Soft Copy of 47th issue of Tax Talk (February 2016)

Vol: 3 Issue : 11 February 2016 February, the shortest month of the year with only 28 days in common years and 29 days in leap years. Despite this, bears all the capabilities to affect the          of the country. Like Mark Twain said “It’s not the size of the dog               With expectations like never before, all eyes will be on Budget 2016 to be laid down by the end of the month for which the pre-budget meetings are already underway.                   may increase the service tax exemption limit. If the exemption limit is increase, it will be almost after 8 years. The increase in                   businessmen, but also ensure that the compliance burden to monitor the indirect tax administration will be reduced, allowing it to focus on bigger taxpayers. This will also seen as a major step          the ambit of the proposed Goods and Services Tax (GST). Recently, numbers of orders are being issued by the Service Tax Department, Kolkata to reduce the pendency of the cases. We like to remind that the period of delays that may be condoned by the Commissioner (Appeals) is only one month. The assessee should be careful with the number of delay days, since the        once the limit of one month is exceeded. The assessee then will be left with no other option but to pay the demanded amount. The faith of GST will be decided in the Budget session of the Parliament as the Finance Minister is quite hopeful that the hindrance in the introduction of GST in our country will overcome during this session. Hence, GST seems to be implemented during the year. We are also hopeful that path will be set in budget session that GST will be light of the day. Instruction has been issued to clarify the dilemma arising due to divergence of view between Para 6.2.1 of the Education Guide 2012 and the CBEC Circular No. !"!#$#$%!$ & '*   !%+$+$%!$    /    over to land owners are to be valued for the purpose of levy of service tax. The issue is discussed in detail at Page – 2 of this issue. The CBEC has issued a circular prescribing procedure for e-payment of refund/rebate claim in order to speed                4 bank account after sanction of the refund/rebate claim       formations. These instructions will be effective from 10.02.2016. The Joint committee on Business processes for GST after having an elaborate discussion with the trade, industry and other stakeholders had come up with its report on GST return. The report has been discussed in detail at page 3 of this issue. We hope this newsletter will add some value and prove          + 7    suggestions/opinions of the readers. Please feel free to convey your views at servicetaxgoyal@gmail.com. We are regularly receiving request for early issues of Tax Talk. Understanding the needs of our valued readers we have posted the soft copy of the newsletter at our website. You may refer all earlier issues of Tax Talk at www.gstpeople.com. DUE DATES PAYMENT FORM DUE DATE Payment for the Month ending January 2016 (assessees other than individual, proprietorship :   ;;<=E-payment6th February, 2016 Vol: 3 Issue : 11 February 2016 1 47 Rs. 5/- Editorial CA Sushil Kr Goyal Instruction regarding valuation of flats for levy of Service Tax E-Payment of Refund/ Rebate Issue No. 47 February 2016I N 47 Fb 2016 2 The Ministry of Finance has set up a High Level Committee (HLC) as announced by the Finance Minister in his Budget Speech 2014-15 to interact with trade and industry and ascertain areas where clarity on tax laws is required. It has been pointed out by the HLC that there is a divergence of view between Para 6.2.1 of the Education Guide 2012 and the CBEC Circular No. !"!#$#$%!$@'*   !%+$+$%!$    /      land owners by the developer/builder are to be valued for the purpose of levy of service tax. *     OQ    ' V      effect from 01.07.2010 to impose tax on builders/developers where the consideration or part of a consideration for sale of         by the competent authority. In case of tri-partite construction business model, there are 3 parties involved: + *   + *#[ iii. The contractor (who undertakes the construction). In such a model, the land owner enters into an agreement with the builder in which the land owner gives either land/development rights to the builder i.e. right to construct/develop a residential    / #      + * builder/developer, in turn, agrees to assign a portion of the     : /     + *   /  #  buyers. The builder/developer receives consideration for the construction service provided by him, from two categories of service receivers: +   :  #   ii. from other buyers, normally in the form of money. * /      be valued for the purpose of levy of service tax. In this respect the CBEC had issued Circular No. 151/2/2012-ST dated !%+%$+$%!$+\    :   /   the land owner will be determined in terms of Section 67(1)(iii) read with Rule 3(a) of Service Tax (Determination of Value) In order to speed up the transfer of the fund directly to the    4            #  claim and thereby promote ease of doing business, CBEC has prescribed the following procedure for e-payment of refund/        ^ I. E-PAYMENT THROUGH AUTHORIZED BANKS a) The payment under the system of electronic payment of refund/ rebate amounts through RTGS/ NEFT facility shall     _ + b) The Commissioner concerned, after obtaining concurrence  _ `=    for payment of refund/ rebate to assesses through RTGS/ z{*  :   _        authorities within their jurisdiction to make e-payment of  #   _  + c) The banks may charge the refund claimant fee for remitting refund amount through RTGS/ NEFT as per RBI guidelines |:$%%}+\  : / ~    /   #+   / #     :   /          being made available for construction should be used for arriving at the value for the purpose of tax. Service tax is liable to be paid by the builder/developer on the ‘construction  4  /          /    land owner by entering into a conveyance deed or similar instrument (e.g allotment letter). The same issue has been also dealt in CBEC Education Guide on Taxation of Services, 2012 wherein it had been mentioned that the value of construction service provided to such land owner will be the value of the land when the same is transferred and the point of taxation will also be determined accordingly. In order to reconcile the two views, the issue has been examined HLC. The HLC has opined that the guidelines communicated by the said circular are more appropriate. Since, the circular is in accordance with the provision relating to valuation as laid down in the Finance Act, 1994 and the Service Tax (Determination of Value) Rules, 2006. With regards to the Education Guide, it has been clearly stated in the Education Guide, 2012 that it is merely an educational aid based on a broad understanding     +  O￿   Q  V nor a manual of instructions issued by the Central Board of Excise and Customs. To that extent it does not command the required legal backing to be binding on either side in any manner. The guide was released purely as a measure of facilitation so that all stakeholders could obtain some preliminary understanding of the new issues for smooth transition to the new regime. Hence, Circulars such as the present one would prevail over the Education Guide, 2012. In view of the above, it is directed that in valuing the service of construction provided by a builder/developer to a landowner, who transfers his land/     :   :    :    / # dwellings from builder/developer, the Service Tax assessing authorities should be guided by the said Board Circular dated 10.2.2012 and not the Education Guide. and the claimant would get only the net amount. II. PROCEDURE FOR E-PAYMENT = 7  #   :        @ _    :         + b) The refund sanctioning authority shall ensure that at least one signed statement of sanctioned orders along with a cheque for the consolidated refund/rebate amount, in the prescribed format, is   _     + c) Upon receipt of the statement signed by the refund sanctioning authority and the cheque for the consolidated refund amount, the bank would credit the refund amounts to the respective accounts of the claimants through NEFT/RTGS after deducting the applicable NEFT/ RTGS charges as per RBI guidelines. *                    10.02.2016. Issue No. 47 February 2016Issue No. 47 February 2016 3 GST Updates          \             undertaken by the taxable person during a prescribed period. A taxable person has a legal obligation to declare his tax liability for a given period in the return, furnish the details about the taxes paid in accordance with    :              frame. There will be a common e-return for CGST, SGST, IGST and additional tax.       { ~    tax period, even if there is no business activity (i.e. Nil Return) during the said tax period of return.  ￿z   +  ~'*￿    the month during which they make purchases (and not regular return.) They will be required to submit their purchase statements (without purchase invoices) as per the periodicity prescribed for   + :    +  Government entities / PSUs , etc. not dealing in GST supplies or persons exclusively dealing in exempted / Nil rated / non –GST goods or services would neither be required to obtain registration nor ~  '* + Periodicity of Return Filing Common periodicity of returns for a class of taxpayers would be enforced. * ~       taxpayers. The periodicity of return for different categories of taxpayers is as follows: S. No. Return /Ledger For  1 GSTR 1 Outward supplies made by taxpayer (other than compounding taxpayer and ISD) 10th of the next month 2 GSTR 2 Inward supplies received by a taxpayer (other than a compounding taxpayer and ISD)15th of the next month 3 GSTR 3 Monthly return (other than compounding taxpayer and ISD) 20th of the next month 4 GSTR 4 Quarterly return for compounding Taxpayer 18th of the month next to quarter 5 GSTR 5 Periodic return by Non-Resident Foreign Taxpayer Within 7 days after the date of expiry of registration. 6 GSTR 6 Return for Input Service Distributor (ISD) 15th of the next month 7 GSTR 7 Return for Tax Deducted at Source 10th of the next month 8 GSTR 8 Annual Return By 31st December of next FY 9 Input Tax Credit Ledger of taxpayer Continuous 10 Cash Ledger of taxpayer Continuous 11 Tax ledger of taxpayer Continuous ￿          ^@ (i) Normal / Regular taxpayers with multiple registrations (for business  =    '       '*|@!: '*|@$  GSTR-3 for each of the registrations separately. (ii) Taxpayers otherwise eligible for the compounding scheme can opt               thereby make their supplies eligible for Input Tax Credit in hands of the purchasers. `= *                /             + *       /  mode would have to be uploaded. Steps for Return Filing: Step1: *          '*|@!    either directly through data entry at the GST Common Portal or               '*|@!    through Apps by 10thday of month succeeding the month during which supplies has been made. The increase / decrease (in supply invoices) would be allowed, only on the basis of the details uploaded by the counter-party purchaser in GSTR-2, upto 17th day of the month. (i.e. within a period of 7 days). Step2: GST Common Portal (GSTN) will auto-draft the provisional GSTR-2 of taxpayer based on the supply invoice details reported by the counter-party taxpayer (supplier) on a near real-time basis. Step3: Purchasing taxpayer will accept / reject/ modify such auto-drafted provisional GSTR-2. Step4: Purchasing taxpayer will also be able to add additional purchase invoice details in his GSTR-2 which have not been uploaded by counter-party taxpayer (supplier) as described in Step 1 and 2 above, provided he is in possession of valid invoice issued by counter-party taxpayer and he has actually received such supplies. Step5: Taxpayers will have the option to do reconciliation of inward supplies with counter-party taxpayers (suppliers) during the next 7 days by following up with their counter-party taxpayers for any missing supply invoices in the GSTR-1 of the counter- party taxpayers, and prompt them to accept the same as uploaded by the purchasing taxpayer. All the invoices would be auto-populated in the ITC ledger of taxpayer. The taxpayer would, however, indicate the eligibility / partial eligibility for ITC in those cases where either he is not entitled or he is entitled for partial ITC. Step6: *     _  '*|@!  '*|@$  using online facility at Common Portal or using GSTN compliant off-line facility in their accounting applications, determine the liability on their supplies, determine the amount of eligible ITC on their purchases and then generate the net tax liability from the system for each type of tax. Cash details as per personal ledger/ carried forward from previous tax period, ITC carried forward from previous tax period, ITC reversal and associated Interest/Penalty, taxes paid during the current tax period etc. would get auto-populated in the GSTR-3. Step7: Taxpayers will pay the amount as shown in the draft GSTR-3 return generated automatically at the Portal post  _      '} + Step8: Taxpayer will debit the Input Tax Credit ledger and cash ledger and mention the debit entry No. in the GSTR-3 return and would submit the same. Acknowledgement: After submission of return, an Acknowledgement Number will be   +              /  tools, acknowledgement of submission will generated after  '*z'  + Issue No. 47 February 2016 Owner: M/s. Goyal Tax Services Pvt. Ltd., Printer & Publisher: Mrs. Reena Goyal Published from Stephen House, Room No. 64, 4 B. B. D. Bag (East), 4th Floor, Kolkata-700 001 And Printed from M/s. CDC Printers Pvt. Ltd., Tangra Industrial Estate-II (Bengal Pottery), 45, Radhanath Chowdhury Road, Kolkata - 700 015. Editor: CA Sushil Kumar Goyal. Bulletin Editorial Board CA. Sushil Kumar Goyal (Editor) CA. Abhisek Tibrewal CA. Pinky Agarwal CA. Ashika Agarwal CA. Nikita Jhawar CA. Neha Gupta CS. Nikita Saraf Published from : Stephen House Room No. 64, 4th Floor 4, B.B.D. Bag (East) Kolkata - 700 001 BOOK POST Registration under RNI No. WBENG/2013/55099 Postal Registration No. KOL RMS/465/2015-17 Date of Publication : 1st February 2016 Our Services (a unit of Goyal Tax Services Pvt. Ltd.) Stephen House, Room No. 64 4, B.B.D. Bag (East) 4th Floor Kolkata - 700 001 Phone : 2262 4632/33 { ^ ￿  +  I N 47 Fb 2016 4 FAQ Q. We had availed works contract service for construction of building. Whether we can take credit of the tax paid on works contract service? A. Rule 2(l) of CENVAT Credit Rules, 1994, provides that any service used by provider of output service for providing an  ~       : credit will be available. However, there are certain       +￿   is, if the service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter    =     construction or execution of works contract of a building or a civil structure or a part, or laying of foundation or making of structures for support of capital goods. In other words, the service provider cannot avail the credit of works contract service or construction service if used for the above mentioned purpose. However, there is an exception to the above i.e if the said       services then credit will be available.Q. What if the building constructed is used for providing “Renting of Immoveable Property Service”? A. We are using works contract service for construction of a building which will be subsequently let out. Firstly, the credit of input service is allowed when the same is used for providing taxable output service. In the instant case, the works contract service had not been used for providing output service i.e Renting of Immovable Property Service though it is being used in construction of the building. Since the output service is provided after the building is constructed. Further, as discussed if the said service is being used for construction or execution of works contract of a building or a civil structure or a part or laying of foundation or making of structures for support of capital goods          : credit will not be available. Hence, we will not be eligible for credit on said works contract service. Q. What if the building constructed is used for “Construction Services”? A. We are using works contract service for construction of a building which in turn will be used by the company for providing construction service. The said service is used for providing        services. Therefore, credit will be available on the same. Consultancy  Registration  Return       Representational Service  Adjudication at all levels  Appeal at all levels  GST - Impact Study 30% Discount to CA/CS/CWA/ Advocates Available at : Book Corporation : 22306669 Kamal Law House : 22308941, Law Point : 22101821, Tax-N-Law : 224207092, Venus Book Dist : 22104605 Price : ` 1995