Income Tax & GST Services

Intimation refers to the processing of returns by the Centralised Processing Centre (CPC). In this, all Income-tax returns filed under Section 139 or in response to a notice under Section 142(1) are processed to verify and fix the arithmetical errors, apparent errors, tax calculation, and tax payments. At this stage, no verification of the income is undertaken.​

​​If the income-tax return is furnished after the due date specified in section 139(1), the interest shall be charged for the period commencing from the date immediately following the due date for filing of return of income and ending with the date on which the return of income is furnished.

The Circular No. 2/2015 [F.No.385/03/2015-IT(B)], dated 10-02-2015, has clarified that no interest under section 234A​ is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing of return of income.​

Where the advance tax paid by the assessee is less than 90% of the assessed tax, the interest shall be charged on the amount of assessed tax less advance tax paid.

If tax is paid on the basis of self-assessment under Section 140A, interest will be calculated on the amount by which advance tax paid falls short of assessed tax up to the date of payment of self-assessment tax, after that interest will be calculated on the amount by which aggregate of advance tax and self-assessment tax paid under Section 140A falls short of the assessed tax.​

​​​If the assessee has opted presumptive taxation scheme of Sections 44AD or 44ADA and advance tax paid on or before March 15th is less than 100% of the assessed tax, simple interest at the rate of 1% shall be charged for 1 month on the shortfall amount (i.e. 100 % of assessed tax less tax deposited on or before March 15).​​

​​​​​As a part of the e-governance initiative to facilitate the conduct of assessment proceedings electronically, the Income tax department has launched an ‘e-proceeding’ facility. It is a simple way of communication between the assessing authority and assessee, through electronic means, without the necessity to visit the Income-tax office to conduct the assessment proceedings.

In the e-proceedings initiatives, all the letters, income tax notices, questionnaires, intimations, orders and other communications are directly sent to the taxpayers’ registered account on the ‘e-filing’ portal of the Income-tax department. The taxpayers can submit the responses electronically by uploading the same along with attachments. The responses submitted by the assessee are viewed by the assessing authority electronically in Income-Tax Business Application (lTBA) module. Besides saving the precious time of the assessee, this initiative also provides a 24X7 anytime/ anywhere convenience to the taxpayers to submit the responses to departmental queries during assessment proceedings.

By completing the entire assessment proceedings online and electronically, the taxpayer has easy access to the ‘e-proceedings’ and all documents and information submitted in the process. This initiative is taxpayer-friendly and environment-friendly as assessment proceedings have become ‘faceless’, ‘paperless’, and ‘jurisdiction-less’.​

​Under the ‘conventional manual mode of assessments’, the jurisdictional assessing authority used to issue a scrutiny notice either under Section 143(2)/142(1) of the Income-tax Act and served such notice to the assessee at his registered address. The assessee (or his authorized representative) used to file the corresponding responses, explanations and supporting documents in physical form (hard copies) to the jurisdictional assessing authority by personally visiting the income tax offices. After a series of personal interactions and deliberations between the assessee/authorized representative and the assessing authority, the assessment was concluded.

As against this, under the new provisions of ‘Faceless Assessments’ under Section 144B, all the letters, income tax notices, questionnaires, assessments, orders and other communications from the assessing authorities are directly sent electronically to the taxpayers’ registered ‘e-filing account’. The taxpayer can submit the ‘e-responses’ electronically by uploading the same along with attachments on the ‘e-Filing’ portal. The ‘e-responses’ submitted by the assessee are viewed by the assessing authority electronically in Income-Tax Business Application (ITBA) module. The assessee is not required to have any personal interface or interaction with the assessing authority.

Thus, the elementary difference between conventional manual assessments and the ‘faceless assessments’ is the mode of the interface between the assessee and the assessing authority. In the conventional manual assessments, the mode of the interface was physical and personal, whereas in the ‘faceless assessments’, the mode is electronic.​

​​​​​Section 269T restricts a person from repayment of any loan, deposit, or any specified advance received by it otherwise than by an account payee che​que or account payee bank draft (drawn in the name of the person who made the loan, deposit or specified advance) or by use of electronic clearing system through a bank account or other electronic modes prescribed under Rule 6ABBA.​

This provision shall be attracted if the value of the covered transaction exceeds the following limit:

The amount of such loan or deposit or specified advance together with interest payable thereon is Rs. 20,000 or more;

The aggregate amount of the loans or deposits held either in own name or jointly with any other person on the date of such repayment, together with interest payable on such loans or deposits, is Rs. 20,000 or more; or

The aggregate amount of the specified advances received by such person either in his own name or jointly with any other person on the date of such repayment together with interest payable on such specified advances, is Rs. 20,000 or more.

H​owever, if a deposit is paid by a Primary Agricultural Credit Society (PACS) or a Primary Co-Operative Agricultural and Rural Development Bank (PCARD) to its member or a loan is repaid to a PACS or a PCARD by its member, the threshold of Rs. 20,000 shall be enhanced to Rs. 2 lakhs (Refer Note 1)

​Note 1: Inserted by the Finance Act, 2023 with effect from 01.04.2023.​

Where a person fails to provide the facility for accepting payment through prescribed electronic modes as required under this provision, he shall be liable for a penalty under Section 271DB of Rs. 5,000 for every day during which such failure continues.​

​​​​Section 54​ provides exemption with respect to capital gains arising from the transfer of a residential house property. The exemption is allowed only if the amount of capital gains are invested for the purchase or construction of new residential house property. ​

​​​​​​​ The Income-tax Act allows exemption from capital gains tax if the amount of capital gains or sale consideration, as the case may be, is further invested in specified new assets. These exemptions are as under the following sections:

1. a) Section 54- Capital Gain arising from the transfer of residential house property
2. b) Section 54B- Capital Gain arising from the transfer of land used for agricultural purpose
3. c) Section 54D- Capital Gains on compulsory acquisition of land and building, forming part of industrial undertaking
4. d) Section 54EC- Capital Gain not be charged on investment in certain bonds
5. e) Section 54EE- Capital Gain not to be charged on investment in units of a specified fund
6. f) Section 54F- Capital Gain on transfer of a long term capital asset other than a house property
7. g) Section 54G- Capital Gain arising on transfer of assets in case of shifting of industrial undertaking from the urban area
8. h) Section 54GA- Capital Gain arising on transfer of assets in case of shifting of industrial undertaking from the urban area to any Special Economic Zone
9. i) Section 54GB​- Capital Gain on transfer of residential property

​​​​​​​The dictionary meaning of the term “audit” is check, review, inspection, etc. There are various types of audits prescribed under different laws like company law requires a company audit, cost accounting law requires a cost audit, etc. The Income-tax Law requires the taxpayer to get the audit of the accounts of his business/profession from the view point of Income-tax Law.

 Section 44AB gives the provisions relating to the class of taxpayers who are required to get their accounts audited from a chartered accountant. The audit under section 44AB aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax Law. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44AB​ is called tax audit.

 The chartered accountant conducting the tax audit is required to give his findings, observation, etc., in the form of audit report. The report of tax audit is to be given by the chartered accountant in Form Nos. 3CA/3CB and ​3CD. ​

1.  As per section 44AB, who is compulsorily required to get his accounts audited, i.e., who is covered by tax audit?

​​​​​​As per section 44AB, following persons are compulsorily required to get their accounts audited :

• A person carrying on business, if his total sales, turnover or gross receipts (as the case may be) in business for the year exceed or exceeds Rs. 1 crore. This provision is​ not applicable to the person, who opts for presumptive taxation scheme under section 44AD​ and his total sales or turnover doesn’t exceed Rs. 2 crores.

Note: The threshold limit, for a person carrying on business, is increased from Rs. 1 Crore to Rs. 10 crores in case when cash receipt and payment made during the year do not exceed 5% of total receipt or payment, as the case may be. In other words, more than 95% of business transactions should be done through banking channels.

 A person carrying on profession, if his gross receipts in profession for the year exceed Rs. 50 lakhs.

• An assessee who declare profit for any previous year in accordance with section 44AD​ and he decreases profit for any of one 5 assessment year relevant to the previous year succeeding such previous year lower than the profit computed as per section 44AD​ ​ and his income exceeds the amount which is not chargeable to tax.
• ​If an eligible assessee opts out of the presumptive taxation scheme, within the aforesaid period, he cannot choose to revert back to the presumptive taxation scheme for a period of five assessment years thereafter.

(*) For provisions of section 44AD​ refer tutorial on “Tax on presumptive basis in case of certain eligible business”.

• ​A person who is eligible to opt for the presumptive taxation scheme of section 44ADA (*) but he claims the profits or gains for such profession to be lower than the profit and gains computed as per the presumptive taxation scheme and his income exceeds the amount which is not chargeable to tax.

​​This provision does not apply to the person, who opts for presumptive taxation scheme under section 44AD/ section 44ADA​

(*) For provision of section 44ADA​, refer tutorial on “Tax on presumptive basis in case of certain eligible business”

 A person who is eligible to opt for the presumptive taxation scheme of sections 44AE (*) but he claims the profits or gains for such business to be lower than the profits and gains computed as per the presumptive taxation scheme of sections 44AE.

(*) For provisions of sections 44AE refer tutorial on “Tax on presumptive basis in case of certain eligible business”.

• A person who is eligible to opt for the taxation scheme prescribed under section 44BB (*) or section 44BBB (*) but he claims the profits or gains for such business to be lower than the profits and gains computed as per the taxation scheme of these sections.

(*) section 44BB is applicable to non-resident taxpayers engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire basis to be used in exploration of mineral oils. section 44BBB​ is applicable to foreign companies engaged in the business of civil construction or erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project.

​​​​​​​The report of the tax audit conducted by the chartered accountant is to be ​furnished in the prescribed form. The form prescribed for audit report in respect of audit conducted under section 44AB​ is Form No. 3CB and the prescribed particulars are to be reported in Form No. 3CD.

In case of persons covered under previous FAQ, i.e., who are required to get their accounts audited by or under any other law, the form prescribed for audit report is Form No. ​3CA​ and the prescribed particulars are to be reported in Form No. 3CD.​

Yes, a machinery loan is a type of business loan offered by various Banks/NBFCs to MSMEs, entrepreneurs and existing businesses. This loan type is mainly considered under equipment finance.

Under the GST Law, export of goods or services has

been treated as:

• inter-State supply and covered under the IGST Act.
• ‘zero rated supply’ i.e. the goods or services exported shall

be relieved of GST levied upon them either at the input

stage or at the final product stage.

This will make Indian exports competitive in the international market.

Yes. The procedures relating to export have

been simplified so as to do away with the paper work and

intervention of the department at various stages of export.

The salient features of the scheme of export under GST regime are as follows:

• The goods and services can be exported either on payment of IGST which can be claimed as refund after the goods have been exported, or under bond or Letter of Undertaking (LUT) without payment of IGST.
• In case of goods and services exported under bond or LUT, the exporter can claim refund of accumulated ITC on account of export.
• In case of goods the shipping bill is the only document required to be filed with the Customs for making exports. Requirement of filing the ARE 1/ARE 2 has been done away with.

The assessment of drugs and formulations under GST would be on the basis of transaction value at each level of supply with end to end ITC chain for neutralizing the GST paid at the procurement level.

In case of clearance of physician samples distributed free of cost, the ITC availed on the said

samples has to be reversed in view of the provisions under Section 17(5)(h) of the CGST Act, 2017.No tax is payable on clearance of physician samples distributed free of cost as the value of supply is zero and no credit has been availed.

In such cases, the manufacturer may issuea credit note within the time specified in sub-section

(2) of section 34 of the CGST Act, 2017 subject to the condition that the person returning the expired

medicines reduces his ITC. Subsequently, when the time expired goods are destroyed, the manufacturer has to reverse his ITC on account of goods being destroyed. Where the goods are returned after the time limit specified in section 34(2) of the CGST Act, 2017, the registered person returning the goods shall issue a tax invoice, as it is a supply within the meaning of Section 7 of the CGST Act, 2017.

With effect from 01-04-2019, effective rate of GST applicable on construction of residential apartments by promoters in a real estate project are as under:

Description Effective rate of GST (after deduction of value of land) Construction of affordable residential apartments 1% without ITC on total consideration.

Construction of residential apartments other than affordable residential apartments 5% without ITC on total consideration.

Affordable residential apartment is a residential apartment in a project which commences on or after 01-04-2019, or in an ongoing project in respect of which the promoter has opted for new rate of 1% (effective from 01-04-2019) having carpet area upto 60 square meter in metropolitan cities and 90 square meter in cities or towns other than metropolitan cities and the gross amount charged for which, by the builder is not more than forty five lakhs rupees. [Cities or towns in the notification shall include all areas other than metropolitan city as defined, such as villages.] In an ongoing project in respect of which the promoter has opted for new rates, the term also includes apartments being constructed under the specified housing schemes of Central or State Governments. [Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR) with their geographical limits prescribed by Government.]

Yes, but such an option is available in the case of an ongoing project. In case of such a project, thepromoter or builder has option to pay GST at old effectiverate of 8% and 12% with ITC. To continue with the old rates, the promoter/ builder has to exercise one time option in the prescribed form and submit the same manually to the jurisdictional Commissioner by the 10th of May, 2019. However, in case where a promoter or builder does not exercise option in the prescribed form, it shall be deemed that he has opted for new rates in respect of ongoing projects and accordingly new rate of GST i.e. 5% / 1% shall be applicable and all the provisions of new scheme including transitional provisions shall be applied. There is no such option available in case of projects which commence on or after 01.04.2019. Construction of residential apartments in projects commencing on or after 01.04.2019 shall compulsorily attract new rate of GST @ 1% or 5% without ITC. 5.

With effect from 01-04-2019effective rate of GST, after deduction of value of land or undivided share of land, on construction of commercial apartments [shops, godowns, offices etc.] by promoter in real estate project are as under:

Construction of commercial apartments in a Residential Real Estate Project (RREP), as explained in question no. 6 below, which commences on or after 01-04-2019 or in an ongoing project in respect of which the promoter has opted for new rates effective from 01-04-2019 : –

5% without ITC on total consideration.

Construction of commercial apartments in a Real Estate Project (REP) other than Residential Real Estate Project (RREP) or in an ongoing project in respect of which the promoter has opted for old rates:-

12% with ITC on total consideration.

A “Residential Real Estate Project” means a „Real Estate Project” in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the project.

What is the criteria to be used by an architect, a chartered engineer or a licensed surveyor for certifying that construction of the project has started by 31st March, 2019

Construction of a project shall be considered to have been started on or before 31stMarch, 2019, ifthe earthwork for site preparation for the project has been completed, and excavation for foundation has started on or before the 31stMarch, 2019.

A promoter shall purchase at leasteighty percent. of the value of inputand input services, from registered suppliers. For calculating this threshold, the value of services by way of grant of development rights, long term lease ofland, floor space index, or the value of electricity, high speeddiesel, motor spirit and natural gas used inconstruction of residential apartments in a project shall be excluded.

Under GST, a trader would be entitled to avail input tax credit paid on their domestic procurements of goods and services unlike the present indirect tax regime. Presently, a significant portion of indirect taxes namely Central Excise and Service Tax form part of the cost component for a trader. This will not be the case under GST. He will now be able to take credit of all taxes paid by him. In respect of imports, the landed cost is expected to reduce significantly under GST. Hence, the traders will gain significantly in terms of input tax credit on their operating expenses thereby decreasing their operating costs. CST which was non-creditable has been subsumed in GST. This will be a huge benefit for the traders. Entry tax has also been subsumed in GST. Removal of CST and entry tax shall immensely benefit the traders. Traders will be able to sell their goods to farthest areas

Traders not opting to pay tax under composition scheme need to file returns on a monthly basis. Form GSTR-1 is to be filled for outward supplies made by the trader (made in the month for which return is being filed) by the 10th of the next month. Other parts of the return Form GSTR-2 and Form GSTR-3 are auto populated and only needs to be verified and submitted by the 15th and the 20th of the next month respectively.

For the time being both GSTIN and IEC have to be declared. But over a period of time, traders need to declare only their GSTIN instead of IEC at the time of imports and exports.

Yes. Under GST, traders will be on par with manufacturers. IGST paid at the time of import will be available as credit which can be used for payment of taxes on further supplies. GSTIN would be used for the purpose of credit flow of IGST on import of goods and refund of IGST paid in case of export

A trader, if registered under GST, will have to pay tax on monthly basis on or before 20th of the succeeding month. A person who has opted for composition levy will have to pay tax on quarterly basis on or before 18th of the month succeeding the quarter relating to supplies.

No. The option availed shall lapse from the day on which his aggregate turnover during the financial year exceeds Rs. 75 Lakhs/50 Lakhs. Once he crosses the threshold, he shall file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days of the occurrence of such event.

Every person who has furnished such an intimation, may electronically furnish at the common portal, a statement in FORM GST ITC-01 containing details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock as well as the capital goods held by him on the date on which the option is withdrawn, within a period of thirty days from the date from which the option is withdrawn.

The option exercised by a registered person to pay tax under composition scheme shall remain valid so long as he satisfies all the conditions mentioned in section 10 of CGST Act, 2017 read with Chapeter II of the CGST Rules, 2017.