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Major Amendments and Notifications in Income Tax and Good and Service Tax

4 December 2022

Income Tax Act, 1961 (the ‘IT Act’)

Any person responsible for providing any benefit or perquisite in cash or kind to a resident, is required to deduct tax at the rate of 10% of the value or aggregate of value of such benefit or perquisite.

Sec 115BBH - Taxation on Income from Transfer of Virtual Digital Assets (w.e.f 01 April 2022):

Where the total income of an assessee includes any income from the transfer of any virtual digital asset, the amount of income-tax on such income shall be taxed at the rate of 30%.

  • No deduction in respect of any expenditure (other than cost of acquisition) or allowance or set off of any loss shall be allowed

  • Loss from transfer of such assets shall not be allowed to be carried forward to succeeding assessment years

Sec 194S - Deduction of tax on payment on Transfer of Virtual Digital Assets (w.e.f. 01 July 2022):

Any person responsible for paying to a resident any sum by way of consideration for transfer of a virtual digital asset, shall deduct tax at the rate of 1% of such consideration paid, at the time of credit of such sum or at the time of payment, whichever is earlier,

Sec 194R - Deduction of tax on benefit or perquisite in respect of business or profession (w.e.f 01st July 2022):

Any person responsible for providing to a resident, any benefit or perquisite, whether convertible into money or not, is required to deduct tax at the rate of 10% of the value or aggregate of value of such benefit or perquisite.

Exception to the above section:

  • If the value or aggregate value of the benefit does not exceed INR 20,000;

  • A person providing the benefit being an individual or a Hindu undivided family, whose aggregate turnover is less than INR 1 Crore in case of Business income and less than INR 50 Lakhs in case of Professional income

Sec 139(8A) - Updated Return:

Any person, whether or not he has furnished a return for a financial year may furnish an updated return of his income or the income of any other person in respect of which he is liable to tax, for the said financial year, at any time within the period of 24 months from the end of the relevant assessment year.

Updated return cannot be filed in the following cases, where the updated return:

a) Is a return of loss; or

b) has the effect of decreasing the total tax liability; or

c) results in refund or increases the refund due.

Provided further that a person shall not be eligible to furnish an updated return in whose case Search has been Initiated or Survey has been conducted.

Section 206C - Notification No.99/2022 dated 17 August 2022:

As per Section 206C(1G) of the IT Act, a seller of an overseas tour programme package from a buyer, being a person purchasing such package, shall collect tax at the rate of 5% of the amount of the package. Notification has been issued wherein it has provided that the said section shall not apply to a person (being a buyer) who is a Non-resident and who does not have a permanent establishment in India.


Goods and Service Tax Act (the ‘GST Act’)

Section 44 - Notification no.10/2022 dated 05 July 2022:

The registered person whose aggregate turnover in the financial year 2021-22 is up to INR 2 crore, is exempt from filing annual return i.e., GSTR 9 for the said financial year.

Rule 87(14):

Registered person may transfer any amount available in his electronic cash ledger under the GST Act to the electronic cash ledger of a distinct person i.e., person having same PAN in FORM GST PMT-09.

No such transfer shall be allowed, if the said registered person has any unpaid liability in his electronic liability register.

Rule 86(4A):

Where a registered person deposits the amount of erroneous refund sanctioned to him, along with interest and penalty, wherever applicable, through FORM GST DRC-03, by debiting the electronic cash ledger, on his own or on being pointed out, an amount equivalent to the amount of erroneous refund deposited by the registered person shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03A.

Mandatory HSN Code:

For taxpayers having annual turnover above INR 5 Crores from FY 2021-22 onwards, it shall be mandatory to report HSN code at six digits level for taxpayers having annual turnover in the preceding year above INR 5 Crores and at four digits level for all B2B supplies for taxpayers having annual turnover in the preceding year up to INR 5 Crores.

Changes in GST rates on Various Services (w.e.f. 18.07.2022) - Notification No. 03/2022 dated 13 July 2022:

  • Hotel rooms with tariff up to Rs. 1,000 per day to be levied GST @ 12%

  • Transport of passengers, with or without belongings by ropeway to be taxed @ 5% [no Input Tax Credit (ITC) available on the same].

  • Other passenger transport services to be taxed @ 18%

  • Services of Goods Transport Agency (GTA) in relation to transportation of goods (including household goods for personal use) by GTA:

    • Without option to pay GST itself @ 5% (no ITC)

    • With option to pay GST itself @5% (no ITC) or 12% (with ITC)

  • GST @18% on supporting services in transport.

  • Hospital room rent in non-ICU room with tariff of more than 5000 per day per person – GST @ 5% (no ITC)

  • Services by way of treatment / disposal of bio medical waste - GST @ 12%

Changes in exemption to supply of services (w.e.f. 18.07.2022) - Notification No. 04/2022 dated 13 July 2022:

  • Withdrawal of exemption to services of speed post, express parcel post, life insurance and agency services provided to non-Government persons;

  • Withdrawal of exemption for rented residential dwelling unit to a registered person;

  • Exemption provided to services by Department of posts for post card, Inland letter, book post, ordinary post;

  • Exemption provided to specified services to foreign tourist by tour operators to the extent of services performed outside India The value of the tour operator service performed outside India shall be such proportion of the total consideration charged for the entire tour which is equal to the proportion which the number of days for which the tour is performed outside India has to the total number of days comprising the tour, or 50% of the total consideration charged for the entire tour, whichever is less;

  • Health care services towards providing rooms having charges exceeding Rs. 5,000 per day per person carved out from exemption.

Changes in Reverse Charge Mechanism (w.e.f. 18.07.2022) - Notification No. 05/2022 dated 13 July 2022

  • For GTA services, reverse charge will not be applicable where GTA has opted for payment by itself, issued tax invoice and made a declaration.

  • Services by way of renting of residential dwelling to a registered person by any person is brought under reverse charge.

Changes in GST exemption on goods (w.e.f. 18.07.2022) - Notification No. 06 & 7/2022 dated 13 July 2022:

For various types of goods, food items etc. exemption will not be available to pre-packaged and labelled goods and GST will be levied @ 5%. These items include curd, butter milk, lassi, sugar, jaggery, pulses, cereals etc.

No inverted duty benefit (w.e.f. 18.07.2022) - Notification No. 9/2022 dated 13 July 2022:

  • No refund of unutilized input tax credit will be allowed, where credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output services of goods (other than ‘nil’ rated or exempt supplies);

  • Such items include soya bean oil, ground nut oil, olive oil, palm oil, specified vegetable oils and fats, coal lignite, beat etc.

E-Invoicing - Notification no.17/2022 dated 01st August 2022:

The E- Invoicing System is applicable to those businesses with an annual aggregate turnover of more than Rs.10 crore w.e.f from 1st October 2022.

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