This is one of the finest budgets this country has witnessed. The budget aligns with the macro economic scenario and takes care of the impact of COVID. In this budget edition, we discuss the various proposals segment and tax wise. Hope this effort of ours is useful for understanding the proposals. Let me also allow to summarise the various proposals before our detailed analysis. 

On the direct tax front, there are certain amendments which have tried to put an end to decade long litigations. Hope they do not open a new round of litigation. The changes in partnership taxation trying to put an end to abusive strategies and the removal of goodwill from the block of assets to put end to settled views are two extreme hues of the budget.

Undoubtedly, the tax avenues (leakages looked from the perspective of tax authorities) available high networth individuals are being closed budget by budget. The taxation of ULIPs and interest on provident fund contributions exceeding certain limits are steps in the above direction. The introduction of safe harbour for sale of residential units considering the COVID periods is a thoughtful move putting an end to litigation on this front. Finally, the definition of ‘liable to tax’ has been brought into the domestic tax provisions putting concrete end to so many aspects. The clarification of the dis-allowability on employee share in a way puts end to disputes but a bit harsher on the employer.

Read more: SBS Wiki Budget Special Edition 2021

Introduction:

Residency is one of the important issues which has to be fixed before proceeding with determination of tax liability. Unless the residency of an individual or company or any entity for that matter is not fixed, there cannot be a way to determine the tax liability. Apart from the tax liability, the residency also gives a person a right to seek various reliefs. Till this point of time, we have seen instances where an individual was treated as a resident in more than one country and tried to resolve such issues by opting various measures namely by applying tie-breaker rules and place of effective management. However, the Finance Act, 2020 has opened up doors for new breed of resident, which is the subject matter of this article. The Finance Act, 2020 has amended Section 6 of Income Tax Act, 1961 (‘ITA’/’Act’) inserting a new sub-section to deal with residency of an individual, who is nowhere a resident. Let us understand the said concept and issues surrounding thereof. 

Read more: Deemed Residency - Concept and Issues Thereof

Introduction:

Under the GST[1] laws, the charging section is provided under section 9. Sub-section (4) of this section as was originally constituted to provide for levy of GST under reverse charge wherein the registered recipients are required to pay GST on all the supply of taxable goods or services when they are procured from unregistered persons. Further, NN[2] 8/2017-CT(R) dated 28.06.2017 has been issued to provide exemption from this levy. However, proviso was inserted in the said notification stating that exemption was not applicable in all the cases where the aggregate value of such supplies of goods or services or both received from any or all the unregistered suppliers does exceed five thousand rupees in a day. Subsequently, the said notification was amended by NN 38/2017-CT(R) dated 13.10.2017 to omit the proviso thereby making the exemption applicable to all cases including the cases where value of such supplies exceeding five thousand rupees in a day.

Read more: RCM Exemption on Supplies from URPs - Prospective or Retrospective?

In this edition, we bring you an article on retrospectivity of Section 9(4) of Central Goods and Services Tax Act. The said section was omitted with effective from Oct 17 after CBIC receiving huge representations stating that the compliance burden it caused and forced many small time assesses to register. However, while the said section is omitted from Oct 17, the applicability from June 17 to Oct 17 is unknown. The tax authorities believe that the said omission is from Oct 17, the taxability would exists for the period prior to it. However, the tax payers state that considering the jurisprudence and intention to relive tax payers, the omission should be held retrospective. The article deals precisely on the said issue.

Read more: SBS Wiki E Journal Nov 2020