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This article analyses the applicability of GST(if any) on interest paid on loans to foreign-based Parent Company by its subsidiary based in India. Whether such transaction is liable to GST?? Let's look in detail. Section 185 of Companies Act,2013 amended by the Companies (Amendment) Act,2017 prescribes that a holding company can provide loans to its subsidiary company or can provide guarantee or security in respect of any loan made by any bank or financial institution to its subsidiary company  provided  that these loans are utilised by the subsidiary company for its principal business activities. Further, Section 186(7) provided that such loan can't be given at a rate of interest not less than the prevailing yield of 1 year, 3 years, 5 years or 10 years Government Security closest to the tenor of the loan. GST Law is an act focused primarily on Supply of Goods/Services. In order to check the applicability of GST, firstly it is determined whether such a transaction is covered ...

The Central Board of Indirect Taxes & Customs (CBIC) vide its notification no.46/2020-Central Tax dated 9th June 2020 has extended the Order for rejection of refund claims of GST under section 54 of CGST Act,2017 in wake of Covid-19 pandemic. Section 54 of CGST Act,2017 prescribes various kinds of refunds that a taxpayer can claim under the GST Act. Some of the Examples would be a refund of unutilised Input Tax Credit in case of Outward Supplies being Exports or zero-rated supplies to SEZ etc. As per section 54(5) read with section 54(7) of CGST Act,2017, Order of refund in full or part as per the satisfaction of officer shall be issued within sixty days of the receipt of the complete application of refund in all aspects. The Order of rejection of refund in part of in full can be issued as well if the proper officer is not satisfied with the refund application by the registered person. However, opportunity of being heard shall be given to the registered person via show-cause notic...

The Central Board of Direct Taxes(CBDT) vide Notification no.32/2020 dated 12th June 2020 has notified the Cost Inflation Index(CII) for the assessment year 2021-2022 and subsequent years by inserting "S.I.No.20". For Starters, Cost Inflation Index is basically a price inflation adjustment due to the timing difference between the date of purchase of asset and date of sale of the asset. It is present purchase value of the asset that is to be sold. Cost Inflation Index is a tool used in the calculation of an estimated yearly increase in an asset’s price as a result of inflation. The Central Government fixes this index and publishes it in its official gazette for measuring inflation. This index, notified each year by the Government is defined under Section 48 of the Income Tax Act, 1961. The intention of the legislature is to tax the real gain on transfer of the capital asset, not the profit due to inflation. In order to achieve this objective, the “Indexation” is introduced in...

The Central Board of Indirect Taxes and Customs( CBIC ) has issued a clarification on 10th June 2020 in respect of the issues relating to refund of accumulated Input Tax Credit( ITC ) in respect of Invoices whose details are not reflected in the FORM GSTR-2A. CBIC vide circulars no.125/44/2019-GST dated 18th November 2019 held that ITC in respect of invoices not reflected in FORM GSTR-2A was admissible and copies of such invoices were required to be uploaded. However, Notification no.49/2019-CT dated 9th October 2019 inserted a rule 36(4)  and restricted the claim of provisional ITC to the extent of 20% of the eligible credit available in FORM GSTR-2A, due to which field officers were apprehensive of the claim of refund of ITC of invoices which were not reflected in FORM GSTR-2A. For E.g., The said notification stated that if a company has invoices of ITC amounting to Rs.100 and its GSTR-2A reflects the balance of Rs.80 then the company could claim ITC worth Rs.96 (120% of Rs.80....

The Central Board of Indirect Taxes & Customs(CBIC) issued Clarification vide  Circular No.140/10/2020-GST  on June 10,2020 putting an end to the huge commotion generated by the contrary rulings of various Advance Ruling Authorities(AAR) on the applicability of GST on Remuneration paid to Directors of a Company. Various Doubts were posed as to whether the GST is leviable on Director's Remuneration paid by companies to their Directors falls under the ambit of entry in Schedule III of Central Goods and Services Tax Act,2017 (CGST Act) i.e.  "services by an employee to the employer in the course of or in relation to his employment"  or whether the same is liable to be taxed in terms of notification no.13/2017-Central Tax(Rate) dated 28th June 2017(entry no.6). The issue of remuneration to directors has been examined under the following two different categories: i) Leviability of GST on remuneration paid by companies to the independent directors defined in section 14...

The 40th GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman through video conferencing on12th June 2020. This was the first GST Council meet after the successive lockdowns due to Covid-19 pandemic. The following recommendations were made related to changes in Law & Procedure: 1. Reduction of Late Fees for Past Returns As a measure to clean up pendency in return filing, late fees for non-furnishing FORM GSTR-3B for the tax period from July 2017 to January 2020 has been reduced/waived as under:  a)'NIL’ late fee if there is no tax liability. b)Maximum late fee capped at Rs. 500/- per return if there is any tax liability. The Reduced Late Fees would apply for all the GSTR-3B returns furnished between 1 July 2017 to 30 September 2020. 2. Further relief for small taxpayers for late filing of returns for February, March & April 2020 Tax periods: For small taxpayers (aggregate turnover up to Rs.5 Crores), for the supplie...

In a significant move towards taxpayer facilitation, the Government has today onwards allowed the filing of " NIL " GST monthly Return in FORM GSTR-3B through SMS. Earlier, The Govt. has come up with such relief measures in the form of allowing Return filing through EVC for Taxpayers of all categories. This latest move will substantially improve ease of GST compliance for over 22 lakh registered taxpayers who had to otherwise log into their account on the common portal and then file their returns every month. Now, taxpayers with NIL liability need not log on to the GST Portal and may file their NIL returns through an SMS. For this purpose, the functionality of filing Nil FORM GSTR-3B through SMS has been made available on the GSTN portal with immediate effect. The status of the returns so filed can be tracked on the GST Portal by logging in to GSTIN account and navigating to Services > Returns > Track Return Status . The procedure to file Nil returns by SMS is as follow...