Significant Amendments in the Provisions of Income Tax Act in Finance Bill, 2022

 The Union Budget, 2022, was presented by Finance Minister Ms. Nirmala Sitharaman in the parliament on 1^stFebruary, 2022. Like each year, this year also, a number of amendments have come up in the provisions of the Income Tax Law with the enactment of the Finance Act, 2022.

Here are the few significant changes that the taxpayers should be aware of:

Taxation of Digital Assets

An important highlight of the Finance Bill, 2022 is the introduction of new provisions for taxation of income from virtual digital assets (cryptocurrency, etc.) that will be effective from 1^stApril, 2023, which are as follows:

a) Gains arising from the transfer of the digital assets would be taxed at a flat rate of 30% (plus applicable surcharge and cess).

b) No deduction for any expenditure (other than the cost of acquisition) shall be allowed to calculate the income from digital assets. Further, no set-off of any loss shall be allowed to the taxpayer from such income.

c) Gift of digital assets would be taxable in the hands of recipients.

d) Payments made in relation to the transfer of the digital assets will be subject to TDS at 1% of such consideration above a certain threshold limit. This provision will become effective from 1^st July, 2022.

Introduction of the concept of ‘Updated Return’

The Finance Minister has introduced a new provision to enable the taxpayer to file an updated return, giving him an opportunity to report additional income that he may have missed inadvertently in the original tax return. While all taxpayers have the option of revising their tax returns up to 31^stDecember following the relevant financial year, the updated return can be filed within a period of two years from the end of the relevant assessment year (i.e., within three years from the end of the relevant financial year). The introduction of this provision is a step towards promoting voluntary reporting by the taxpayers.

Tax relief to the parents and guardians of the person with a disability

[This amendment will take effect from 1^stApril, 2023]

Presently, the deduction to resident individuals and HUF under Section 80DD is allowed with regard to any amount deposited under a scheme issued by LIC or any other insurer for the maintenance of a dependant, being a person with a disability, provided such scheme provides for payment of the annuity or lump sum for the benefit of the disabled dependant only in case of death of the subscriber (Parent or Guardian).

However, in some situations, the person with disability may need payment of the annuity or lump sum during the lifetime of the parents and guardians also. Thus, in order to remove such genuine hardship, it is proposed that the parents or guardians can claim such deduction even if the disabled dependent person claims the payment of annuity or lump sum amount during their lifetime, i.e., on parents/guardians attaining the age of 60 years.

Better litigation management

In an attempt to reduce the repeated litigation between taxpayers and the department, section 158AB has been inserted in the Act and has been provided that if a question of law in an assessee’s case is identical to a question of law which is pending in appeal before the Supreme Court or the jurisdictional High Court in any case, the filing of a further appeal in case of this assessee by the department shall be postponed till such question of law is resolved by the jurisdictional High Court or the Supreme Court.

Increased NPS Deduction Limit for State Government Employees

The Central Government employees are allowed a deduction of up to 14 per cent of their salary on account of the contribution made by the Central Government to their National Pension Scheme Account. However, at present, such deduction is allowed only to a maximum of 10 per cent of the salary in the case of the State government employees.

To bring parity between both Central and State government employees, the government has proposed to increase the limit of tax deduction from 10 per cent to 14 per cent on the contribution of the employer to the NPS account of State Government employees as well retrospectively with effect from 1^stApril, 2020.

Incentives to Start-ups (Section 80-IAC)

Eligible start-ups incorporated before 31^stMarch, 2022 had been given the benefit of tax exemption for three consecutive years out of ten years from the year of incorporation under section 80-IAC. This period of incorporation of the eligible start-ups has now been extended by one more year, i.e., till 31^stMarch, 2023, to avail such tax incentives.

Incentives to newly incorporated manufacturing entities (Section 115BAB)

The domestic manufacturing companies set up after 1^stOctober, 2019 that commenced manufacturing or production before 31^stMarch, 2023, had been provided with the benefit of a concessional tax rate of 15% under section 115BAB. This period for commencement of manufacturing or production has now been extended by one more year, i.e., till 31^stMarch, 2024, to avail the benefit of such concessional tax rate.

Reduced Alternate Minimum Tax rate for Co-operative societies

Currently, co-operative societies are liable to pay Alternate Minimum Tax at the rate of 18.5 per cent. However, companies are required to pay the same at the rate of 15 per cent. To cater a level playing field between co-operative societies and companies, this rate for co-operative societies also has been reduced to fifteen per cent.

Clarification on the disallowance of Health and Education Cess

In the budget speech, the Finance Minister clarified that any surcharge or cess imposed on the taxpayer is not allowable as business expenditure. Accordingly, an amendment has been made in section 40 of the Act to expressly convey that the ‘tax’ shall include any surcharge or cess on such tax and not be allowed as business expenditure for computation of business income.

Deterrence Against Tax-Evasion

In order to increase dissuasion among tax evaders, section 79A has been inserted in the Act to provide that no set-off of any loss shall be allowed against the undisclosed income detected during search and survey operations.

Rationalization of Surcharge

The surcharge rate on long-term capital gain on transfer of any asset has now been capped at 15%. Earlier, the capping was applicable to long-term capital gains only from listed equity shares, units, etc. This capping will help taxpayers with a taxable income above Rs. 2 crores to save some taxes.

Also, for co-operative societies, having total income above Rs. 1 crore, but less than Rs. 10 crores, the surcharge has been reduced to 7 per cent from 12 per cent. Further, the surcharge rate of the AOPs has been capped to 15%.

Exemption of amounts received for Covid treatment or in the event of death due to Covid 19

In a press release dated 25^thJune, 2021, the Finance Ministry announced exemption of payments received for Covid medical treatment or on the death of an individual due to the illness related to Covid 19. These exemptions have now been legislated with retrospective effect from 1^stApril, 2020 by making amendments under section 17 and section 56 of the Act. Such exempt payments are as follows:

a) The amount received by a taxpayer from an employer or any person for treatment of Covid-19.

b) The amount received by the family members of a person who lost his life due to Covid-19 from the employer of such deceased person or any other person.

It must be noted that this exemption shall be allowed without any limit for the amount received from the employer, whereas the exemption shall be limited to Rs. 10 lakhs in total for the amount received from any other person.

It has been clarified that such payment must be received within 12 months from the date of death to qualify for the exemption.

Summing up

The objective of the Union Budget 2022 regarding the Direct Taxes was to simplify the tax system, promote voluntary compliance by taxpayers, and reduce litigation. The clarity on taxation of virtual digital assets will help investors make the right decisions.The introduction of the provision of updated return is a step towards affirmative and voluntary reporting by taxpayers and relief against penal provisions.

Source: https://www.manishanilgupta.com/blog-details/significant-amendments-in-the-provisions-of-income-tax-act-in-finance-bill2022

GST Suspended? What to do Next?

 The national GST laws have enabled a strong network of compliance. GST laws are regularly amended to ease up the GST regime and make the regulation fair for all. However, simultaneously, the government is also focusing on making the GST taxation laws more stringent than ever before. A failure to comply with GST regulations may lead to the cancellation/suspension of GST registration which one cannot afford to let happen as it is not lawful to make any taxable supply after the suspension of GST Registration. So, let us take a more in-depth look at the reasons and possible measures to help you deal with this GST registration suspension situation.

 Reasons behind Cancellation/Suspension of GST Registration

 As a taxpayer, you may wonder why a GST registration may be cancelled or fear of getting your registration suspended. However, it is to be noted that no registration is cancelled without valid reasons. So, it becomes very important to be extra-cautious to watch out for any possibility of GST Registration cancellation.

 Here are some of the reasons why your GST registration may be suspended-

 1: In case there is a change in the constitution of your business. 

 2: In case a business is discontinued, transferred, merged or closed down. 

3:  It may be suspended if the taxpayer fails to abide by the provisions of the CGST Act.  

 4: The taxpayer may voluntarily apply for a cancellation of registration, and in that case, the proper officer puts the GST into suspension.

 5: If the GST registration was obtained using fraudulent methods, the officer has the right to suspend the registration.

6:  Registration also gets suspended if it is found out that the business is being operated from a place other than the one mentioned. 

 7: As per GST regulations, a failure to start the business within six months of GST registration may lead to a cancellation/suspension of the registration.

 8: If the taxpayer is found to be issuing invoices without supplying goods or services

9:  If the taxpayer fails to furnish valid bank account details, the registration can be suspended after a warning.

10:  If a person who is covered under the composition scheme has not furnished his returns for three continuous tax periods 

 11: In case a person conducting business, other than under the composite scheme, has not furnished the returns for a period of six months. 

 Understanding suspension of GST registration

 An authorised officer can only suspend registration if he has reasons to consider that the registration is liable to be cancelled. The officer may offer a warning or a chance to rectify the situation before the GST is suspended. 

The taxpayer is intimated through Form GST REG-31 regarding discrepancies. The form also mentions that GST may be cancelled if the taxpayer does not provide a valid explanation. Further, the officer can still order a suspension if, in his opinion, the explanation is found to be incomplete or unsatisfactory. 

 Consequences of GST Registration Suspension

 In case a GST registration of a person is suspended, the business entity may not be able to pay taxes or file for a GST return. If you are under the category of the taxpayer and your GST registration has been suspended, you must immediately contact an assessing officer and request for activation of GSTIN. A failure to do the same in time can lead to cancellation of registration and further penalties due to non-compliance with GST regulations. 

 What to do after Suspension of GST Registration?

 In case the taxpayer has not voluntarily applied for cancellation of registration and yet have received a notice, here are some of the things you can consider-

 1: On receiving a notice for discrepancies

 If a taxpayer receives a notice for discrepancies, he needs to furnish a reply to the tax authority within one month of receiving the notice. The reply should include details of all the corrective measures and actions taken to comply with the non-compliances and the reasons as to why the registration should not be cancelled. 

 2: On receiving a notice of cancellation

 In this scenario, one needs to reply to the tax officer using Form GST Reg 18 online through the official GST portal within one month of getting the notice. 

 3: Receiving a notice due to non-filling of returns

 Non-filing of returns is the most common scenario. If the notice for suspension or cancellation of registration is issued on the ground of non-filing of returns, the said person may file all the due returns and submit the response. 

 How To Activate suspended GST Registration?

 As a registered taxpayer, you can apply for reactivation of your GST registration as per GST laws within 30 days. But this can only be done when an authorised GST officer suspends the registration. A voluntarily suspended registration cannot be revoked under any circumstances. There is no doubt that the rules for suspension provide relief to taxpayers to some extent. 

 The government has streamlined the process, but it is still advisable to take the help of a professional for revoking the suspended GST registration. A consultation with a GST professional or a certified CA can help you stay under compliance and get possible remedies to deal with the suspension of GST registration without going through much trouble.

 Source: https://www.manishanilgupta.com/blog-details/gst-suspended-what-to-do-next

TRADEMARK/BRAND REGISTRATION

 In our routine life, we come across different brands. Without realizing it, we are using the brand in everything; whether we are wearing something or eating anything, almost everyone has registered their business. Trademark is a unique way of identifying the brand. Trademark is a symbol or word that the user legally registers as representing a company or product. It differentiates your product from the products of other competitors. For instance, any wristwatch enthusiast in India can identify Titan's name merely by looking at the logo — even if the brand name is not cited on the product.

It is a type of intellectual property consisting of a recognizable sign, design, or expression which makes it unique from other products. So, if you are running any business and come up with some new ideas or outstanding work, get yourself registered before anyone steals it. A Trademark should be unique to your brand to get it recognized. If your logo is unique and recorded, the potential customers will remember your brand by that logo. Anyone can quickly identify which brand your product belongs to.

Why do trademarks matter?

A trademark helps protect the owner of the mark by securing the exclusive right to use it or allowing another to use the same in return for payment. A trademark owner can be an individual, business organisation, or legal entity.

A trademark is one of your company’s precious capital. It is a way of identification and substantially plays a significant role in building the company's public image. Trademarks carry supreme interest as the general public can recognize a brand based on trademarks in a competitive market. At the same time, they also prevent other enterprises from copying another’s brand. Trademark helps to save the brand from infringement. Brand registration in India drives the companies to abide by the standards, rules and regulations. Customers can identify brand values and offerings after being satisfied with consistency and quality.

Need for Trademark Registration

Trademark is registered under the Trademark Act, 1999, and whenever infringements of trademarks happen, it provides the owner of the trademark the capacity to sue for losses. Brands, when registered, act as intellectual property for the business, as they safeguard the investment of the company. The chosen trademark shall register them selves on a mandatory basis as they work as a unique symbol for the products and services they provide.

How to Register a Trademark?

It feels hurt when you see some other entrepreneurs rob your hard-earned reputation. Many times, trademark (TM) owners end up in prolonged litigation because they did not register their brand when the time was right. Hence, it is virtuous to register your mark, and the owner will have the much-needed legal protection of their brand name registration in India. The trademark registration in India process does not require much effort. It is a simple process. The following procedure is involved for the Online brand Registration:

Step 1: Trademark Registration

Many entrepreneurs do not understand the importance of a TM search. Before applying for TM, always search your mark on the TM portal, as it gives you a fair picture of whether your mark matches the existing trademark. It helps to save your time and further gives you a forewarning of the possibility of trademark litigation. Always remember to select the unique and distinctive mark representing your company. Make sure to choose the right class for your brand among the 45 classes under Nice Classification. Classes from 1-34 are for goods, and classes from 35-45 are for service.

Step 2: Filing Trademark Application

After making a suitable search on the portal, make sure that your chosen brand name or logo is not listed or registered in the Trademark Registry India; you can further opt for registering the mark. The first step is filing a trademark application at the Trademark Registry India. When trademark registration online is done, an application receipt is issued immediately for future reference.

Step 3: Examination

The next step is the examination of trademark applications by the examiner for any discrepancy. The examiner may accept the trademark absolutely, conditionally or object. It might take around 12-18 months.

If the application is unconditionally accepted, the trademark will get published in the Trademark Journal. If in case it is not accepted unconditionally, the required conditions or objections have to be fulfilled, and one month time shall be allotted to fulfil the conditions or objections.

The trademark shall be published in the Trademark Journal if such a response is accepted. If, in case, the answer is not received, one can request a hearing. If the examiner feels that the trademark shall be allowed registration in the hearing, it proceeds for publication in the Trademark Journal.

Step 4: Publication

Notice of publication is good news for the applicant. It means the applicant is one step closer to the trademark registration. Under this step, the public will have the opportunity to challenge the pending trademark registration. The trademark proceeds for registration if there is no opposition after 3-4 months from publication. In case of resistance, there is a fair hearing, and Registrar gives a decision.

Step 5: Registration certificate

After the trademark application, the particular brand is published in Trademark Journal, and a registration certificate is issued under the seal of the Trademark Office.

Step 6: Renewal

Once the trademark gets registered, the same is valid for ten years. The applicant can renew the registration after every ten years from the expiry of the brand.

Benefits of trademark registration in India

There are various benefits offered by registering the product, which are as follows:

1. Legal Protection

2. Brand recognition

3. Product differentiation

4. Business valuation and goodwill

5. Creation of an asset

6. Business expansion

Parameters to keep in mind regarding Online Trademark Registration

1. A trademark brings ample benefits to the company. It is considered an intangible asset that can be franchised, traded and commercially contracted.

2. The owner of a registered trademark can have the right to sue or file a case against any third party that uses their trademark without the prior permission of the owner of the brand.

3. Though the trademark registration is voluntary, if it is registered, it benefits the owner in terms of all legal matters. It proves that the particular brand belongs to that person.

4. A registered trademark has ten years of validity. After that, the applicant may initiate the renewal process before the expiry of the registered trademark. The brand will remove the trademark if one fails to do so,

Trademark registration services in Delhiprovide potential clients with the best benefits of trademark at a reasonable cost since it is a hub of various services. It is recommended to hire a consultant for trademark registration to prevent any objections from the department.

The symbols ™ (the trademark symbol) and ® (the registered trademark symbol) is used to indicate trademarks; the initial is used in connection with an unregistered mark. TM denotes that you are claiming a right to use your brand as a trademark, although it may not yet be registered with the relevant IP office, while the latter is for use by the registered owner. This indicates that you have the legal right to use the name, symbol, or another identifier for the products or services for which you are using it. R sign establishes your trademark's legal ownership.

The brand registration process in India has gained utmost importance. Trademark often seems unnecessary and is therefore neglected. But most people are unaware of the benefits of registering their business in trademark. The brand name registration process is quite simple and easy. One can realize this in the form of phrases, symbols or marks. For a more successful business, registering your brand is a key factor, and at the same time, it will unlock a range of benefits.

As mentioned above, it is clear how important it is to register your mark to prevent any infringement. It is a simple process and does require much effort. Hence, take steps in protecting your brand and understand the power of your brand name registration.

Source: https://www.manishanilgupta.com/blog-details/trademark-and-brand-registration

How to Handle GST Summon?

 Nowadays, as registered taxpayers, our inbox is flooded with several GST reminders. Likewise, we often missed out on an important notice for any other taxpayer. But, is it only a notice which is crucial? Are you missing out on a "summon"? How to handle the same? Before we jump into it, let's know more about it.

What is a summon?

A summon, in simple words, is an order to appear or mark your presence before a judge or a magistrate for any enquiry or against wrongdoing which could be civil, criminal or both. It is also known as CAN in a few parts of the world, i.e. Court Attendance Notice. In legal terms, a summons is also known as a citation, requiring an under-mentioned person to be present at a notified place, at the advised time and for the announced purpose.

Broadly there are four types of summoning listed below;

• Judicial Summon
• Citation
• Administrative summons
• Civil Summon

The summons issued under the GST ACT is a type of Administrative summon. As per the case, the officer in charge can call any registered person to appear before and produce evidence or document. 

How summon is different from a notice?   

All summons are notices, but all notices are not summoned.

As discussed above, a summon is an official call upon or invitation to mark your presence at the court or before an officer. However, notice is general information from the court/authority. Notice may or may not result in a summon.

As per GST ACT, a summon shall be deemed to be a "legal proceeding" under provisions of section 193 and the section 228 of the Indian Penal Code (45 of 1860).

On the contrary, the same doesn't apply to the notice.

Power to summon under the CGST ACT 2017.

 Section 70 of the C.G.S.T. Act, 2017: Power to summon assessee to give any evidence and in order to produce documents.

1: The proper officer under CGST Act shall have the power to summon any person whose presence he requires necessary to provide an evidence or produce a document or any other thing in any inquiry in the same ways, as provided in the case of a civil court procedure under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).

2: The inquiry referred to in sub-section (1) shall be considered to be a "Legal proceeding" under the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).

When can I expect a summon?

Under Sec 70 of C.G.S.T. Act, summon can be issued when a taxpayer is undergoing any inquiry proceedings. Wherein inquiry could be initiated on non-satisfaction of any ground related to compliance, a requirement of law or the notice issued.

As per the latest judgment in the case of G.K. Trading Company Vs Union Of India And 4 Others (Allahabad High Court) wherein it was held that G.S.T. authorities are allowed to initiate inquiry proceedings under Section 70 of C.G.S.T. Act, 2017 combinedly with the proceedings under section 6(2)(b) as the prohibition of Section 6(2)(b) of the C.G.S.T. Act shall come into play only when any proceeding on the same subject-matter has already been initiated by a proper officer under the U.P.G.S.T. Act and therefore, an adequate officer under the U.P.G.S.T. Act or the C.G.S.T. The Act may invoke the power under Section 70 in any inquiry.

Therefore, by the above judgment, it's pretty clear that you can expect a summon collaterally with the other proceedings under the Act, be it an investigation, search, seizure either to give any evidence or produce a document or anything.

Below are the few listed matters on which inquiry could be initiated if considered necessary by the proper officer;

• The Input tax credit taken is wrongly availed or utilized.
• G.S.T. Refund is wrongly made with or without the intent to defraud.
• Non-payment of G.S.T. liability (tax) or the short payment of the tax with or without the intent to defraud.
• Differences in Input tax credit claims made in GSTR-3B vis-a-vis GSTR-2A/2B
• Delay in filing of GSTR-1 and GSTR-3B consecutively for more than six months
• Inconsistent declaration in GSTR-1 and e-way bill portal. Etc

Features a taxpayer should know about a summon.  

• As per one of the circulars, summons should be used only as a last resort when it is absolutely required.
• All persons to whom summons are issued shall be bound to attend, either in person or by an authorized agent, if the taxpayer is not a natural person.
• An officer of the rank Superintendent and above are empowered to issue a summon.
• If you are not comfortable with the English language, you can record your statement in a local language.
• Even if the taxpayer files all the documents with the officer as mentioned in the summons letter, the taxpayer must attend the summons.
• Summons may be issued to you even in the investigation launched against some other person.
• The person summoned is bound to submit all the relevant documents asked for. If not available, state the reasonable time required to provide the same.
• A statement is generally recorded during such summons.
• A recorded statement is admissible as evidence and can be used against the person in legal proceedings.
• The statement should be voluntarily given and not under threat, coercion, or pressure.
• The person should be summoned and a statement taken during working hours.

Who could be G.S.T. summon consultant?

A practising Chartered Accountant, an Advocate, Cost and Management Accountant or any other professional possessing such knowledge and experience as would be considered sufficient to handle the complexity of the case.

Procedure for replying GST summon?

Any taxpayer who receives the summon shall first consult a GST summon consultant. Who, could be a legal practitioner, be it a Chartered Accountant in practice or an Advocate, to know the reason and justification behind such summon? (As per law, the power to call can be exercised only when there is a need for the appearance of the assessee)

A taxpayer should be mindful that summons is a legal proceeding, which cannot be ignored. Once the taxpayer and the practitioner are satisfied with the justification and purpose of the summon, the taxpayer shall block his calendar for the notified date.

The taxpayer shall state the facts and figures to the practitioner to accumulate and produce objective evidence and statements before the authority. Before the call upon date, he shall be handful with all the required evidence, documents and statements before the authority.

Under the rigorous inquiry from the authority, the taxpayer shall not testify and sign any documents before reading and understanding the same.

Penalty for non - compliance of GST summon?

All persons to whom summons are issued shall be bound to attend, either in person or by an authorized agent, if the taxpayer is not a natural person.

If a taxable person does not act upon before the officer of central tax, when issued with a summon for appearance to provide the evidence or produce a document in an inquiry, is liable to pay the penalty under section 122 (3) of the C.G.S.T. Act,2017, i.e., Rs.25000.

How to deal with GST summon?

* GST Summon Consultant – Assessee shall consult the practitioner to know the reason and justification of the summon.

* Block your calendar – Assessee shall block his calendar for the specified dates.

* Produce – Assessee shall produce before the practitioner all the facts, figures, evidence and state the absolute truth.

* Be handful – Assessee shall be a handful with all the required documents and information.

* Be mindful – You should be cognizant while recording your statement; this could be used against you.

* Don't promise – During the summon inquiry, do not explicitly promise to pay any taxes or penalties; always consult with your practitioner about this.

* Have your words ready – As we emphasize from the beginning, consult exclusively and be prepared with your comments and performance and disclaim wisely when you are not sure about the same.

* Be confident – Don't panic in any situation and act wisely and confidently with a fearless attitude.

Disclaimer: This content is purely for knowledge and educational purposes. It contains only general information and references to legal content. It is not legal advice, and should not be treated as such.

Source: https://www.manishanilgupta.com/blog-details/how-to-handle-gst-summon