taxpayer will receive communication through email and SMS.

 

Form	RFD-09
Description	Reply to Show Cause Notice by the Taxpayer
Action by	Taxpayer
Previous Processing Workflow	The taxpayers were submitting reply to the show cause notice manually  to the tax officer.
Electronic/ Online Processing	1.The taxpayer is required to reply the SCN electronically/online in RFD-09 form which would be available on his dashboard. 2.The taxpayer shall be able to reply to the SCN and upload supporting documents electronically through RFD-09. 3.The tax officer may not process the reply to the SCN if not given electronically in RFD-09 by the taxpayer.

 

Form	RFD-09
Description	Order for Re credit of Rejected Amount
Action by	Tax Officer
Previous Processing Workflow	The tax officer uploaded the refund order details in RFD-01B and then the ITC got re credited to the taxpayer’s ITC ledger.
Electronic/ Online Processing	1.The tax officer shall issue PMT-03 electronically. 2.With the issuance of PMT-03, the inadmissible ITC shall get re credited to the electronic credit ledger of the taxpayer automatically. 3.The taxpayer is required to give an undertaking that he will not file an appeal against the refund order if he/she desires to get a recredit of the rejected amount. This undertaking has to be submitted to the tax officer manually. 4.The taxpayer shall be able to view the recredit order in PMT-03 on his  dashboard.

Now the tax payers will be able to view the various stages of processing of their refund claims. Communication between the GST department and tax payers are now through email/SMS which is welcome move.

The disbursement of refund will now be done by a single authority.Earlier the state and the central government used to disburse the refunds separately. 

Final Thoughts

Online GST refund processing is a major relief for tax payers. The earlier process relied on too much paper work and manual processing  of claims. Hope this new workflow proves beneficial to tax payers.

 

A business to be successful has to not only focus on day to day elements of finances but has to create a financial plan for the future.A financial plan will enable the management team to know where they are going and how they’re going to get there.

Budgeting and forecasting is an essential part of any business. Often these terms are used interchangeably.In this post we guide you through the differences between budgeting and forecasting and how combining them together  will give you an insight into your financial future

Budgeting

Budgeting is used to control your spend. This is a periodic exercise which is can be done either on a quarterly or annual basis. Normally, businesses set targets for revenues or expenditure across the entire organisation.Actual versus budgeted numbers provide a clear picture to internal and external stakeholders of the money that is available.

Forecasting

Forecasting is about attempting to predict, as closely as possible, the real financial outcomes you’ll see over a given period. A forecast uses current data to build “What if Scenario’s”. 

So for a robust financial forecast it is necessary to have solid financial data.It is apparent that a dynamic forecast is the result of current business knowledge and reliable data. A forecast, unlike a budget, can be run at anytime viz, monthly, quarterly or yearly. A forecast is an essential part of business intelligence aiding decision making.

Scenario planning is a process of trial and error which is played out in theory. Some examples of scenario’s could be:

• what if rentals go up by 5%?
• what if selling prices go up by 5%?
• what if payroll costs go up by 10%?

The answers to all these have a significant impact on the business. Scenario-planning is there to help you understand the impact of your business decisions, and to reduce the potential risk by showing you the most financially astute pathway to take when it comes to planning for the future.

A better view of the future with cloud accounting

Spreadsheets are not up to the task, being time-consuming to update, tricky to share and generally outmoded by the latest in online accounting software. Having a cloud accounting platform as your main accounting system adds real value, by helping the business to record every single transaction – and giving you a pool of real-time data to dip into.

Having this huge pool of financial information at your disposal allows you to create three-way financial reporting and provides a data source you can integrate with your choice from the latest in financial technology reporting and forecasting apps.

With a forecasting solution incorporated into your forecasting you can turn your numbers into a practical reality that you can then execute on. There’s an ever-growing marketplace of cloud-based apps you can integrate into your core system – and that means you can use budgeting tools, budget managers, KPI dashboards and business intelligence solutions to measure business performance and check out those ‘What if…?’ scenarios across the period.

Look to the future and succeed

If you’re serious about making a success of your business, you need to plan ahead, get your budget in place and run regular forecasts to check that you’re on track.

At Integra Books we believe that cloud based services are the future and to achieve this we have partnered with Zoho. We use Zoho Books as accounting software integrated with Zoho Reports. The sync between Zoho Books and Zoho Reports will enable to track your budgets and build forecasts for the future. 

Integra Books combines the best domain expertise with best in class technology. Get in touch with us to set ball rolling.

 

 

    

 

The Government has introduced the Taxation Laws (Amendment) Ordinance, 2019 for reducing the corporate taxes. Now domestic companies can now opt to pay taxes at 22%  or at 15% subject to conditions which are as under:

1.Reduced rates of taxes shall be applicable from 1.4.2020.

2.Company shall not avail deductions under:

a.Section 10AA: deductions for newly established Special Economic Zones

b.Section 32(iia):additional depreciation for machinery

c.Section 32AD: additional depreciation for machinery used in special states

d.Section 33AB: investments in specified deposits

e.Section 33ABA: deposits into site restoration fund

f.Section 35(2AA)(2AB): expenditure on scientific research

g.Section 35AD: Deduction in respect of expenditure on specified business

h.Section 35CCC: Expenditure on agricultural extension project

i.Section 35CCD: Expenditure on skill development project

3.Further, company shall not avail any deductions under Chapter VIA except the deduction under:

a.Section 80JJA: Deduction in respect of employment of new employees

4.The loss arising from deductions under point 2 shall not allowed to be allowed for any subsequent year.

5.The tax payer has to opt for paying taxes at 25% +cess or 15%+ cess, once the option is availed it cannot be rolled back.

Particulars	Tax on Domestic Companies	Tax on New Domestic Manufacturing Companies
Applicable  Financial Year	2019-20	2019-20
Timing of exercising option for lower tax	On or before the due date specified for filing returns	On or before the due date specified for filing returns
Basic Tax Rate	22%	15%
Surcharge Rate	10%	10%
Cess	4%	4%
Effective Rate	25.17%	17.16%
Applicability of Minimum Alternate Tax	Not Applicable	Not Applicable
Conditions	None	Company has been registered on or after the 01/10/2019, and has commenced manufacturing on or before 31/03/2023
	None	The company is not engaged in any business other than the business of manufacture or production of any article or thing

6.Savings in Tax Rates:

Income Slabs	Pre–Amendment Scenario			Savings in Tax Rates
	Companies having turnover Below Rs 400 cr	Companies having turnover of Rs 400 cr or more	Tax Rate as per New option given u/s 115BAA	Companies having turnover Below Rs 400 cr	Companies having turnover of Rs 400 cr or more
total income upto Rs 1 Crore	26.00%	31.20%	25.17%	0.83%	6.03%
total income exceeding Rs 1 Crore but not exceeding Rs 10 crore	27.82%	33.38%	25.17%	2.65%	8.21%
total income exceeding Rs 10 crore	29.12%	34.94%	25.17%	3.95%	9.77%

Final Thoughts

India can boast of an optimal tax rate of 22% and incentive tax rate of 15%. These rates are on par with global corporate tax rates and will provide an incentive for manufacturing firms to shift their supply chains to India.

The document shall not be construed as professional advice or an opinion

The GST Council, in its meeting recommended the following Law & Procedure related changes:

1.Relaxation in filing of annual returns for MSMEs for FY 2017-18 and FY 2018-19 as under:   

a.waiver of the requirement of filing FORM GSTR-9A for Composition Tax payers for the said tax period

b.filing of FORM GSTR-9 for those taxpayers who (are required to file the said return but) have aggregate turnover up to Rs. 2 crores made optional for the said tax periods

2. A Committee of Officers to be constituted to examine the simplification of Forms for Annual Return and reconciliation statement.

3.In order to nudge taxpayers to timely file their statement of outward supplies, imposition of restrictions on availment of input tax credit by the recipients in cases where details of outward supplies are not furnished by the suppliers.

4.New return system now to be introduced from April, 2020 (earlier proposed from October, 2019), in order to give ample opportunity to taxpayers as well as the system to adapt and accordingly specifying the due date for furnishing of return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 for the period October, 2019 -March, 2020.

5.Issuance of circulars for uniformity in application of law across all jurisdictions:

a.procedure to claim refund in FORM GST RFD-01A subsequent to favorable order in appeal or any other forum

b.eligibility to file a refund application in FORM GST RFD-01A for a period and category under which a NIL refund application has already been filed 

c.clarification regarding supply of Information Technology enabled Services being made on own account or as intermediary

6.Rescinding of Circular No.105/24/2019-GST dated 28.06.2019, ab-initio, which was issued in respect of post-sales discount.

7.Integrated refund system with disbursal by single authority to be introduced from 24th September, 2019.

8.In principle decision to link Aadhar with registration of taxpayers under GST and examine the possibility of making Aadhar mandatory for claiming refunds.

9.In order to tackle the menace of fake invoices and fraudulent refunds, in principle decision to prescribe reasonable restrictions on passing of credit by risky taxpayers including risky new taxpayers.

The decisions taken by the GST Council has been reproduced here in simplified language. For the actual notifications it is prudent to refer to the official notifications issued by the Government.The document shall not be construed as professional advice or an opinion

 

The Finance Minister in her Budget speech in February 2019 had announced the formation of Startup Cell within the Income Tax Department.This announcement was made after several start up’s received income tax demand notices, popularly known as angel tax.

The income tax department had questioned the valuation of start up’s and wanted to tax part of the capital raised by these companies. This move had raised alarm among start up founders and investors. The Department of Industrial Promotion and Planning (DIPP) had issued notification stating that provisions of angel tax shall not apply to a startup company if the startup fulfills certain conditions and is recognised by the DIPP.  

Further, the income tax department issued a notification stating that:

1. the angel tax provisions (Section 56(2) (viib) of the Income Tax Act) will not apply to any capital received by a startup company recognised by DIPP.
2. the angel tax provisions will not apply to consideration received by a company for issue of shares that exceeds the face value of such shares, if the consideration has been received from a person being a resident or company which fulfills conditions prescribed by DIPP
3. where the startup company is selected under “limited scrutiny” or “complete scrutiny” the contention of startup shall be summarily accepted
4. where the startup company is selected under “limited scrutiny” or “complete scrutiny” the applicability of Section 56(2)(viib) shall be inquired into by the Assessing Officer only after obtaining approval of the supervising officer
5. where the startup company selected for “limited scrutiny” or “complete scrutiny” the applicability of Section 56(2)(viib) shall be inquired into by the Assessing Officer only after obtaining approval of the supervising officer

The Finance minister in her Budget speech had also announced the formation of a Startup Cell to address the grievances of Startup’s. The Income Tax Department has now formally constituted this Cell.

The Cell will work towards redressal of grievances and mitigate tax-related issues in case of Start-up entities with respect to administration of the Income-tax Act, 1961.

Grievances relating to Start-ups may be filed with the O/o Under Secretary, ITA-I, Room No.245A, North Block, New Delhi – 110001 as well as online at startupcell.cbdt@gov.in. The Cell will also be accessible telephonically on 011- 23095479 /23093070 (F).

Start-up entities can approach the Cell for speedy resolution of their grievances. This initiative is the latest amongst the recent initiatives taken by CBDT to further ease the compliance issues pertaining to Start-ups.

 

       

In a major relief to all corporates in the country the Finance Minister announced a significant tax reduction. The Government of India has brought in Taxation Laws (Amendment) Ordinance 2019 to make amendments to the Income Tax Act to lower tax rates for Corporate tax payers.

Salient features of these amendments are as under:

1. A domestic company in India has now an option to pay income-tax at the rate of 22% subject to condition that they will not avail any exemption/incentive. The effective tax rate for these companies shall be 25.17% inclusive of surcharge & cess. In a further relief, it has been announced that such companies shall not be required to pay Minimum Alternate Tax.
2. A domestic company incorporated on or after 1^stOctober 2019 making fresh investment in manufacturing, has now an option to pay income-tax at the rate of 15%. This benefit is available to companies which do not avail any exemption/incentive and commences their production on or before 31st March, 2023. The effective tax rate for these companies shall be 17.01% inclusive of surcharge & cess.  Also, such companies shall not be required to pay Minimum Alternate Tax.
3. A domestic company which does not opt for the concessional tax regime and avails the tax exemption/incentive shall continue to pay tax at the pre-amended rate. After the exercise of the option they shall be liable to pay tax at the rate of 22% and option once exercised cannot be subsequently withdrawn.
4. Further, in order to provide relief to companies which continue to avail exemptions/incentives, the rate of Minimum Alternate Tax has been reduced from existing 18.5% to 15%

These are very significant announcements which are designed to restart the private investments in the country. The reduction in corporate taxes was due for a while as countries like Singapore & the USA had reduced their corporate taxes.

In order to boost the Make in India initiative the Government has set a tax rate of 15% for manufacturing industries set up on or after 1.10.19. This is a historic move to give a boost to the struggling manufacturing sector. The slowdown in consumption had resulted in massive job losses in this sector.

The Minimum Alternate Tax (MAT) has been removed for domestic companies in the new tax regime. Further, in case of companies opting old rate of taxes, the MAT has reduced to 15%. We only hope that in the future MAT is completely removed and India moves towards taxing only actual profits.

The conditions for availing reduced taxes will have to be looked in detail once they are notified by the Central Board of Direct Taxes.

Final Thoughts

India can boast of an optimal tax rate of 22% and incentive tax rate of 15%. These rates are on par with global corporate tax rates and will provide an incentive for manufacturing firms to shift their supply chains to India.

Come September and it is time to file Annual Returns with the Registrar of Companies. As per the provisions of the Companies Act, 2013, the due date for holding the Annual General Meeting (AGM) for the financial year ended 31^st March 2019 is 30^th September 2019.

The annual returns consists of two forms viz:

1. Form AOC 4
2. Form MGT 7

 As per Section 137 and 92 of the Companies Act, it is required to file the Balance sheet (Form AOC-4) and the Annual Return (form MGT-7) within 30 days and 60 days respectively from the date of AGM. 

Annual returns consists of the following information and documents:

1. Audited Financial Statements
2. Audit Report
3. Directors Report
4. Notice to AGM
5. Other secretarial documents prescribed under the Companies Act.

The Companies Act, 2013 was amended in November to introduce late fees for delayed filing of ROC Returns. The late is fees now at Rs 100 per day for each form.

It is important to note that a Unique Document Identification Number (UDIN) being made mandatory from 1^st July 2019 for all Audit/Assurance/Attest function. Hence, in order to conduct the AGM on or before 30.09.2019, Statutory Auditor should generate and mention UDIN in the statutory audit report on or before 29^th September 2019.

Running a Startup business in India is not an easy task. It involves a constant investment of both time and effort as well as technical capabilities of knowing the various statutory compliance and regulations. We hope this blog post is helpful for both founders and budding entrepreneurs in imparting the right knowledge and guiding them.

But many early businesses struggle with the multitude of compliances that are part of doing business in India. Our advisors at Integra Books can help you ensure you file the right things at the right time.

New GST Returns

The GST council in has recommended to introduce a new set of GST returns to replace the current returns with effect from 1.10.19. The new set of returns are supposed to ease the compliance burden on tax payers while making it simple to fill and file the returns.

The new return scheme will have separate returns for large tax payers (having turnover of more than 5 crores) and small tax payers (having turnover upto 5 crores).

Form GST RET 1 will replace the Form GST 1. The Form GST RET 1 will have two Annexures:

1. Form GST ANX-1: Annexure of Outward Supplies including imports and reverse charge
2. Form GST ANX-2: Annexure of Inward Supplies

The timelines for filing the Form GST RET 1 will be as under:

 

Category	Filing of GST ANX-1
Large Tax Payers	Monthly basis from October 2019
Small Tax Payers	Quarterly only in January 2020

 

Small tax payers shall use GST PMT-8 to pay GST either by cash or by input credit. There are no changes in the due date for payment of taxes i.e, 20^th of the following month.

There are other option for small tax payers who do not want to file GST RET 1, they can choose to file other quarterly returns viz, GST Sahaj-Form GST RET 2 or Sugam-Form GST RET3.

Invoices uploaded via GST ANX-1 can be viewed by the recipient on a real time basis. The matching tool is designed to help the taxpayers match their input credit. It is important to note that changes in GST ANX-1 can be made only by the supplier. Further, editing is allowed only if the recipient has not accepted the supply. Once accepted, the edit can be done only if the recipient unlocks the invoice. All the changes to GST ANX-1 can be done before furnishing the annual return.

Recipient filing monthly returns can accept details uploaded by the supplier till 10th of the following month. If the recipient is filing quarterly returns, then he can accept details uploaded by the supplier till the 10th of the month succeeding the quarter for which the return is filed.

The Form GST ANX-2 will be auto populated with details uploaded by the supplier. The recipient can accept it or reject it. Any rejection by the recipient will be conveyed to the supplier only after filing of the return by the recipient. The rejection from the recipient can be edited by the supplier before filing the subsequent return. If the supplier does not file ANX-2 for more than two months the input credit will not be available to recipient.

It needs to be seen how the new set of returns will be accepted by the business community. Even in the new set of returns the onus of getting the input credit is upon the tax payer. The tax payer is required to follow up with the supplier to ensure the input credit is transmitted.

Our advisors at Integra Books can help you file your GST returns and navigate through multiple compliance’s.

Co-working spaces growing in India at a fast pace. Startups, small and medium-sized enterprises (SMEs) and even multinationals are based in co-working spaces. A co-working space provides work on a plug and play model which is convenient as well as cost effective for businesses.

This co-working concept has posed a challenge for GST authorities when it comes to providing GST registration. GST authorities so far have been hesitant in providing registration to businesses working from a co-working space. Most often the reasons for rejection was that the co-working space could not be considered as “principal place of business” as per the GST law. To further this reasoning the GST department contended that there were other companies in the same space and hence it could not act as principal place of business.

Recently, a co-working space in Kerala petitioned the GST Authorities to permit the registration for businesses based out of co-working spaces. The co-working space argued that hiring full-fledged offices in big cities is unaffordable due to high rental charges. Due to this reason many startups prefer co-working spaces. The following questions were raised by the co-working space in its petition to the GST Authorities:

1. Can GST registrations be allowed for multiple companies from the same address?
2. Can registration be denied even if they follow all GST rules regarding “place of business?

The GST authorities ruled that there is no prohibition under GST law for obtaining GST registration to a shared office space or virtual office, if the land lord permits such leasing as per the agreement. Further, the GST authority ruled that every business seeking registration shall upload the following:

1. the rental agreement with the landlord
2. if there is a sub-lease, then rental agreement between lessee and sub lessee
3. monthly utility bill in connection with the payment of electricity charges or water charges

This ruling is a relief for businesses working out of a co- working space and will enable to obtain GST registration henceforth.

Running a business in India is not an easy task. It involves a constant investment of both time and effort as well as technical capabilities of knowing the various statutory compliance and regulations.

But many early businesses struggle with the multitude of compliances that are part of doing business in India. Our advisors at Integra Books can help you ensure you do the right things at the right time