GST Update – 54th GST Council Meeting Recommendations

Home > GST Update – 54th GST Council Meeting Recommendations

The 54th GST Council

met inter alia made the following recommendations relating to changes in GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST.

1. List of Services to be added to RCM:

RCM applicability on

a. Renting of commercial property by unregistered to registered person

SBC Comments:
Earlier, w.e.f. 18th July 2022, the renting of residential property was subject to Reverse Charge Mechanism (RCM). The proposal now suggests extending RCM to include the renting of commercial property. However, the term “commercial property” has not been explicitly defined in the law. It is also proposed that all types of commercial property rentals may eventually be brought under the purview of GST

b. Supply of Metal scrap by unregistered to registered person

Reverse Charge Mechanism (RCM) to be introduced on supply of metal scrap by unregistered person to registered person provided that the supplier shall take registration as and when it crosses threshold limit and the recipient who is liable to pay under RCM shall pay tax even if supplier is under threshold.

2. GST TDS on supply of metal scrap:

A TDS of 2% will be applicable on the supply of metal scrap by a registered person in B-to-B supply

SBC Comments:
Previously, the applicability of Tax Deducted at Source (TDS) was restricted to government companies and their related entities. As this metal scrap industry is an unorganized sector. It is now proposed that a 2% TDS will be imposed on the business-to-business (B2B) supply of metal scrap.

3. Proposed GST exemptions

4. Recommendations

a)Introduction of RCM Ledger & IMS

Introduction of a Reverse Charge Mechanism (RCM) ledger, an Input Tax Credit Reclaim ledger (by 31 October 2024) and an Invoice Management System (IMS)

SBC Comments:
The Reverse Charge Mechanism (RCM) ledger and Invoice Management System (IMS) streamline compliance on the GST portal by allowing to manage of regular ITC and RCM ITC while also providing tools for effective invoice management.

b) Introduction of B2C e-Invoicing

SBC Comments:
B2B E-invoicing compliance was introduced on October 1, 2020. It was mandatory for businesses with a turnover exceeding INR 500 crore or more, which was gradually brought down to INR 5 crore or more. However, due to the large volume of transactions, B2C E invoicing is also being considered. The specific limits for B2C E-invoicing are currently under discussion and will be notified soon.

c) GST on life and health insurance

Constitute a Group of Ministers (GoM) to holistically look into the issues pertaining to GST on life insurance and health insurance. The GoM is to submit the report by end of October 2024.

d) GST on Preferential Location Charges

Location charges or Preferential Location Charges (PLC) paid along with the consideration for the construction services of residential/commercial/industrial complex before issuance of completion certificate forms part of composite supply
SBC Comments:
This clarification comes as a much-needed relief for the real estate industry, addressing the long-standing ambiguity regarding tax rates on Preferential Location Charges (PLC). For buyers, this is great news! Instead of the GST rate of 18% being applied to PLC, it will now be taxed at a reduced rate of 5%, or 1% for affordable housing.

e) Goods Transport Agency (GTA)

When a Goods Transport Agency (GTA) provides additional services (like loading, unloading, packing, unpacking, transshipment, or temporary warehousing) during the transportation of goods by road and issues a consignment note, these services are considered part of a composite supply.
If these services are provided separately and invoiced separately, they are not treated as part of the composite supply of transportation of goods

f) Introduction of sub-sections (5) and (6) into section 16

The GST Council recommended the early notification of sections 118 and 150 of the Finance (No. 2) Act, 2024, which introduce sub-sections (5) and (6) into section 16 of the CGST Act, 2017, with retrospective effect from July 1, 2017. They also suggested a special procedure for rectifying orders under section 148 of the CGST Act for taxable persons who received orders for wrong input tax credit claims but are now eligible under the new sub-sections. Additionally, a circular will be issued to clarify the procedure and address issues related to these new provisions.
SBC Comments:
A retrospective amendment of sub-sections (5) and (6) into section 16 provides great relief to the taxpayers who were affected by delayed claiming of ITC. They can now avail the benefit of it by approaching the appropriated appellate authority for revision of orders.

g) Removal of Rules 96(10), 89(4A), and 89(4B) from the CGST
Rules, 2017

The GST Council recommended that, where the inputs were initially imported without payment of IGST and compensation cess by availing benefits under Notification No. 78/2017-Customs dated 13.10.2017 or Notification No. 79/2017-Customs dated 13.10.2017 are later paid along with interest, the refunded IGST on exports will not breach Rule 96(10) of the CGST Rules. To ease the refund process for exporters, the Council also suggested the prospective removal of Rules 96(10), 89(4A), and 89(4B) from the CGST Rules, 2017.
SBC Comments:
Exporters who fulfill the conditions of paying IGST and compensation cess on imported inputs (along with interest) and having the Bill of Entry reassessed will no longer be required to repay the refunded IGST with interest and penalties under Section 74.
However, many exporters have already incurred penalties, including repayment of the IGST refund, interest, and additional penalties ranging from 15% to 100%.Many taxpayers were unable to claim refunds due to restrictions imposed under Rule 96(10). This is a huge relief given to the exporters with payment of tax.

h) Addition of Rule 164 to the CGST Rules, 2017

The GST Council recommended adding rule 164 to the CGST Rules, 2017, to outline the procedure and conditions for waiving interest or penalties on tax demands for FYs 2017-18, 2018-19, and 2019 20 under section 128A of the CGST Act. They also recommended that the insertion of section 128A (Amnesty Scheme) in CGST Act, 2017, may be notified with effect from 01.11.2024. and related circulars along with

i) The GST Council recommended issuing circulars to clarify and resolve ambiguities on the following issues:

a. Place of Supply for advertising services provided by Indian companies to foreign entities.
b. Availability of Input Tax Credit on demo vehicles for vehicle dealers.
c. Place of Supply for data hosting services provided by Indian service providers to foreign cloud computing service provider

5. Summary of Rate Changes and Exemptions:

Changes in GST Rates on Goods & Services:

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SBC Tax Alert e-DRS September 2024

SBC - Tax Alert e-DRS September 2024

Home > SBC – Tax Alert e-DRS September 2024

CBDT’s e-Dispute Resolution Scheme:

The Central Board of Direct Taxes (CBDT) has recently enabled the procedure for its e-Dispute Resolution Scheme, 2022 (e-DRS) via a press release dated 30-Aug 2024, in line with Section 245MA of the Income-tax Act, 1961 (IT Act).

Earlier in 2022, the income tax (IT) department had notified this scheme under Section 245MA of the IT Act, to reduce tax litigation and disputes.

This scheme aims to minimize litigation and offer relief to taxpayers by providing a streamlined electronic platform for dispute resolution. The scheme is particularly beneficial for smaller disputes where litigation costs and processes may be burdensome for taxpayers

SBC is pleased to present its Tax Alert summarizing the key features of the scheme and the procedure now notified. While the scope of the scheme appears limited, it is essential to understand the features of the scheme so that a taxpayer can diligently decide between:

a) Vivad Se Vishwas Scheme, 2024 (VSVS)
b) e-DRS
c) Normal Appeal Mechanism

Key Features of the e-DRS:

Eligibility:

Taxpayers are eligible to apply for the scheme if the returned income does not exceed ₹50
lakh for the relevant assessment year and the aggregate variation in the tax order (including
draft orders) does not exceed ₹10 lakh (Specified Order).

Ineligibility:

1.Assessees involved in search or survey cases.
2.Cases based on information received under international agreements (Section 90 or 90A).
3.Taxpayers who have been prosecuted for offenses under the Income-tax Act or other criminal laws as mentioned in Section 245MA.

Process outlined by:

1.Taxpayers can file an application electronically using Form 34BC on the Income-tax e-filing portal within one month of receiving a specified tax order.
2.If an appeal is already pending before the Commissioner of Income-tax (Appeals) [CIT(A)] or the Specified Order has been passed on or before 31-Aug-2024 and the time limit for filing appeal with CIT(A) has not been lapsed, the application should be filed by 30-Sep 2024.
3.A fee of INR 1,000 must be paid before making the application.
4.Upon receipt of order from the Dispute Resolution Committee (DRC), the Assessing Officer (AO) has to pass final assessment order for draft assessment order applied or modify the assessment order, in other cases
5.AO has to pass the order in conformity with directions of the DRC within 1 month

Powers of the DRC:

1.The DRC can modify variations in tax orders.
2.It may reduce or waive penalties and offer immunity from prosecution provided the applicant has paid the tax due on the returned income and co-operates with DRC.
3.Orders must be passed by the DRC within six months from the date of admitting the application.
4.Decisions shall be by majority of the members of a DRC.

List of Jurisdictional Committees:

DRCs have been established across 18 jurisdictions in India. The complete list and contact
information are available on the Income-tax e-filing portal.

Constitution of the DRC:

• 2 retired officers from the Indian Revenue Service (Income-tax), who have held the post of Commissioner of Income-tax or any equivalent or higher post for five years or more; and
• 1 serving officer not below the rank of Principal Commissioner of Income-tax or Commissioner of Income-tax as specified by the Board.

The members shall be appointed by the Central Government for a period of three years.

SBC Comments and how can it assist:

Pros:
• Quick Resolution: Faster resolution of disputes, with a mandate for decisions within six months.
• Relief from Penalty/Prosecution: The scheme provides for the waiver or reduction of penalties and immunity from prosecution in certain cases.
• Electronic Filing: Convenient e-filing system reduces paperwork and eliminates physical interaction with tax officials

Cons:
• Limited Scope: The orders covered are only where the returned income is below 50 lakhs (where return is filed) and the variation is up to INR 10 lakhs
• No Further Appeal: Once the DRC decision is accepted, no further appeal is allowed. The only legal recourse available is through a Writ Petition.
• Uncertainty in Initial Implementation: As the scheme is relatively new, there is some uncertainty regarding how favourable the committee’s decisions will be towards taxpayers considering the orders are not appealable. It may be prudent to wait and observe how the scheme is implemented before opting for it.

Conclusion:

The e-Dispute Resolution Scheme, 2022 offers a timely opportunity for eligible taxpayers to resolve smaller disputes efficiently. However, the inability to appeal further after opting for this scheme and uncertainty around its practical application should be carefully considered before proceeding. This scheme shall however be beneficial for cases where there is risk of penalty and prosecution though the tax impact is limited.

Taxpayers should evaluate their position, consult their tax advisors, and consider whether this scheme aligns with their dispute resolution needs (along with the alternative options that are available currently available VSVS v/s e-DRS Appeal Mechanism.

How can SBC assist?
• Analysing the eligibility under the Scheme
• Evaluation of options – VSVS v/s e-DRS v/s Appeal Mechanism
• Filing and processing of the application
• Representation and liaising with the tax authorities

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Transfer Pricing Compliances for Non Residents (NR) in India

Home > Transfer Pricing Compliances for Non Residents (NR) in India

Transfer Pricing Compliances applicable to NRs in India:

The clock is ticking, and Indian Transfer Pricing (“TP”) Compliances for the financial year 2023-24 are just around the corner, with due dates in Oct/Nov ’24.

Ensuring compliance with Indian transfer pricing regulations isn’t just a box to tick; it’s a strategic imperative. Non-compliance can result in serious repercussions with tax authorities. While many multinationals are abreast and carefully track the TP compliances of resident entities, there has been confusion or oversight regarding TP compliances applicable to a non-resident entity especially the associated enterprises (“AEs”) of Indian entities.

In this update, we have highlighted the applicability of Indian TP compliances for Non-Residents (“NR”) in India.

Applicability of TP Provisions to NRs

Section 92(1) of the Income Tax Act, 1961 (“IT Act”) (the primary section for the applicability of TP) provides that income arising from international transactions has to be at arm’s length price (“ALP”). Accordingly, Indian TP provisions would apply to NRs only when they enter into international transactions that give rise to taxable income in India.

If an NR has taxable income in India as per the provisions of the ITA from its AEs in the nature of services income, royalty/license fees, interest, sale/transfer of shares (capital gains), guarantee commission, etc., the NR has to comply with TP regulations in India.

ALP analysis from the standpoint of Indian resident AEs alone is not sufficient, as the TP regulations require even the NR AEs to substantiate the ALP for taxable international transactions.

TP Compliances for NR	Threshold for applicability	Due date	Penalty for non compliance
Accountants Report (Form No. 3CEB)	If International Transactions(irrespective of threshold) are undertaken with foreign Associated Enterprises (AEs). [Sec 92E (Form No. 3CEB) is applicable for all taxpayers including NR]	31st October	INR 1,00,000 [Sec 271BA is applicable to all taxpayers including NR]
Transfer Pricing Study Report	If aggregate value of International Transactions > INR 1 Crore. [Sec 92D & Rule 10D (TP Study) is applicable to NR having international transactions that gives rise to taxable income in India]	31st October	2% of value of international transactions [Sec 271AA(1) is applicable to all taxpayers including NR]
Master File (Form No. 3CEAA)	Part A is applicable if International Transactions are undertaken during the financial year (Part A is applicable to all MNEs irrespective of threshold) Part B is applicable if below twin conditions are satisfied: • Consolidated Group Revenue exceeds INR 500 Crores and • Aggregate value of all International Transactions exceeds INR 50 crores, or the Intangible Property related International Transactions exceeds INR 10 Crores [Sec 92D & Rule 10D (Form No. 3CEAA) is applicable for all taxpayers including NR]	30th November	INR 5,00,000 [Sec 271AA(2) is applicable to all taxpayers including NR]

Filing of Form No. 3CEB, maintenance of TP Study Report and Corporate Tax Return by NR

Income earned by NR	Form 3CEB & TP Report compliance requirement	Corporate Tax Return Requirement (“ROI”)
Taxable as per Income Tax Act & DTAA	To be reported in Form 3CEB & TP Study Report to be maintained (if value > INR 1 Crore)	Applicable unless TDS is deducted at rates given in Section 115A and there is no other income chargeable apart from incomes specified in Section 115A.
Taxable as per Income Tax Act but exempt as per DTAA	To be reported in Form 3CEB & TP Study Report to be maintained (if value > INR 1 Crore)	Applicable where DTAA benefit is opted by NR.
Not taxable as per Income Tax Act	Not to be reported (Can be disclosed in Form No. 3CEB out of abundant caution if there are any other taxable international transactions)	Not applicable
Other transactions of NR not impacting the taxable income	Not to be reported (Can be disclosed in Form No. 3CEB out of abundant caution if there are any other taxable international transactions)	Not applicable

TP compliances applicable even in case of ITR exemption	Filing of Master File (Form No. 3CEAA) by NR
❑ Section 115A provides an exemption to NRs from filing a Return of Income (ROI) when their total income consists of interest, dividends, FTS (Fees for Technical Services), and royalties, if tax has been deducted as per the rates provided therein. ❑ To claim such exemption, NR must not have any additional income that is assessable under the IT Act. ❑ However, there is no corresponding exemption in Sections 92E and 92D, and it would be advisable for NRs to comply with TP regulations to avoid penalties u/s 271BA and 271AA of the IT Act.	❑ The Central Board of Direct Taxes (“CBDT”), vide Notification No. 31/2021 dated April 5, 2021, amended Rule 10DA(4). ❑ As a result, if there are more than one resident as well as non-resident constituent entities, Form No. 3CEAA can be filed by any one designated constituent entity on behalf of all constituent entities. ❑ Accordingly, this redundant compliance burden on NRs is eased by the government.

Mitigating the Risk of Potential Litigation

❑ Under the Indian TP litigation mechanism, the Assessing Officer (AO) must refer the scrutiny of international or specified domestic transactions to a designated Transfer Pricing Officer (TPO).

❑ The CBDT, via Instruction No. 03/2016, provides guidelines on risk parameters for referring cases to TPOs.

❑ Cases are selected for scrutiny based on “TP risk parameters” through the Computer Aided Scrutiny Selection (CASS) system or the Compulsory Manual Selection Process.

❑ Cases under corporate tax scrutiny may also be selected for TP scrutiny based on Non-TP risk parameters, such as:

Non-filing of Form No. 3CEB or non-reporting of transactions in Form No. 3CEB.
TP adjustments of INR 10 crore or more in prior years, upheld by judicial authorities or pending in an appeal.
Findings related to TP matters in india from search, seizure, or survey operations.

❑ Non-Residents must ensure transfer pricing compliance to avoid scrutiny and penalties related to the non-filing of Form No. 3CEB in India.

Check Points for NR TP Compliance

Check Points	Explanation
Obtain PAN in India	When TP compliances are applicable, obtaining a PAN in India is crucial for electronic filings. For Non-Residents (NRs), obtaining a PAN through Form 49AA can be time-consuming, as it requires documents like the certificate of incorporation to be apostilled or attested by the Indian consulate or embassy abroad. It is advisable to initiate this process early to meet impending due dates.
Authorize Digital Signature Certificate (DSC) Holders in India	It is advisable to authorize a person holding a Digital Signature (DSC) in India by initiating a Power of Attorney (PoA), as electronic TP filings require digital signing. NR individuals acting as signatories for NR entities outside India may also consider obtaining a DSC depending on convenience.
Reliance on Available Documentation for TP Compliance	Since NR may not statutorily required to maintain books of accounts in India under any law, reliance should be placed on Form No. 26AS, invoices, agreements etc. Reliance can also be placed on documents, information and accounts maintained by the Indian AE with whom the NR AE has entered into international transaction.
Ensure Arm’s Length Price (ALP) Compliance	The Transfer Price should fall within the arm’s length range to meet the arm’s length requirements from the perspectives of both the Indian AE and NR AE, ensuring compliance from both sides.
Reconcile Form No. 3CEB with Form No. 26AS and Income Tax Return	Ensure that the value of international transactions reported in Form No. 3CEB matches with Form No. 26AS and the Income Tax Return to avoid scrutiny notices due to mismatches.
Report All Relevant International Transactions	Report all taxable international transactions and, where required, other international transactions as a precautionary measure to avoid penalties for failure to report qualifying international transactions.

Judicial Rulings in the context of NR TP Compliances

Case Law Reference	Important Observations
Content
Venenburg Group B.V. [2007] 289 ITR 464 (AAR)	Case Summary: The Authority for Advance Ruling (AAR) held that the applicant was not taxable in respect of capital gains on sale of shares held in its Indian subsidiary under the provisions of India Netherland Tax treaty. AAR held that since the provisions of the tax treaty were more beneficial to the assessee than provisions of the Act, the same were applicable to the assessee. Conclusion: The AAR further held that it was not necessary for the applicant to file tax return in India in the absence of tax liability in India and transfer pricing provisions under section 92 to 92F were not attracted in respect of the aforesaid transactions.
Praxair Pacific Ltd. [2010] 326 ITR 276 (AAR)	Case Summary: The assessee, a tax resident of Mauritius, proposed to transfer its holding in Indian company to its wholly owned Indian subsidiary. The AAR held that the transaction could not be regarded as ‘transfer’ in view of provision of section 47(iv). Further, the AAR also held that the transaction was not subject to capital gain tax in view of provisions of India Mauritius tax treaty. The AAR further held that provisions of section 115JB (MAT provisions) were not applicable to foreign company. Conclusion: The AAR also held that transfer pricing provisions were not applicable as income was not taxable in India.
Dow Agro Sciences Agricultural Products Ltd. [2016] 380 ITR 668 (AAR)	Case Summary: The applicant, a company, incorporated and registered in Mauritius, contends that its investment in Dow Agrosciences India (DAS India) is a capital asset. The Revenue argues about the existence of a Permanent Establishment (PE) in India, but the applicant has provided documents supporting no PE. The applicant reiterates that profits from the sale of equity shares of DAS India won’t be taxable in India due to the DTAA between India and Mauritius. Conclusion: Transfer pricing provisions (Sections 92 to 95) are not applicable if the transaction is not taxable in India. Since the proposed share transfer does not attract tax in India under the tax treaty’s Article 13, these provisions do not apply.
Goodyear Tire and Rubber Co. [2011] 334 ITR 69 (AAR)	Case Summary: In the facts of the given case, Goodyear Tire and Rubber Company USA, proposed to transfer its 74% shareholding in Goodyear India Limited (listed on BSE ) to its Singapore based subsidiary as ‘ Gift’ and at NIL value . Goodyear USA argued that since the full value of consideration received or accruing as a result of the transfer of shares was NIL, the mechanism to charge the capital gains to tax fails. The AAR upheld Goodyear’s contention and ruled that ‘It is settled law that Section 45 must be read with Section 48 and if the computation provision cannot be given effect to for any reason, the charge under Section 45 fails. Conclusion: The AAR further held that transfer pricing provisions under section 92 to 92F were not applicable to the facts of the case as the transaction was not taxable under Indian tax laws.
Vodafone India Services Pvt. Ltd. v. Union of India [2014] 368 ITR 1 (Bombay)	The Bombay High Court concluded that if ‘income’ is chargeable to tax under the normal provisions Of the Act, then alone Chapter X/transfer pricing provisions of the Act could be invoked. The Government of India vide Instruction No. 2/ 2015 dated 29.1.2015 has accepted the decision of the Bombay High Court in the case Of Vodafone Services Pvt. Ltd. According to the said instruction, the premium arising on issue of shares is a capital account transaction and does not give rise to income and hence not liable to transfer pricing adjustment.
Castleton Investment Limited. [2012] 348 ITR 537	Case Summary: The AAR held that transfer pricing provisions (Sections 92 to 92F) are applicable even if the income, such as capital gains, is exempt from taxation. In the case of Castleton Investment Limited, a Mauritius-based company, which held shares in an Indian listed company, the AAR determined that the provisions are considered machinery provisions. As such, capital gains cannot be determined without applying these sections. Whether the gain is ultimately taxable in India or not, the transfer pricing provisions would still apply if the transaction falls within their ambit. Conclusion: The applicability of Section 92 does not depend on chargeability under the Act. Thus, the AAR ruled that transfer pricing provisions would be applicable in this case of transferring investment to an associated enterprise in Singapore.
Armstrong World Industries Mauritius Multiconsult Ltd. [2012] 349 ITR 303 (AAR)	Case Summary: Armstrong World Industries Mauritius Multiconsult Ltd., a fully-owned subsidiary of Armstrong World Industries Ltd., UK (Armstrong UK) and a tax resident of Mauritius, intends to repurchase a portion of its shares from the applicant (holding 99.97% of shares) while the remaining shares (0.03%) are held by Armstrong UK. This proposed buyback is not liable to capital gains tax in India by virtue of the India-Mauritius. Conclusion: Thus, the AAR held that transfer pricing provisions would be applicable in the said case, taxpayer would be liable to comply with the Transfer Pricing provisions irrespective of whether the taxpayer earns any taxable income in India or not.
BNT Global Pvt. Ltd. v. ITO (ITA No. 4111/Mum/2016 dated 26 April 2017)	Case Summary: The taxpayer has not filed the audit report in Form 3CEB for its international transaction involving the receipt of foreign remittance from its Non-Resident Indian (NRI) Director, who was also a beneficial shareholder, in exchange for share capital and share premium within the company. Conclusion: The ITAT upheld the penalty under Section 271BA for the failure as the share issuance transaction fell within the ambit of Section 92E, requiring the filing of Form No. 3CEB. The reliance on the Vodafone India Services Pvt. Ltd. case was rejected, as it dealt with different facts and penalties.
Convergys Customer Management Group Inc. [MA NO. 261/Del/2020 I.T.A. No. 3529//DEL/2015 MA NO. 262/Del/2020 in I.T.A. No. 3530//DEL/2015]	Case Summary: Taxpayer only submitted Form 3CEB during the scrutiny and has not filed TP Study. Further, taxpayer did not disclose certain international transactions (of reimbursements, interest payments, FTS) on the premise that they are not subject to tax in India in accordance with the Treaty provisions. A categorical finding was given by the ITAT that every person has to maintain its own documents which taxpayer failed to and instead relied on its Indian subsidiary’s TP study. Conclusion: The ITAT upheld that Form 3CEB submission is not equivalent to TP documentation compliance u/s 92D while dismissing the Miscellaneous Application upholding levy of penalty u/s 271AA for non-maintenance of documents u/s 92D.
Without Prejudice
Commissioner of Wealth-tax v. Apar Ltd. [2002] 122 Taxman 631 (Bombay)	The term “without prejudice” was used to indicate to the Assessing Officer that filing a return and paying taxes should not impact the rights of the taxpayer. The taxpayer reserves the option to claim settlement as if the return was not filed under the Act. By filing the return “without prejudice,” the taxpayer denies liability to be assessed under the Act and implies the possibility of future rectification in accordance with the law. However, when any compliance is undertaken “without prejudice,” it must be clearly disclosed, along with relevant facts and justifications, in the documentation maintained by the non-resident and in Form No. 3CEB issued by the accountant.
On maintenance of separate transfer pricing documentation by non – residents
DCIT v. Convergys Customer Management Group Inc. [ITA No. 3529/DEL/2015 and ITA No. 3530/DEL/2015]	Case Summary: The ITAT imposed a penalty on Convergys Customer Management Group Inc., a US-based non-resident company, for not maintaining TP documents under Section 271AA of the Income Tax Act. The case involved its Indian subsidiary, Convergys India Services Pvt. Ltd., providing call center/back office support services. The Assessing Officer found a fixed place PE and Service PE in India with attributable profits, resulting in disallowances and penalties for not maintaining TP documents. Conclusion: In conclusion, the ITAT upheld the penalty imposed under Section 271AA of the Income Tax Act, stating that the CIT(A) was wrong in deleting the penalty.
On TP adjustments in hands of NR
Instrumentation Corporation Ltd., Finland v. ADIT [I.T.A. Nos. 1548 and 1549/Kol/2009]	Case Summary: Instrumentarium Corporation, a Finnish company (F Co.), provided an interest-free loan to its Indian subsidiary, Datex Ohmeda India Pvt. Ltd. (I Co.). The case revolved around whether the loan was at arm’s length and whether it eroded India’s tax base. Conclusion: The Assessing Officer argued that the transaction was not at arm’s length, resulting in an adjustment to the interest income of F Co. The company contended that applying transfer pricing provisions in this situation would lead to a reduction in the Indian tax base and increased losses for I Co., which could be carried forward and set off in subsequent years. The Income Tax Appellate Tribunal (ITAT) held that Section 92(3) of the Income Tax Act required assessing the impact on profits or losses for the year under consideration and for the taxpayer in question, rather than considering the impact on taxes in subsequent years. Thus, if the transaction was accepted without an arm’s length pricing adjustment, it would result in tax base erosion to the extent of the taxability of interest in the hands of F Co. The ITAT also rejected the argument that a corresponding deduction should be given to I Co.

Emphasis on Two-sided Transfer Pricing Analysis

❑ To satisfy the ALP test for both parties in a transaction, a two-sided comprehensive transfer pricing analysis is required.

❑ This analysis ensures that both the Indian AE and the NR AE meet the ALP standards.

❑ The transfer price must be set within an acceptable arm’s length range for both jurisdictions. The process is complex and time-consuming but is crucial to prevent double taxation and avoid tax disputes.

❑ The Kolkata Tribunal, in the landmark case of Instrumentarium Corporation Limited [I.T.A. Nos. 1548 and 1549/Kol/2009], emphasized the need for a two-sided TP analysis to determine the arm’s length price in both jurisdictions and mitigate risks of double taxation and tax disputes.

Conclusion

To successfully navigate the complex TP landscape in India, here’s what both residents and NRs should do:

❑ Ensure Compliance: It’s crucial for multinationals to diligently ensure compliance in India with applicable transfer pricing regulations for both resident and non-resident entities in India (i.e., filing all the relevant forms in India related to three-tiered documentation). Non-compliance could be viewed negatively by tax authorities.

❑ 360-Degree Analysis: It’s pertinent to ensure that the information disclosed in Form No. 3CEB, the local file, master file, and country-by-country report provides a comprehensive view and supports the transfer pricing and other tax positions of the multinational group. Applicability and filing of corporate tax returns should also be perused diligently.

❑ Robust Documentation: Remember, it’s not limited to filings alone. TP and tax filings should be backed up by the maintenance of robust supporting documentation to substantiate the TP positions and analysis in case of future audits/scrutiny by tax authorities.

In a nutshell, robust transfer pricing documentation and adherence to guidelines should be your top priority if you’re a multinational operating in India.

Disclaimer: This material and the information contained herein prepared by Steadfast Business Consulting LLP is intended for clients to provide updates and is not an exhaustive treatment of such subject. We are not, by means of this material, rendering any professional advice or services. It should not be relied upon as the sole basis for any decision which may affect you or your business. This Alert provides certain general information as well as specific information with respect to Steadfast Business Consulting LLP. This alert should neither be regarded as comprehensive not sufficient for the purposes of any decision-making.

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Tax Alert Clarification on ITCC August 2024

Tax Alert - Clarification on ITCC - August 2024

Home > Tax Alert – Clarification on ITCC – August 2024

Background:

Finance Minister Nirmala Sitharaman had announced a key amendment in the Union Budget 2024 aimed at individuals planning to relocate from India.
Under the new law, individuals domiciled in India are required to clear all pending tax dues and obtain a ‘Income-tax Clearing Certificate’ (ITCC) before departing the country. This amendment vide the Finance Act (No. 2), 2024 also included a reference to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, under Section 230(1A) of the Income-tax Act.
This means that liabilities under the Black Money Act are now treated in the same manner as liabilities under the Income-tax Act for the purpose of obtaining an ITCC.
However, there was confusion and reports in the media mainly on account of interpretation of Hon’ble Finance Minister’s speech whereby it was being reported that all the individuals leaving India shall be mandatorily required to
obtain this ITCC.

Clarification issued on 20-Aug-2024:

Central Board of Direct Taxes (CBDT) has now issued a press release on 20-Aug2024 to clarify that contrary to some incorrect reports, not all Indian citizens domiciled in India are required to obtain an ITCC before leaving the country. The requirement applies only to specific cases:
• If a person is involved in serious financial irregularities and is under investigation where a tax demand is likely to be raised.
• If a person has outstanding direct tax arrears exceeding Rs. 10 lakh, which have not been stayed by any authority.
The decision to require an ITCC must be supported by recorded reasons and approved by the Principal Chief Commissioner or Chief Commissioner of Income-tax.
This clarification aims to dispel misinformation and reassure taxpayers that the ITCC requirement remains limited to rare and specific circumstances, unchanged since 2003.

SBC Comments:

ITCC is to be obtained from the concerned Income tax authority by filing application in in Form No. 31 by the individuals domiciled in India at the time of departure if:

The concerned Income tax authority (i.e., Assessing officer) is of the opinion that there are circumstances which necessitates such person to obtain such certificate.
The Income tax authority records the reasons and obtain approvals as mentioned.

This certificate shall be issued only if there are liabilities under the following Acts:

Income-tax Act, 1961
Wealth-tax Act, 1957 (27 of 1957)
Gift-tax Act, 1958 (18 of 1958), or
Expenditure-tax Act, 1987 (35 of 1987) or

Post the amendment vide the Finance Act (No.2) 2024, now the liabilities under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 shall be additionally considered while issuing such certificate.

It is now clear from the CBDT clarification that only in rare cases (serious financial irregularities or tax arrears are moas mentioned), ITCC shall be required. The tax authorities in such cases shall issue ITCC after perusing the liabilities under above regulations or after perusing that satisfactory arrangements have been made for the payment of all or any of such taxes/dues which are or may become payable by that person.

Where can SBC help?

Representation before tax authorities in relation to obtaining of ITCC
Advise on the applicability of ITCC and perusal of the specific facts applicable.
Advise and assist in mitigation of liabilities, if any, under any of the above laws mentioned.

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VSVS 2.0: Reintroducing the Vivad Se Vishwas Scheme in Union Budget 2024

Reintroducing the Vivad Se Vishwas Scheme in Union Budget 2024

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Introducing Vivad Se Vishwas Scheme, 2024

Executive Summary

Key Features of the Direct Tax Vivad Se Vishwas Scheme ( DT VSVS), 2024

Scheme Overview:

The Direct Tax Vivad Se Vishwas Scheme, 2024 (DT VSVS 2024 Scheme) is introduced in the Finance (No. 2) Bill, 2024 as part of Union Budget 2024, announced on July 23, 2024
The scheme draws applicability, procedure, and settlement methods from the Direct Tax Vivad Se Vishwas Act, 2020 (DT VSVS 2020 Scheme)
The start date and sunset date for the scheme are yet to be notified

Eligibility for settlement:

Disputes/appeals, including writs and special leave petitions [Appeal(s)], whether filed by the taxpayer or the tax authorities and are pending as on 22 July 2024 before the following forums:

The Supreme Court, High Court, Income Tax Appellate Tribunal (ITAT), Commissioner/Joint Commissioner (Appeals) [CIT(A)]
The Dispute Resolution Panel (DRP) or where DRP directions have been issued but the final assessment order is awaited
Revision petitions pending before the Commissioner of Income Tax

Settlement Process:

To resolve eligible disputes, taxpayers must pay amounts determined by the Designated Authority (DA) under the 2024 Scheme and follow the procedure prescribed

” For the resolution of certain income tax disputes pending in appeal, I am also proposing the Vivad Se Vishwas Scheme, 2024. I hope that taxpayers will make use of this opportunity to get relief from the vexatious litigation process” – Hon’ble Finance Minister, India“

Background

Given the success of the previous DTVSVS 2020 scheme and the growing backlog of litigation at various
appellate levels, Hon’ble Finance Minister, 2024 reintroduced Vivad Se Vishwas Scheme, 2024 (2024
Scheme).

Triumph of VSVS 2020

As of 4 July 2024
• No. of pending income tax litigations where settlement sought by the declarants – 1,31,714
• Number settled finally out of above declarations sought – 1,13,894
• Payments made against Disputed Tax – INR 75,788.25 Cr
Remarkable progress has facilitated the payment of INR 75,788.25 crore(s) as taxes showcasing the scheme’s effectiveness in streamlining tax disputes and fostering a more efficient tax resolution process
VSVS 2.0 stands as a testament to the government’s commitment to simplifying tax compliance and dispute resolution, offering a major boost to the nation’s financial system

Key Terms of the DTVSVS 2024 Scheme

The Finance Act, 2024 has inserted a new Chapter IV to provide the DTVSVS 2024 Scheme.

Term	Definition
Appellate forum	Includes the Supreme Court, High Court, ITAT, CIT(A), or Joint CIT(A), as applicable.
Declarant	A person who files a declaration.
Declaration	The declaration filed by the taxpayer under the Scheme.
Designated authority	An officer not below the rank of a Commissioner of Income-tax notified by the Principal Chief Commissioner for the purposes of the Scheme.
Disputed fee	Fee determined under the Income-tax Act for which an appeal has been filed.
Disputed income	Whole or so much Income as is relatable to the disputed tax.
Disputed interest	Interest determined under the Income-tax Act where it is not charged on disputed tax and an appeal has been filed.
Disputed penalty	Penalty determined under the Income-tax Act where it is not levied on disputed income or tax and an appeal has been filed.
Disputed tax	Income-tax payable by the appellant, including surcharge and cess, based on the potential outcome of various appeals, objections, or revisions.
Last date	Date notified by the Central Government in the Official Gazette.
Tax arrear	Includes disputed tax, interest chargeable or charged on such disputed tax, penalty leviable or levied on disputed tax, or disputed interest or disputed penalty or disputed fee (or any combination thereof related to the disputed tax)

Eligibility Criteria for Taxpayers

Ineligibility Criteria & Dispute Settlement
Guidelines

Settlement Amount for Dispute

For cases with disputed tax, interest charged or chargeable and penalty levied or leviable

Nature of Dispute/ Tax Arrear	Settlement before 31 December 2024	Settlement on or after the 01 January 2025 but on or before last date to be notified
The declarant was an appellant at the same appellate forum on or before January 31, 2020.	110% of the disputed tax	120% of the disputed tax
The declarant is an appellant from February 1, 2020, up to the specified date.	100% of the disputed tax	110% of the disputed tax

For cases with disputed interest or disputed penalty or disputed fee

Nature of Dispute/ Tax Arrear	Settlement before 31 December 2024	Settlement on or after the 01 January 2025 but on or before last date to be notified
The declarant was an appellant at the same appellate forum on or before January 31, 2020.	30% of disputed interest/ penalty/fee	35% of disputed interest/penalty/fee
The declarant is an appellant from February 1, 2020, up to the specified date.	25% of disputed interest/ penalty/fee	30% of disputed interest/penalty/fee

*Settlement amounts payable to be reduced to 50% in following cases:-Where appeal/writ/Special leave petition is filed by the tax authorities.-The Appellant’s case is favorably covered by the ITAT/High Court decision in taxpayer’s own case.

Procedural Requirements for Relief

Any Assessee opting for the scheme shall follow the following procedure as specified in the guidelines

• The above forms are further discussed in the ensuing slides. The above forms are based on the DTVSVS 2020 Scheme and the Forms for DTVSVS 2024 scheme are yet to be notified. However, given the similarity in the schemes, there may be minor changes in the fields and format of the Form while the essence remaining intact

Important: The declaration under the Scheme shall be deemed not to have been made if,–
(a) any material particular furnished is found to be false at any stage; or
(b) Violation of conditions of the Scheme; or
(c) the declarant acts in any manner which is not in accordance with the undertaking given by him.

All the proceedings and claims which were withdrawn under this section and all the consequences under the Income-tax Act against the declarant shall be deemed to have been revived.

Form Details & Immunities

An in-depth understanding of the forms specified earlier is detailed below:

Form No.	Form For	Form Content
Form 1	Declaration	Form 1 has 5 sections: Part A: General information and eligibility details Part B: Dispute-related information Part C: Tax arrears details Part D: Amount payable details Part E: Payments made against tax arrears Part F: Net amount payable or refundable to the appellant
Form 2	Undertaking	This form pertains to the undertaking in which the taxpayer waives all rights to any remedy or claim related to the matter they choose to settle under the DT VSVS Scheme.
Form 3	Granting of Certificate	The designated authority will issue an electronic certificate detailing the tax arrears and amount due. The declarant must pay the amount specified in Form 3 within the given timeframe, or the Form 1 declaration will be void.
Form 4	Intimation of payment and proof of Withdrawal	Payment details per Form 3 must be submitted to the designated authority using this form, along with proof of withdrawal of any related appeals, petitions, or claims filed by the declarant.
Form 5	Issuance of order	The designated authority will issue an order in this form, confirming that the taxpayer has paid the dues stated in Form 3 and granting immunity from prosecution or penalty proceedings.

Immunity & Essential Considerations

Any amount paid under a declaration made is non-refundable.
If the declarant paid more than the amount due before filing the declaration, they are entitled to a refund of the
excess but without interest under section 244A of the Income-tax Act.
Except as specifically stated, the scheme grants no additional benefits, concessions, or immunity beyond the
matters covered in the declaration.
The order issued by the designated authority is final and cannot be reopened in any other proceedings.
No new proceedings for offences, penalties, or interest can be initiated.
Appellate forums, arbitrators, conciliators, or mediators cannot rule on cases where the designated authority has
issued an order.
Settling the dispute does not set a precedent for conceding a tax position i.e., the tax authority cannot
proceed for any other AY or proceeding based on declaration or settlement under the DTVSVS Scheme.

How can SBC assist you?

SBC Comments:

The proposed scheme is advantageous for taxpayers who have been experiencing lengthy litigation cycles or anticipate high litigation costs:

✓ Settlements do not set precedents, preserving case uniqueness.
✓ Encourages cooperation between taxpayers and authorities.
✓ Provides clear resolution and certainty on tax obligations.
✓ Helps avoid lengthy and costly litigation.
✓ Waives interest and penalties, reducing financial strain.
✓ Allows use of available tax losses, enhancing financial stability.
✓ It significantly reduces the costs associated with legal disputes

However, the following issues may arise, and it is advisable to seek professional guidance to address them

✓Immediate cash outflows may disrupt budgeted expenses.
✓Quick decisions and fast analysis are required due to tight deadlines.
✓Partial settlement is not allowed; all issues must be resolved or litigated.
✓The scheme doesn’t address double taxation or high-stakes cases; APA or MAP may be needed
✓There were FAQs issued even for application of the earlier DTVSVS Scheme and it shall be necessary to see the tax positions on calculating disputed tax or arrears for settlement.

SBC Support:

Navigating the Vivad se Vishwas Scheme 2.0 can be complex, and our team at SBC is here to support you
every step of the way. Here’s how we can assist:

Eligibility Assessment: We’ll review your litigation status to determine scheme qualification and offer tailored advice.
Documentation & Filing: Our experts will assist in gathering and preparing required documents for timely and accurate submission under VSVS 2.0.
Compliance & Risk Management: We’ll guide you through compliance, identify risks, and develop mitigation strategies.
Representation & Negotiation: We’ll represent and negotiate on your behalf with authorities for optimal outcomes.

SBC has extensive and exclusive experience in assisting non-resident taxpayers, including successfully filing applications under the DTVSVS 2020 Scheme. In a notable case, SBC facilitated the admission of an application that was initially rejected, by filing a WRIT Petition, ultimately securing a favorable outcome for the client.

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GST Amnesty Scheme U/S 128A

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GST Amnesty Scheme U/S 128A

The Financial Bill released on July 23, 2024, introduces a significant new provision Section 128A to the Central Goods and Services Tax (CGST) Act. This section specifically addresses the waiver of interest or penalties, or both, related to demands raised under Section 73 of the CGST Act for certain tax periods. This change aligns with discussions from the 53rd GST Council meeting held onJune 22, 2024, which highlighted the need for a more flexible approach to tax compliance and
enforcement. Section 128A aims to offer relief to businesses by reducing the financial burden of interest and penalties, thus fostering a more supportive tax environment.

June 24 2024

GST Council Meeting

June 23 2024

Financial Bill

March 31 2024

Deadline forTax Payment as per 53rd GST Council Meeting

Note: ThePressReleaseissuedafter the 53rdGSTCouncil Meeting initially specified a cut-off date of March 31, 2025. However, lawmakers have granted the Government the authority to extend this deadline if necessary. Therefore, the Government may notify an extended deadline as deemed appropriate, though it is yet to be formally notified

What is an Amnesty Scheme ?

An amnesty scheme in taxation refers to a limited-time opportunity offered by the government to taxpayers to settle their outstanding tax liabilities with reduced penalties and interest.
Theseschemesaredesignedto encourage voluntary compliance, clearbacklogs of disputed tax demands, and increase tax revenue by providing a more lenient settlement option comparedtostandard enforcement measures.
Benefits in an Amnesty Scheme include:
• Significant reduction or waiver of penalties
• Encourages regular tax compliance.
• Resolveslong-standing disputes.
• Restores blocked ITC for better cash flow
• Helps avoid legal proceedings

Is this the first ever Amnesty Scheme?

Previously (as examples shown below) are amnesty schemes under the CBIC which have typically addressed issues related to the late submission of GST monthly and Annual Returns. These initiatives aimed to alleviate penalties and encourage compliance among taxpayers. Similarly, The latest scheme, discussed in the 53rd GST Council meeting and
detailed in the financial bill, 2024, introduces Section 128A in CGST Act to provide conditional waiver of interest or penalty or both relating to demands raised under section 73 years 2017-18, 2018-19 and 2019-20 , in cases where demand notices have been issued under section 73and full taxliability is paid by the taxpayer before a date to be notified.

What is Covered in the Proposed Scheme?

Scope: Applies specifically to demands under Section 73, which generally deals with non-fraudulent tax discrepancies and refunds.
Time Frame: Relief applicable for tax periods from FY2017-18 to FY2019-20.
Due Date for Payment: All taxes must be paid on or before March 31, 2025 as per the 53rd GST Council meeting. However, currently the law remains silent and an official notification from the government is yet to be issued.
Relief: Complete waiver of interest and penalty.

What is Not Covered in the Scheme?

While the proposed GST Amnesty Scheme under Section 128A offers significant relief to taxpayers, it is important to understand that certain cases are noteligible for this scheme. This exclusion aims to maintain the integrity of the tax system and ensure that the scheme benefits those who comply with the law in good faith. The following are the key
exclusions:

Demands raised under Section 74, i.e., cases involving fraud, willful misstatement, or suppression of facts to evade tax.
Erroneous refunds received by the assesses.
No refund will be issued for interest and penalty already paid by the taxpayers.

Advantages of the Scheme

Reduction in Litigation: By offering a waiver of interest and penalties, the scheme incentivizes taxpayers to settle disputes without further legal proceedings, reducing the burden on tax tribunals and courts.
Revenue Generation: The scheme encourages the payment of outstanding taxes, leading to immediate revenue generation for the government.
Relief for Taxpayers: Provides significant relief to taxpayers who faced difficulties during the initial years of GST implementation, offering a chance to settle their dues with a reduced financial burden.

Is Excluding erroneous refunds justified?

Unlike income tax refunds, delayed GST refunds do not receive the benefit of delayed interest. Many taxpayers have approached High Courts seeking interest on delayed refunds and have GST authorities.
Erroneous refunds typically involve the utilization of Input Tax Credit (ITC), which should not attract interest unless it pertains to ineligible credits. Denying amnesty benefits solely because the credit was utilized through are fund is unjustified.
Penalties for erroneous refunds, especially those obtained through specific applications like RFD-01 and verified by an officer, are not warranted. Extending penalty waivers to erroneous refunds would help resolve disputes and litigation

Is the Scheme Applicable at all stages of Litigation?

The applicability extends to:

Notice issued under section 73 of the CGST Act: The scheme covers cases where a notice has been issued under Section 73 for recovery of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilized.
Notice issued under section 74, deemed as issued under section 73 due to the absence of elements of fraud/suppression/ wilful misstatement: If a notice initially issued under Section 74 is later deemed to be issued under Section 73 because it lacks elements of fraud, suppression, or wilful misstatement, it falls under the purview of this amnesty scheme.
Order issued under section 73 of the CGST Act, where no order under sub-section (11) of section 107 [Appellate Authority] or sub-section (1) of section 108 [Revisional Authority] has been issued: If an order has been issued under Section 73, and there is no subsequent order from the Appellate Authority (Section 107) or the Revisional Authority (Section 108), this situation is also covered by the amnesty scheme.
Orders issued under section 73(9) and further no orders have been passed from high court/ supreme court under sections 117 or 118 respectively: The scheme is still applicable, subjective to withdrawal of appeal before high court/supremecourt.
Appeal Order or Revisional Authority Order: The scheme also includes cases where orders have been issued by the Appellate Authority or the Revisional Authority.

If the Litigation is initiated by a Taxpayer

If the Litigation is initiated by the department

Suggestions for Different Cases

ASMT-10(It is often used to issue an assessment order, which might result in a demand for tax liability. Once the assessment is complete and if any tax dues are identified, the GST officer may issue DRC-01 to formally demand the payment of the assessed tax amount.)
DRC-01 (i. It is a formal show cause notice to the taxpayer indicating the amount of tax, interest, and penalty issued after the taxpayer does not respond satisfactorily to the DRC-01A or does not comply with the intimation provided therein.

ii. Issued right afterward if there is a need to formally demand the payment of the tax assessed in ASMT
10.)

DRC–07 (issued after the adjudication of the show cause notice (DRC-01) when the tax authority has made a final determination.)
GSTAPL– 01 (An Appeal to Appellate Authority by a taxpayer or an unregistered person aggrieved by any decision or order passed against him by an adjudicating authority.)
Or when a writ petition is filed.

For all the above cases , there can be three possible outcomes:

A. Acceptance of all allegations – Pay the demanded tax amount and avail benefits of section 128A i.e– waiver of interest and penalty.
B. Acceptance of some of the allegations – Pay tax, interest and penalties attracted towards accepted allegations.
C. Declination of all the allegations – Go for further proceedings or pay the pre-deposit for further appeals.

Is Excluding cases related to Section 74 of the CGST Act Justifiable?

The government’s decision not to extend this scheme to Section 74 cases is understandable, given the association of fraudulent intentions with taxpayers falling under this section.
However, numerous notices are issued under Section 74 without sufficient grounds, often after the expiration of the time limit for issuing show cause notices under Section 73.
In such cases, taxpayers who wish to settle disputes based on their merits face the imposition of interest and penalties.
Extending the benefits of the scheme to these cases could potentially resolve a significant number of disputes.
Moreover, when Section 74 notices are issued within the timeframe set for Section 73 notices, Section 75(2) considers these notices as being issued under Section 73.
However, delays in making these decisions beyond March 31, 2025, would mean that taxpayers miss out on the opportunity to benefit from the amnesty scheme.

Can we avail the scheme benefit for specific issues of a single notice?

No, the scheme doesn’t benefit only specific issues of a single notice.
Upon reviewing past Amnesty Schemes under income and Service Tax, it becomes evident that the government’s primary aim in introducing these schemes is to effectively reduce and resolve cases in their entirety, rather than offering partial relief.
We are pretty much sure that the proposed scheme will continue to do the same, by providing comprehensive solutions without partial measures.
Taxpayers facing notices that include both favourable and unfavourable judgements must carefully assess their options under the scheme to ensure they maximize the benefits available to them.

Are Transition Credit Disputes Covered
Under this scheme?

The new amnesty scheme under Section 128A of the CGST Act covers certain transitional credit disputes.
If there is an ongoing dispute under Section 73 that involves the credit or tax payments related to the previous regime, it should be resolved before claiming transitional credit. This is to ensure that any claims made are accurate and not affected by unresolved issues.
Transitional credits refer to the input tax credits that taxpayers were entitled to carry forward from the pre-GST regime to the GST regime under Section 140 of the CGST Act.
The Supreme Court, in the case of Filco Trade Centre Pvt. Ltd. vs Union of India, directed the Goods and Services Tax Network (GSTN) to provide a one-time opportunity for all taxpayers to either file or revise Form TRAN-1. This decision allows taxpayers to claim transitional credits that were initially not claimed.
Many taxpayers faced technical issues or other difficulties in filing or correctly submitting Form TRAN-1 within the stipulated deadline.
Hence, the Supreme Court ordered GSTN to open a one-time window for all taxpayers to either file Form TRAN-1 or revise the previously filed Form TRAN-1 to claim unclaimed transitional credits.
Now, for cases were transitional credit claimed post 1st July 2017, we are at a view that the remedy available u/s 128A can be availed.

SBC Takeaways

The introduction of Section 128A in the Finance (No.2) Bill –2024 is a strategic move to ease the burden on taxpayers involved in non-fraud cases under Section 73 of the CGST Act.
This amendment provides relief through conditional waivers while ensuring that tax collection goals are achieved.
The exclusion of erroneous refunds from the waiver scope also serves to prevent revenue losses.
Participating in the amnesty scheme can help businesses ensure that their transitional credit claims are accurate and compliant with GST regulations, thus avoiding disputes or penalties.
For notices which state multiple issues, the benefit of waiver cannot be claimed for a certain or specific issue.
Overall, this amendment benefits taxpayers by creating a supportive and compliant tax environment, while simultaneously maintaining the revenue authority’s focus on genuine tax collection efforts.

How Can SBC help in Amnesty Scheme?

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Indian Transfer Pricing Compliances

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Indian Transfer Pricing Compliances

Local File

TP compliance	Applicability	Due date	Penalty for non compliance
TP Study to be maintained u/s 92D	If aggregate value of International Transactions > INR 1 Crore or If Specified Domestic Transactions (SDT) > INR 20 Crores [transactions with entities/units claiming special tax holiday exemptions or deductions u/s 80IA or 80IB or 10AA or with entities claiming concessional tax rates of u/s 115BAB]	31 October 2024 (1 month prior to Tax Return filing due date)	2% of value of International Transactions or SDT
Form No. 3CEB Report by an Accountant u/s 92E	If International Transactions (irrespective of threshold) are undertaken with foreign Associated Enterprises (AEs) or If SDTs are undertaken with Indian AEs (either of the parties are claiming any tax holiday exemptions or concessional tax rates and the overall transactions value exceeds INR 20 Crores)	31 October 2024 (1 month prior to Tax Return filing due date)	INR 1,00,000

Master File

TP compliance	Applicability	Due date	Penalty for non compliance
Form No. 3CEAA (Part A) – Master File u/s 92D(4) (One Page Form)	Part A is applicable if International Transactions are undertaken during the financial year (Part A is applicable to all MNEs irrespective of threshold)	30 November 2024 (Same as Tax Return filing due date)	INR 5,00,000 Non furnishing of information and documentat ion
Form No. 3CEAA (Part B) – Master File u/s 92D(4) (Detailed Form)	Part B is applicable if below twin conditions are satisfied:- Consolidated Group Revenue exceeds INR 500 Crores and Aggregate value of all International Transactions exceeds INR 50 Crores or the Intangible Property related International Transactions exceeds INR 10 Crores	30 November 2024 (Same as Tax Return filing due date)	INR 5,00,000 Non furnishing of information and documentat ion
Form No. 3CEAB Master File Intimation u/s 92D(4) (One Page Form)	It is applicable to MNEs crossing the above Master File filing thresholds and having more than one entity operating in India	31 October 2024 (30 days prior to Master File filing due date)	INR 5,00,000 Non furnishing of information and documentat ion

Country-by-Country Report (CbCR)

TP compliance	Applicability	Due date	Penalty for non compliance
Form No. 3CEAD CbC Report u/s 286(2)/(4) (Detailed Form)	If Consolidated Group Revenue for preceding accounting year exceeds INR 6,400 Crores. However, if the bilateral exchange relationship for the automatic exchange of CbC Reports between tax authorities of Parent Entity/Alternate Reporting Entity (ARE) Jurisdiction and Indian jurisdiction is activated, then the Indian entity need not file CbCR in India as per Form No. 3CEAD. Indian entity is only required to file a CbCR Notification via Form No. 3CEAC. Link to check activated exchange relationships for CbCR https://www.oecd.org/tax/beps/country-by-country-exchange-relationships.htm	12 months from the Penalty for non compliance end of group’s accounting year 31 December 2024 (if Group’s accounting year is ending on 31 December 2023)	INR 5,00,000 – Furnishing of inaccurate information in CbCR INR5,000/15,000/ 50,000 per day – Non-furnishing of CbCR – Depending on the days of delay of violation
Form No 3CEAC CbCR Notification u/s 286(1) (One Page Form)	CbCR Notification is to be filed when Parent Entity/ ARE is filing CbCR in its respective jurisdiction and there is an automatic exchange of CbCR activated between Parent/ARE’s jurisdiction and the jurisdiction of Constituent entity i.e., India	10 months from the end of group’s accounting year 31 October 2024 (if Group’s accounting year is ending on 31 December 2023)	INR 5,00,000 – Furnishing of inaccurate information in CbCR INR5,000/15,000/ 50,000 per day – Non-furnishing of CbCR – Depending on the days of delay of violation

Other Important Tax Filings

Important Tax Compliances	Due Dates Applicable for Transfer Pricing Cases
Income Tax Return (ITR)	30 November 2024
Form No. 3CA/3CD – Tax Audit Report u/s 44AB	31 October 2024 (1 month prior to ITR due date)
Form No. 29B – Report u/s 115JB for certifying book profits computation	31 October 2024 (1 month prior to ITR due date)
Form No. 10ID – One time application u/s 115BAB(7) for exercise of concessional tax rate of 15% in case of new manufacturing domestic co’s	Before filing ITR which is due by 30 November 2024
Form No. 10IC – One time application u/s 115BAA(5) for exercise of concessional tax rate of 22% in case of domestic co’s	Before filing ITR which is due by 30 November 2024
Form No. 56F – Report u/s 10A/10AA for claiming tax exemptions/reliefs by FTZ/SEZ units/entities	31 October 2024 (1 month prior to ITR due date)
Form No. 56FF – Particulars to be furnished under clause (b) of sub-section (1B) of section 10A for claiming tax exemptions/reliefs by FTZ/SEZ units/entities	31 October 2024 (1 month prior to ITR due date)
Form No. 10CCB – Audit Report u/s 80I(7)/80IA(7)/80IB/80IC/80IE for claiming tax holiday deductions	31 October 2024 (1 month prior to ITR due date)
Form No. 10CCBBA – Audit Report u/s 80ID(3)(iv) for claiming deduction in respect of profits and gains from business of hotels and convention centres in specified area	31 October 2024 (1 month prior to ITR due date)
Form No. 10CCBC – Audit Report u/s 80-IB(11B) for claiming deduction in deduction in the case of an undertaking deriving profits from the business of operating and maintaining a hospital in a rural area	31 October 2024 (1 month prior to ITR due date)
Form No. 10DA – Report u/s 80JJAA – Additional employee deduction	31 October 2024 (1 month prior to ITR due date)
Form No. 67 – Statement for claiming Foreign Tax Credit (FTC)	On or Before end of AY i.e., 31 March 2025

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September 26, 2022June 27, 2026 bySBC

Learn Everything About Tax System & Taxation in India

LEARN EVERYTHING ABOUT TAX SYSTEM & TAXATION IN INDIA

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LEARN EVERYTHING ABOUT TAX SYSTEM & TAXATION IN INDIA

Every government’s important and greatest source of revenue comes from taxes. Tax revenue is used by the government for a number of initiatives aimed at advancing the country. In India, the central government, state governments, and local municipal entities make up the tax structure. The three-tier structure of the Indian tax system is well-designed.

Major Central Taxes

Income Tax
Central Goods & Services Tax (CGST)
Customs Duty
Integrated Goods & Services Tax (IGST)

Major State Taxes

State Goods & Services Tax (SGST)
Stamp Duty & Registration

Local Municipal Taxes

Property Tax
Professional tax

Types of Taxes in India

The two main types of taxes in India are those levied by the Central and State governments:

1. Direct Taxes

2. Indirect Taxes

In India, you pay direct taxes on your income, but spending is subject to indirect taxes. The earning party, whether an individual, HUF, or business, is accountable for depositing the direct tax due.

Indirect taxes include value-added tax, service tax, goods and service tax, customs duty, etc. whereas direct taxes include income tax, gift tax, capital gain tax etc.

Direct taxes account for almost 50% of the government’s revenue in India. The majority of indirect taxes are collected by corporations and companies that provide goods and services. These organisations are therefore accountable for depositing indirect taxes.

Goods and Services Tax (GST)

A complicated network of indirect taxes has been consolidated into the Goods and Services Tax, or GST tax. India’s tax system consists of three tiers of levies: the central government, the states, and local governments.

Prior to the implementation of the GST, the following indirect taxes might be applied to goods and services in India:

a) Excise Duty
b) Entertainment Tax
c) Value Added Tax (VAT, State)
d) Octroi
e) Service Tax
f) Central Sales Tax (collected by State)
g) Purchase Tax
h) Entry Tax (State)
i) Luxury Tax (State)

These interconnected and sometimes overlapping taxes resulted in several drawbacks and disputes for manufacturers and suppliers as well as the governing authorities. Therefore, GST was brought into effect.

Taxability in India

Individual

An individual in India is taxed on the basis of the salary they earn

Company

The effective corporate tax rate for any corporate house would have the following components:

Corporate tax
Surcharge (charged for corporates earning higher incomes) and
Education Cess (applied on corporate tax and surcharge above)

Corporate tax rates For Domestic corporates

For a gross turnover of up to INR 400 crores in FY 2020-21, the corporate tax rate is 25%.
For a gross turnover above INR 400 crores in FY 20, the corporate tax rate is 30%.

The domestic corporate houses are also provided with an option to opt for a beneficial tax rate of 15% (if engaged in manufacturing) and 22% (subject to foregoing certain benefits). These rates require the satisfaction of an enumerated list of conditions as given under Indian Income-tax laws.

For Foreign corporates

Interest is charged at 5% or 20%
Royalty or Fee for technical services is charged at a 10% tax rate.
Any other kind of income is charged at a rate of 40%

The above rates are subject to rates given in Tax-treaty with the country in which the foreign corporate is domiciled.

Surcharge:–
Health and Education Cess: @4% of income tax plus surcharge
MAT: All businesses, whether domestic or foreign (apart from those in the infrastructure and power sectors), that report zero or a minimal income in order to avoid paying taxes are required to pay MAT at a rate of 15 percent (plus surcharge and cess as applicable)

Branch Office

Project Offices and Branch Offices are both considered as Indian Permanent Establishments of their foreign headquarters. As a result, it is taxed at a rate of 40%* on its Indian profits.
A PAN, TAN, yearly income tax return and AAC must all be obtained by the PO/BO.
There are no additional taxes due upon repatriation of excess or at the time of closure for POs or BOs.

Firm/LLP

An LLP formed in India is regarded as an Indian tax resident and is subject to a 30 percent* tax on its worldwide revenue.
A PAN and TAN must be obtained, and an annual income tax return must be filed.

Taxation Of Different Foreign Entities As Per Income Tax Act

A company formed in India (Wholly-owned subsidiary/ Joint Venture)

An Indian-incorporated business is considered an Indian tax resident and is subject to a 30 percent tax on its worldwide revenue. However, the appropriate rate of tax is 25 percent if its turnover in FY 2017–18 is up to INR 4,000 mn.
A PAN and TAN must be obtained, and an annual income tax return must be filed.
The domestic firm is exempt from paying dividend distribution tax starting with the Assessment Year 2021–2022 on any amount declared, distributed, or paid by such a company as a dividend.
A domestic company’s dividend is taxable in the hands of the shareholders.

LLPs

The profits that LLP distributes to its partners are not subject to tax in either party’s possession. Repatriation of capital contributions is permitted without any thresholds and is not subject to any additional taxes, such as upon dissolution.

Liaison Office

Due to Indian exchange control restrictions, a Liaison Office (LO) is often exempt from income tax in India because it cannot engage in commercial activity or generate profits.
Both a withholding tax registration number (TAN) and an Indian tax registration number (PAN) must be obtained.
A yearly financial affairs statement and an annual activity certificate must be submitted (AAC) by LO.
There are no repatriation taxes due to the fact that a LO often cannot produce any profits. Even if there are any unutilized funds at the time of its closure, it can be repatriated without any exit taxes.

The whole income tax collection and return filing procedure has been digitalized by India’s income tax department over the last several years. Through the numerous portals of the Income Tax Department, it has become quite simple for both individuals and companies to pay their taxes online, file returns, and finally trace the history of their payments.

How Steadfast Business Consulting Helps You With Taxation

Steadfast Business Consulting’s income tax services keep you informed of the evolving needs of the taxation system in India and overseas while minimizing your exposure to business and personal taxation. We provide a wide range of completely integrated direct tax and regulatory services for thriving firms in both their local and international activities. For major multinational corporations, mid-sized firms, high-net-worth individuals, and company owners wishing to expand, our specialised teams offer the most tax-effective options.

Frequently Asked Questions

Who are the taxpayers in India?

A taxpayer, also known as an assessor, is a person who must pay tax to the government on the basis of the type and amount of income received during an assessment year. In India, a taxpayer is anyone who is earning an income, whether an individual or a corporate.

What are the different types of taxes in India?

In India, there are two different forms of taxes: direct tax and indirect tax. Indirect taxes include value-added tax, service tax, Good and Service Tax, customs duty, etc. whereas direct taxes include income tax, gift tax, capital gain tax, etc.

What is the structure of the Indian tax system?

The Indian tax system is well structured and has three tiers. The central government, state governments, and local municipal entities make up the tax structure.

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Company

The effective corporate tax rate for any corporate house would have the following components:

Corporate tax
Surcharge (charged for corporates earning higher incomes) and
Education Cess (applied on corporate tax and surcharge above)

Corporate tax rates For Domestic corporates

For a gross turnover of up to INR 400 crores in FY 2020-21, the corporate tax rate is 25%.
For a gross turnover above INR 400 crores in FY 20, the corporate tax rate is 30%.

The domestic corporate houses are also provided with an option to opt for a beneficial tax rate of 15% (if engaged in manufacturing) and 22% (subject to foregoing certain benefits). These rates require the satisfaction of an enumerated list of conditions as given under Indian Income-tax laws.

For Foreign corporates

Interest is charged at 5% or 20%
Royalty or Fee for technical services is charged at a 10% tax rate.
Any other kind of income is charged at a rate of 40%

The above rates are subject to rates given in Tax-treaty with the country in which the foreign corporate is domiciled.

Surcharge:–
Health and Education Cess: @4% of income tax plus surcharge
MAT: All businesses, whether domestic or foreign (apart from those in the infrastructure and power sectors), that report zero or a minimal income in order to avoid paying taxes are required to pay MAT at a rate of 15 percent (plus surcharge and cess as applicable)

Branch Office

Project Offices and Branch Offices are both considered as Indian Permanent Establishments of their foreign headquarters. As a result, it is taxed at a rate of 40%* on its Indian profits.
A PAN, TAN, yearly income tax return and AAC must all be obtained by the PO/BO.
There are no additional taxes due upon repatriation of excess or at the time of closure for POs or BOs.

Firm/LLP

An LLP formed in India is regarded as an Indian tax resident and is subject to a 30 percent* tax on its worldwide revenue.
A PAN and TAN must be obtained, and an annual income tax return must be filed.

Taxation Of Different Foreign Entities As Per Income Tax Act

A company formed in India (Wholly-owned subsidiary/ Joint Venture)

An Indian-incorporated business is considered an Indian tax resident and is subject to a 30 percent tax on its worldwide revenue. However, the appropriate rate of tax is 25 percent if its turnover in FY 2017–18 is up to INR 4,000 mn.
A PAN and TAN must be obtained, and an annual income tax return must be filed.
The domestic firm is exempt from paying dividend distribution tax starting with the Assessment Year 2021–2022 on any amount declared, distributed, or paid by such a company as a dividend.
A domestic company’s dividend is taxable in the hands of the shareholders.

LLPs

The profits that LLP distributes to its partners are not subject to tax in either party’s possession. Repatriation of capital contributions is permitted without any thresholds and is not subject to any additional taxes, such as upon dissolution.

Liaison Office

Due to Indian exchange control restrictions, a Liaison Office (LO) is often exempt from income tax in India because it cannot engage in commercial activity or generate profits.
Both a withholding tax registration number (TAN) and an Indian tax registration number (PAN) must be obtained.
A yearly financial affairs statement and an annual activity certificate must be submitted (AAC) by LO.
There are no repatriation taxes due to the fact that a LO often cannot produce any profits. Even if there are any unutilized funds at the time of its closure, it can be repatriated without any exit taxes.

The whole income tax collection and return filing procedure has been digitalized by India’s income tax department over the last several years. Through the numerous portals of the Income Tax Department, it has become quite simple for both individuals and companies to pay their taxes online, file returns, and finally trace the history of their payments.

How Steadfast Business Consulting Helps You With Taxation

Steadfast Business Consulting’s income tax services keep you informed of the evolving needs of the taxation system in India and overseas while minimizing your exposure to business and personal taxation. We provide a wide range of completely integrated direct tax and regulatory services for thriving firms in both their local and international activities. For major multinational corporations, mid-sized firms, high-net-worth individuals, and company owners wishing to expand, our specialised teams offer the most tax-effective options.

Frequently Asked Questions

Who are the taxpayers in India?

A taxpayer, also known as an assessor, is a person who must pay tax to the government on the basis of the type and amount of income received during an assessment year. In India, a taxpayer is anyone who is earning an income, whether an individual or a corporate.

What are the different types of taxes in India?

In India, there are two different forms of taxes: direct tax and indirect tax. Indirect taxes include value-added tax, service tax, Good and Service Tax, customs duty, etc. whereas direct taxes include income tax, gift tax, capital gain tax, etc.

What is the structure of the Indian tax system?

The Indian tax system is well structured and has three tiers. The central government, state governments, and local municipal entities make up the tax structure.

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September 21, 2022June 27, 2026 bySBC

Tax Implications On E-Commerce Operators

TAX IMPLICATIONS ON E-COMMERCE OPERATORS

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TAX IMPLICATIONS ON E-COMMERCE OPERATORS

Online services are becoming more and more well-liked and in high demand, proving that digitalization is the future. The rise of e-commerce companies is one of the most obvious shifts in the digital economy. In this article, we go through the direct tax ramifications for e-commerce operators who may or may not be residents.

Background

E-commerce transactions are impacted by several tax laws, including those relating to income tax and GST in India. To avoid taxing transactions and gain tax benefits, the government is adopting several sections in both direct and indirect tax regimes. Small sellers who sold their goods or rendered services through E-Commerce Operators were formerly exempt from taxation and could avoid paying taxes on those transactions since there were no regulations governing them. Additionally, non-resident online merchants gained money in India without paying taxes. As a result, the Government added the following provisions to the GST and Income Tax.

Under the Income-tax laws, the tax and withholding tax implications vary depending upon the role observed by an entity in the chain of e-commerce transactions.

Key Terms

E-commerce consists of the following things that one must be aware of:

i. Ecommerce Operator: A person who owns, controls, or runs a digital or electronic facility or platform for electronic commerce is referred to as an “e-commerce operator” or an ECO. An ECO in India may or may not be a resident.

ii. Ecommerce Participant: An “e-commerce participant” or ECP is a resident of India who uses a digital or electronic facility or platform for electronic commerce to sell goods, render services, or both, including digital commodities.

iii. E-commerce Supply or services”:

(a) Online sale of goods owned by the ECO; or
(b) Online provision of services provided by the ECO; or
(c) Online sale of goods or provision of services or both, facilitated by the ECOr; or
(d) Any combination of activities listed in clause (i), (ii) or clause (iii).

Tax (TDS) to be deducted by E-Commerce Operator on payments made to E-Commerce Participant

In accordance with the Explanation to Section 194O, any payment made directly to an ECP by a buyer of goods or a recipient of services for the sale of goods or the provision of services, or both, that was made possible by an ECO shall be considered to be the amount credited or paid by the ECO to the ECP and must also be included with the gross amount of these kinds of sale or services for the purpose of TDS.

Note, no TDS would be applicable if the ECP is a non-resident.

What are the Applicable Income Tax Provisions for An E-Commerce Operator?

Let’s look at the different income tax regulations that you, as an operator of an ecommerce marketplace, need to be aware of:

For Resident ECO:

An ECO is deemed to be a resident ECO if it is registered in India, has a permanent establishment there, or satisfies the requirements of Section 6 (the residency test) of Indian Income tax laws. According to income tax regulations, the following compliances must be made by Residents ECO:

1. Income Tax Return

Commission—main ECO’s source of income—is classified under the head “Profits and Gains from Business and Profession.” The following table summarises resident ECO compliance.

NOTE: A tax audit is legally required to be conducted if the ECO’s annual revenue exceeds INR 10 crore and more than 95 percent of its transactions are made in an “other than cash” mode. If the “other than cash” requirement is not met, the INR 1 crore threshold for applicability of a tax audit is used instead.

TDS to be deducted under Section 194-O

For Non-Resident E-Com Operators

An ECO is said to be non-resident if it is not registered in India and does not create a residence as per Section 6 requirements.

A non-resident ECO would be subject to following compliances and levy:

1. Equalisation Levy under Sec 165A:

Yes, regardless of whether you have a large or small business, the office of the CFO is extremely important to any business. Since costing is always a concern for a business, it is wise to hire a virtual CFO.

Who is liable to pay Equalisation Levy under section 165A

The equalisation levy under section 165A (read with section 166A) shall be paid by the non-resident ECO providing e-commerce supply or services.

What is the due date of depositing Equalisation Levy under section 166A

Equalisation Levy according to section 166A is required to be deposited by the e-commerce operator on quarterly basis on challan no. ITNS 285 as follows:

What are the returns to be furnished for reporting equalisation levy by an ECO

Every ECO liable to pay equalisation levy shall furnish an annual statement containing all particulars, as prescribed in Form No. 1 on or before 30th June immediately following that financial year.
The Form should be signed and verified electronically under digital signature or electronic verification code.

Equalization Levy Vs TDS under Section 194O

An Interplay

The main consideration under Equalisation levy is upon the buyer on the NR E Commerce platform whereas for TDS under Section194-O it is upon the residency of the ECP.

Following is an instance where both the provisions are applicable .

A Buyer resident in India purchases goods on an E Commerce platform run by a NR from a seller (ECP) who is a resident in India. In such a scenario, NR ECO would be liable to pay an equalisation levy @ 2% in India (subject to other conditions of the section being satisfied) and deduct tax @1% u/s 194 O of the ITA from the payment to be made to the seller.

Under GST Act

The GST implications for an e-commerce operator are broadly outlined below –

At Steadfast Business Consulting, we take care of all the Income Tax Laws and GST practices so that you can carry out your business operation in a hassle-free manner without worrying about the compliances your business needs to follow. Get in touch with our experts to know more about our tax services.

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September 19, 2022June 27, 2026 bySBC

Why Are Virtual CFO Services Gaining Huge Recognition In The Corporate Industry?

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Why Are Virtual CFO Services Gaining Huge Recognition In The Corporate Industry?

As the title suggests, a virtual CFO is a financial and organisational expert who performs the duties of a chief financial officer. The virtual CFO, however, works remotely on a contractual, part-time basis rather than rendering such services in person and full-time as a traditional CFO.

Until recently, most small businesses did not have a CFO who could provide strategic direction since top management preferred permanent, in-house jobs. Because it was hard to identify when a scaling firm is ready for such a commitment, small and medium-sized organisations have failed to meet the requirement.

However, things are shifting, and small company owners now prioritize this initiative and opting for virtual CFO services.

Additionally, a majority of businesses and cooperatives strive to run lean since they are under pressure to outsource and reduce employees as much as possible. This drives cooperatives to choose virtual CFO services over traditional full-time CFO services.

What do Virtual CFOs offer?

● A top-tier management accountant is a virtual chief financial officer. They can handle critical financial decisions, regular business operations, high-level planning, and financial management guidance. Numerous remote CFOs now have experience and insight into the difficulties and possibilities that many sectors present due to working with several companies. Their expertise in finance and ability to explain how to work together effectively can benefit the team.

● Many policies must be created, and strategic concepts must be put into practise in order to have a clearly defined accounting health check. Correct guidance is examined and studied throughout this procedure concerning current turnover, profit, business goals, and operational and accounting systems. Accounting health checks also consider the firm’s organization, tax effectiveness, and future development opportunities. The organisation will benefit from the VCFO’s areas of experience in regards to all business-related matters.

● A CFO offers accounting services that will define and oversee the bookkeeper/controller and provide insight to assist steer the ship towards the defined objectives in order to produce accurate reports and evaluate the results. As a result, you and your business will be able to centralise your team and keep the stakeholders informed with exact knowledge of where, when, and how to do so.

● The CFO may be a much-needed sounding board, mentor, or guide. Basically, you can have a team partner that is familiar with your business and can assist and keep you accountable while you work to achieve clearly defined objectives.

In layman’s terms, a virtual CFO can offer important services:

● Elucidate the financial results regularly.

● Management of cash and planning.

● Strategy

● Reporting & identifying metrics

Besides these, virtual CFO services also include the following to some extent:

Fundraising: Virtual CFOs may develop the financial narrative and engage in some light pitching.

Participate in board meetings: The CEO may get preparation and coaching from a virtual CFO, and their attendance in meetings may be desired.

Mergers and acquisitions: You may often anticipate some light advising and analytical support from a virtual CFO.

What are the advantages of a Virtual CFO?

More than ever, startups and companies are looking for possibilities to run efficiently. Where required, there is pressure to reduce staff and outsourcing, which has resulted in a trend towards using virtual CFO providers rather than an in-house full-time CFO, who is more conventional. Below are a few of the many factors contributing to the expansion of virtual CFO services.

Flexibility: When you hire a Virtual CFO, you may choose the terms and costs that are ideal for your business. For the VCFO, this can entail working full-time hours for a predetermined number of weeks, followed by part-time or on a fractional basis. You may scale up or down as necessary as the specs change. You pay for the time and deliverables unique to your firm without sacrificing the kind of talents and expertise you require.

Accounting knowledge: A Simulated CFO who is a Designated Accountant may be hired and selected for the position. Dealing with someone who holds a CA qualification, has recent experience, and is actively continuing their practices through Professional Development programmes, you can be confident that they have followed the strict standards their discipline sets.

External stakeholder and professional services liaison: A Virtual CFO serves as a point of contact for stakeholders, lenders, and expert bodies from outside the organisation. They provide additional assurance for the reporting and evaluation, and an Appointed Accountant’s diligent work and expert guidance give the third party assurance.

Get Up to Speed Fast: A simulated CFO’s life flies into a situation and resolves things right away. They can go into a conversation mid-stream and quickly analyze what needs to be done in terms of finances, whether it be data gathering, bettering financial statements, or adopting better accounting practices.

Steadfast Business Consulting Virtual CFO Services

Steadfast Business Consulting’s virtual CFO services for small businesses, corporates, and big corporate houses provide outcomes in Revenue optimization, Profitability improvement, Cash Flow/working capital improvement, and Enterprise valuation using our services of Office of CFO, Performance Improvement, and Business Transformation.

A CFO could be crucial in acquiring the finance if your organization is expanding and you soon aim to recruit an investor. If you need to create a solid financial IT system, our skilled and experienced CFO might be a great effective alternative in the planning and transition. When you want to take on any major financial dealings, such as a merger or acquisition, and assign tasks and challenges, our virtual CFO will assist in making sure that everything runs smoothly.

If you have any other questions, you can write to us at mithilesh@sbcllp.in or call us at +91 95531 11131.

Frequently Asked Questions

What is a Virtual CFO?

A virtual CFO is an entity or an individual who helps you and your company with your finances virtually. The CFO is responsible for the majority of the financial aspects of your company.

Should you outsource your CFO services?

Yes, regardless of whether you have a large or small business, the office of the CFO is extremely important to any business. Since costing is always a concern for a business, it is wise to hire a virtual CFO.

SBC

GST Update – 54th GST Council Meeting Recommendations

The 54th GST Council

1. List of Services to be added to RCM:

a. Renting of commercial property by unregistered to registered person

b. Supply of Metal scrap by unregistered to registered person

2. GST TDS on supply of metal scrap:

3. Proposed GST exemptions

4. Recommendations

a)Introduction of RCM Ledger & IMS

b) Introduction of B2C e-Invoicing

c) GST on life and health insurance

d) GST on Preferential Location Charges

e) Goods Transport Agency (GTA)

f) Introduction of sub-sections (5) and (6) into section 16

g) Removal of Rules 96(10), 89(4A), and 89(4B) from the CGST Rules, 2017

h) Addition of Rule 164 to the CGST Rules, 2017

i) The GST Council recommended issuing circulars to clarify and resolve ambiguities on the following issues:

5. Summary of Rate Changes and Exemptions:

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SBC - Tax Alert e-DRS September 2024

CBDT’s e-Dispute Resolution Scheme:

Key Features of the e-DRS:

SBC Comments and how can it assist:

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Transfer Pricing Compliances for Non Residents (NR) in India

Transfer Pricing Compliances applicable to NRs in India:

Applicability of TP Provisions to NRs

Filing of Form No. 3CEB, maintenance of TP Study Report and Corporate Tax Return by NR

Mitigating the Risk of Potential Litigation

Check Points for NR TP Compliance

Judicial Rulings in the context of NR TP Compliances

Emphasis on Two-sided Transfer Pricing Analysis

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Tax Alert - Clarification on ITCC - August 2024

Background:

Clarification issued on 20-Aug-2024:

SBC Comments:

Where can SBC help?

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Reintroducing the Vivad Se Vishwas Scheme in Union Budget 2024

Introducing Vivad Se Vishwas Scheme, 2024

Executive Summary

Key Terms of the DTVSVS 2024 Scheme

Eligibility Criteria for Taxpayers

Ineligibility Criteria & Dispute Settlement Guidelines

Settlement Amount for Dispute

Procedural Requirements for Relief

Form Details & Immunities

An in-depth understanding of the forms specified earlier is detailed below:

Immunity & Essential Considerations

How can SBC assist you?

SBC Comments:

SBC Support:

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GST Amnesty Scheme U/S 128A

June 24 2024

June 23 2024

March 31 2024

What is an Amnesty Scheme ?

Is this the first ever Amnesty Scheme?

What is Covered in the Proposed Scheme?

What is Not Covered in the Scheme?

Advantages of the Scheme

Is Excluding erroneous refunds justified?

Is the Scheme Applicable at all stages of Litigation?

If the Litigation is initiated by a Taxpayer

If the Litigation is initiated by the department

Suggestions for Different Cases

For all the above cases , there can be three possible outcomes:

Is Excluding cases related to Section 74 of the CGST Act Justifiable?

Can we avail the scheme benefit for specific issues of a single notice?

Are Transition Credit Disputes Covered Under this scheme?

SBC Takeaways

How Can SBC help in Amnesty Scheme?

g) Removal of Rules 96(10), 89(4A), and 89(4B) from the CGST
Rules, 2017

Ineligibility Criteria & Dispute Settlement
Guidelines

Are Transition Credit Disputes Covered
Under this scheme?