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    The Finance Bill, 2016 proposed to insert a new section – section 270A on imposition of penalty to replace the existing section 271of the Income-tax Act, 1961 (“Act”) which has been matter of litigation throughout. This section shall come into effect from April 1, 2017 i.e., Assessment Year (“AY”) 2017-18.

     

    The reasons for bringing in a new section, as stated in the Memorandum explaining the Finance Billis - “Under the existing provisions, penalty on account of concealment of particulars of income or furnishing inaccurate particulars of income is leviable under section 271(1)(c) of the Income-tax Act. In order to rationalize and bring objectivity, certainty and clarity in the penalty provisions, it is proposed that section 271 shall not apply to and in relation to any assessment for the assessment year commencing on or after the 1stday of April, 2017 and subsequent assessment years and penalty be levied under the newly inserted section 270A with effect from 1stApril, 2017. The new section 270A provides for levy of penalty in cases of under reporting and misreporting of income”.

     

    Purpose for bringing a new section:

     

    The existing provisions of Section 271of the Act is for levy of penalty in case of concealment of income or furnishing of inaccurate particulars of income which can range from 100 percent to 300 percent of the amount of tax sought to be evaded by an assessee. The levy of penalty under this section has always attracted huge litigation. The discretion regarding the quantum of penalty that can be imposed lies in the hands of Assessing Officer which also led to corruption. Major litigation under this section has been on the following issues:

     

    • The interpretation of the term – ‘tax sought to be evaded’;

     

    • The tax authorities considered any addition or disallowance made in the course of assessment would attract the levy of penalty under section 271(1)(c);

     

    • The rate of penalty has always been upto the discretion of the tax authority etc.

     

    To overcome all the shortcomings of this section and to reduce litigation to some extent, the Finance Bill, 2016 proposed the insertion of Sections 270A and 270AA in the Act which will replace the existing provisions of section 271.

     

    Section 270A:

     

    The section 270A of the Act imposes penalty for under reporting and misreporting of income. It states that:

     

    • The Assessing Officer / Commissioner (Appeals) / Principal Commissioner or the Commissioner may

     

    • During the course of any proceedings under the Act
    • Direct that any person
    • Who has under-reported his income
    • Shall be liable to pay penalty in addition to tax, if any, on the under reported income


     

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    SBS Wiki                                                                                                                                                       www.sbsandco.com/wiki

     

    In a nutshell, the concept of ‘concealment of income or furnishing of inaccurate particulars of income’ mentioned in section 271(1)(c) has been replaced by under reporting and misreporting of income which has been clearly defined in the section.

     

    What constitutes under-reporting of income?

     

    Sub-section (2) of section 270A lists the cases wherein a person is said to have under reported his income which are mentioned below:

    1. the income assessed is greater than the income determined in the return processed under clause (a) of sub-section (1) of section 143;

     

    1. the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been furnished;

     

    1. the income reassessed is greater than the income assessed or reassessed immediately before such re-assessment;

     

    1. the amount of deemed total income assessed or reassessed as per the provisions of section 115JB or 115JC, as the case may be, is greater than the deemed total income determined in the return processed under clause (a) of sub-section (1) of section 143;

     

    1. the amount of deemed total income assessed as per the provisions of section 115JB or 115JC is greater than the maximum amount not chargeable to tax, where no return of income has been filed;

     

    1. the income assessed or reassessed has the effect of reducing the loss or converting such loss into income.

     

    The most important point to be noted here is that in case of the assessee who has reported a loss in his return of income, penalty will be charged on the amount of tax on the under reported income inspite of the assessee still having a loss after including the under reported income. Due to this provision, any income which is being under reported by the assessee will fall within the purview of penalty (excluding certain circumstances mentioned below) even if the assessee has an overall loss.

     

    What constitutes misreporting of income?

     

    Income is said to be misreported in the following cases:

     

    1. misrepresentation or suppression of facts;
    2. failure to record investments in the books of accounts;
    3. claim of expenditure nor substantiated by any evidence;
    4. recording of any false entry in the books of account;
    5. failure to record any receipt in books of account having a bearing on total income and
    6. failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction to which the provisions of Chapter X(Special provisions relating to avoidance of double taxation) applies

     

     

     

     

     

     

     

     

     

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    Rationalisation of penalty provisions

     

     

    SBS Wiki                                                                                                                                                       www.sbsandco.com/wiki

     

    Amount forming under reported income:

     

    In case a person’s case falls under any of the above 6 clauses, the amount of under reported income shall be:

     

    Rationalisation of

     

     

     

    Amount of under-reported income if assessed for first time

     

     

    *where,

     

     

    If Return of income has been furnished

     

     

     

     

     

     

    If Return of income has not been

     

    furnished

     

     

     

     

     

    Unreported income arising out of

     

    determination of deemed total income in accordance with MAT / AMT

     

     

     

    In any other case

     

     

    Amount of income assessed (-) Amount of income determined under 143(1)(a

     

     

    For Company, firm, local authority:

     

    Amount of income assessed

     

     

    For others:

     

    Amount of income assessed (-) maximum amount not chargeable to tax

     

     

    In accordance with formula*

     

    (A-B)+(C-D)

     

     

    Amount of income reassessed / recomputed (-) amount of income reassessed / recomputed in the preceding order

     

     

    penalty provisions


     

    A = Total income, including the under reported income, as per the normal provisions of the Act B = Total income, excluding the under reported income, as per the normal provisions of the Act C = Total income, including the under reported income, as per the provisions of section

     

    115JB / 115JC, i.e., MAT / AMT

    D = Total income, excluding the under reported income, as per the provisions of section 115JB / 115JC, i.e., MAT / AMT

     

    In case, the amount of under reported income on any issue has been considered under the normal provisions of the Act and as per provisions of section 115JB / 115JC, then for the purpose of computing the amount under D, such amount, considered under both, will not be excluded.

     

     

     

     

     

     

     

     

     

     

     

     

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    Amounts that would not form part of under reported income

     

    Section 270A lays lists down certain amounts that would not form a part of under reported income to not cause undue hardship to Assessees. These are listed below:

     

    • The amount of income for which the assessee offers an explanation which is satisfactory to the AO/CIT(A)/CIT/PCIT of it being bonafide and the Assessee has disclosed all material facts to substantiate the explanation

     

    • The amount of under reported income determined on the basis of an estimate wherein the accounts are correct and complete to the satisfaction of the AO/CIT(A)/CIT/PCIT but the method employed cannot compute the income satisfactorily

     

    • The amount of under reported income has been determined on the basis of an estimate, wherein the assessee on his own, has estimated a lower amount of addition or disallowance on the same issue andhas included such amount in the computation of income and has disclosed all material facts relating to such addition and disallowance

     

    • The amount of under reported income which is on account of any addition made in accordance with the arm’s length price as determined by the Transfer Pricing Officer and proper documentation has been maintained by the Assessee as prescribed under section 92D. Further, the assessee should also have declared the international transactions under Chapter – X and disclosed all material facts relating to the same

     

    • Amount of undisclosed income referred to in section 271AAB (penalty where search has been initiated)

     

    Amount of penalty

     

    The amount of penalty would be equal to 50% of the amount of tax payable on under reported income. In case the under reported income is on account of misreporting then the penalty would be equal to 200%of the amountof tax payable on under reported income. The AO/ CIT(A) / CIT / PCIT should issue an order in writing to impose penalty under this section.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

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    Rationalisation of penalty provisions

     

     

    SBS Wiki                                                                                                                                                       www.sbsandco.com/wiki


     

    Amount of tax payable on under reported income

     

     

     

    No ROI filed + income

     

    assessed for first time

     

     

    Total income determined under

    Tax payable in respect

    clause 143(1)(a) / assessed /

    of under-reported income

    reassessed or recomputed in a

    shall be

    preceding order is a loss

     

     

     

     

     

    Amount of income assessed (+)

     

    maximum amount not

     

    chargeable to tax

     

     

     

    Amount of tax calculated on the under reported income as if it were total income

     

     

    Rationalisationofpenaltyprovisions

     

     

     

     

    In any other case                                                        X-Y*

     

     

     

    *X = Amount of tax calculated on the total income, including the under reported income

     

    Y = Amount of tax calculated on the total income, excluding the under reported income

     

    Penalty shall not be imposed if any disallowance or addition has formed the basis of imposition of penalty in the case of the person for the same or any other assessment year.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

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    Immunity from imposition of penalty and prosecution – section 270AA

     

     

     

     

    Penalty imposed u/s

     

    270A and immunity

     

    is sought u/s 270AA

     

     

     

     

    2 conditions to be

     

    satisfied

     

     

     

     

     

    Tax + interest payable

    No appeal filed against

    by order u/s 143(3) /

    147 paid within time                                      such order

    prescribed u/s 156

    YES

     

     

     

     

    Application to be

     

    made within 30 days

     

    of such order to AO

     

     

     

     

    AO will pass order within 30 days

     

    from the end of the month in which

     

    the application is made wither

     

    accepting or rejecting the

     

    application after giving the assessee

     

    an opportunity of being heard

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

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    Rationalisation of penalty provisions

     

     

    SBS Wiki                                                                                                                                                       www.sbsandco.com/wiki

     

    Section 270AA has been inserted w.e.f April 1, 2017 from AY 2017-18 to provide immunity to assessees from imposition of penalty u/s 270A and initiation of proceedings u/s 276C (wilful attempt to evade tax, etc) or section 276CC (failure to furnish returns of income) if the following 2 conditions are satisfied:

     

    • The amount of tax and interest payable as per the order issued under section 143(3) or 147 of the Act, as the case may be, has been paid within the period specified within the time limit specified in the Notice of Demand, and

     

    • No appeal has been filed against such order issued under section 143(3) or 147 of the Act

     

    Process for obtaining immunity

     

    An assessee should make an application within one month from the end of the month in which the order u/s 143(3) and 147 has been received. The form and manner in which the application is to be made is yet to be notified by CBDT.

     

    In case the AO is satisfied that all conditions mentioned above have been fulfilled by the Assessee, he may grant an order accepting such application to grant immunity u/s 270AA. The order shall be passed after the expiry of the period available to file appeal against the above mentioned orders.

     

    The order has to be passed by the AO within one month from the end of the month in which the application has been made by the assessee. Before passing any order, the assessee is to be given an opportunity of being heard.

     

    In case the penalty under section 270A has been imposed on account of misreporting, no immunity is available for the assessee under this section.

     

    It is important to note that where the application has been accepted by the AO and an order has been issued for the same, no appeal can be filed with the CIT(A) nor an application for revision can be made under section 264 against the order received u/s 143(3) or 147 of the Act.

     

    With the insertion of section 270A and section 270AA in the Act, the complexities in the imposition of penalty have been reduced to certain extent along with the quantum of penalty thus being beneficiary for all assessee.

    Tags:

    Over the last two decades, rising internet and mobile phone penetration has changed the way we communicate and do business. E-commerce is relatively a novel concept. It is, at present, heavily leaning on the internet and mobile phone revolution to fundamentally alter the way businesses reach their customers.

     

    While in countries such as the US and China, e-commerce has taken significant strides to achieve sales of over 150 billion USD in revenue, the industry in India is, still at its infancy. However over the past few years, the sector has grown by almost 35% CAGR from 3.8 billion USD in 2009 to an estimated 12.6 billion USD in 20131

     

    Industry studies by IAMA2 Indicate that online travel dominates the e-commerce industry with an estimated 70% of the market share. However, e-retail in both its forms; online retail and market place, has become the fastest-growing segment, increasing its share from 10% in 2009 toan estimated 18% in 20133 . Calculations based on industry benchmarks estimate that the number of parcel check-outs in e-commerce portals exceeded 100 million in 2013. However, this share represents a miniscule proportion (less than 1%) of India’s total retail market, but is poised for continued growth in the coming years. If this robust growth continues over the next few years, the size of the e-retail industry is poised to be 10 to 20 billion USD by 2017-2020. This growth is expected to be led by increased consumer-led purchases in durables and electronics, apparels and accessories, besides traditional products such as books and audio-visuals.

     

    Now India is getting ready for introduction of Goods and Service Tax law (GST), it can further fuel the growth of e-commerce

     

    With the above background the author has made an attempt to bring the extant FEMA - Foreign Direct Investment Regulations for e-commerce industry

     

    Brief Background:

     

    Before 2006                       FDI was prohibited into Retail Business

     

    10thFebruary, 2006        FDI in cash-and-carry (wholesale) brought under automatic route.

     

    Earlier, it was allowed under approval route. 51% FDI was permitted under Government approval into SBRT

     

    April, 2010                          Cash and Carry Whole Sale Trade is permitted subject to 25% intra group entities

     

    sales restriction

     

     

    1Source: Internet and Mobile Association of India research report

     

    2Source: IAMAI report titled ‘e-Commerce Rhetoric, Reality and Opportunity’

     

    3Source: PwC analysis

     

     

    5 | P a g e


     

    SBS Wiki

    www.sbsandco.com/wiki

     

    July, 2010

    DIPP has issued second Discussion Paper FDI into MBRT

    7th December, 2011

    Union Cabinet Proposes 51% FDI in Multi-Brand Retail Trade

    10th January, 2012

    FDI into Single Brand Retail increased to 100% under Government route subject

     

    to stipulated Conditions

     

    14th September, 2012 The Government opens FDI into Multi-Brand Retail Trade (MBRT) upto 51% subject to stipulated conditions

     

    20th September, 2012 The Government clarifies the position that company having FDI cannot enter into e-commerce in both SBRT and MBRT

     

    January, 2014                    DIPP Releases a discussion paper on “E-Commerce in India, highlighting pros and

     

    cons of allowing FDI in the Sector”

     

    29th March, 2016           DIPP has issued Press Note No. 3/2016, whereby the definition of E-Commerce has been divided into Inventory based Model and Market based model.

     

    24th June, 2016                DIPP has issued Press Note No. 5/2016 for relaxing local sourcing norms for SBRT

     

    Extant FDI Regulations for FDI into E-Commerce:

     

    1. Relevant Definitions:

     

    • E-commerce- E-commerce means buying and selling of goods and services including digital products over digital & electronic network.

     

    • E-commerce entity- E-commerce entity means a company incorporated under the Companies Act, 1956 or the Companies Act, 2013 or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in section 2(v)(iii) of FEMA 1999, owned or controlled by a person resident outside India and conducting the e-commerce business.

     

    • Inventory based model of e-commerce- Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.

     

    • Marketplace based model of e-commerce- Marketplace based model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller.

     

     

     

     

     

     

     

     

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    FDI into eCommerce

     

     

    SBS Wiki                                                                                                                                                      www.sbsandco.com/wiki

     

    1. Guidelines for Foreign Direct Investment on e-commerce sector:

     

    • 100% FDI under automatic route is permitted in marketplace model of e-commerce. (ii)FDI is not permitted in inventory based model of e-commerce.

     

    1. Other Conditions:

     

    • Digital & electronic network will include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles etc.

     

    • Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis.

     

    (iii)E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services.

     

    (iv)E-commerce entity providing a marketplace will not exercise ownership over the inventory i.e. goods purported to be sold. Such an ownership over the inventory will render the business into inventory based model.

     

    • An e-commerce entity will not permit more than 25% of the sales affected through its marketplace from one vendor or their group companies.

     

    (vi)In marketplace model goods/services made available for sale electronically on website should clearly provide name, address and other contact details of the seller. Post sales, delivery of goods to the customers and customer satisfaction will be responsibility of the seller.

     

    • In marketplace model, payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India.

     

    (viii)In marketplace model, any warrantee/guarantee of goods and services sold will be responsibility of the seller.

     

    (ix)E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field.

     

    • Guidelines on cash and carry wholesale trading as given in para 5.2.15.1.2 of the Consolidated FDI Policy dated 7th June, 2016 will apply on B2B e-commerce.

     

     

     

     

     

     

     

     

     

     

     

     

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    FDI into eCommerce

     

     

    SBS Wiki                                                                                                                                                       www.sbsandco.com/wiki

     

    1. Subject to the conditions of FDI policy on services sector and applicable laws/regulations, security and other conditionalties, sale of services through e-commerce will be under automatic route.

     

    Currently, eTravel comprises close to 70% of the total eCommerce market. eTailing, which comprises of online retail and online marketplaces, has become the fastest-growing segment in the larger market having grown at a CAGR of around 56% over 2009-2014. The size of the eTail market is pegged at 6 billion USD in 2015. Books, apparel and accessories and electronics are the largest selling products through eTailing, constituting around 80% of product distribution. 4

     

    The increasing use of smartphones, tablets and internet broadband and 3G/4G has led to developing a strong consumer base likely to increase further. This, combined with a larger number of homegrown eTail companies with their innovative business models has led to a robust eTail market in India rearing to expand at high speed.

     

    The ecommerce business may further give impetus once the GST Mechanism is put in place and the echo system is tuned to the new law.

    Tags:

    Over the last two decades, rising internet and mobile phone penetration has changed the way we communicate and do business. E-commerce is relatively a novel concept. It is, at present, heavily leaning on the internet and mobile phone revolution to fundamentally alter the way businesses reach their customers.

     

    While in countries such as the US and China, e-commerce has taken significant strides to achieve sales of over 150 billion USD in revenue, the industry in India is, still at its infancy. However over the past few years, the sector has grown by almost 35% CAGR from 3.8 billion USD in 2009 to an estimated 12.6 billion USD in 20131

     

    Industry studies by IAMA2 Indicate that online travel dominates the e-commerce industry with an estimated 70% of the market share. However, e-retail in both its forms; online retail and market place, has become the fastest-growing segment, increasing its share from 10% in 2009 toan estimated 18% in 20133 . Calculations based on industry benchmarks estimate that the number of parcel check-outs in e-commerce portals exceeded 100 million in 2013. However, this share represents a miniscule proportion (less than 1%) of India’s total retail market, but is poised for continued growth in the coming years. If this robust growth continues over the next few years, the size of the e-retail industry is poised to be 10 to 20 billion USD by 2017-2020. This growth is expected to be led by increased consumer-led purchases in durables and electronics, apparels and accessories, besides traditional products such as books and audio-visuals.

     

    Now India is getting ready for introduction of Goods and Service Tax law (GST), it can further fuel the growth of e-commerce

     

    With the above background the author has made an attempt to bring the extant FEMA - Foreign Direct Investment Regulations for e-commerce industry

     

    Brief Background:

     

    Before 2006                       FDI was prohibited into Retail Business

     

    10thFebruary, 2006        FDI in cash-and-carry (wholesale) brought under automatic route.

     

    Earlier, it was allowed under approval route. 51% FDI was permitted under Government approval into SBRT

     

    April, 2010                          Cash and Carry Whole Sale Trade is permitted subject to 25% intra group entities

     

    sales restriction

     

     

    1Source: Internet and Mobile Association of India research report

     

    2Source: IAMAI report titled ‘e-Commerce Rhetoric, Reality and Opportunity’

     

    3Source: PwC analysis

     

     

    5 | P a g e


     

    SBS Wiki

    www.sbsandco.com/wiki

     

    July, 2010

    DIPP has issued second Discussion Paper FDI into MBRT

    7th December, 2011

    Union Cabinet Proposes 51% FDI in Multi-Brand Retail Trade

    10th January, 2012

    FDI into Single Brand Retail increased to 100% under Government route subject

     

    to stipulated Conditions

     

    14th September, 2012 The Government opens FDI into Multi-Brand Retail Trade (MBRT) upto 51% subject to stipulated conditions

     

    20th September, 2012 The Government clarifies the position that company having FDI cannot enter into e-commerce in both SBRT and MBRT

     

    January, 2014                    DIPP Releases a discussion paper on “E-Commerce in India, highlighting pros and

     

    cons of allowing FDI in the Sector”

     

    29th March, 2016           DIPP has issued Press Note No. 3/2016, whereby the definition of E-Commerce has been divided into Inventory based Model and Market based model.

     

    24th June, 2016                DIPP has issued Press Note No. 5/2016 for relaxing local sourcing norms for SBRT

     

    Extant FDI Regulations for FDI into E-Commerce:

     

    1. Relevant Definitions:

     

    • E-commerce- E-commerce means buying and selling of goods and services including digital products over digital & electronic network.

     

    • E-commerce entity- E-commerce entity means a company incorporated under the Companies Act, 1956 or the Companies Act, 2013 or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in section 2(v)(iii) of FEMA 1999, owned or controlled by a person resident outside India and conducting the e-commerce business.

     

    • Inventory based model of e-commerce- Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.

     

    • Marketplace based model of e-commerce- Marketplace based model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller.

     

     

     

     

     

     

     

     

    6 | P a g e


    FDI into eCommerce

     

     

    SBS Wiki                                                                                                                                                      www.sbsandco.com/wiki

     

    1. Guidelines for Foreign Direct Investment on e-commerce sector:

     

    • 100% FDI under automatic route is permitted in marketplace model of e-commerce. (ii)FDI is not permitted in inventory based model of e-commerce.

     

    1. Other Conditions:

     

    • Digital & electronic network will include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles etc.

     

    • Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis.

     

    (iii)E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services.

     

    (iv)E-commerce entity providing a marketplace will not exercise ownership over the inventory i.e. goods purported to be sold. Such an ownership over the inventory will render the business into inventory based model.

     

    • An e-commerce entity will not permit more than 25% of the sales affected through its marketplace from one vendor or their group companies.

     

    (vi)In marketplace model goods/services made available for sale electronically on website should clearly provide name, address and other contact details of the seller. Post sales, delivery of goods to the customers and customer satisfaction will be responsibility of the seller.

     

    • In marketplace model, payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India.

     

    (viii)In marketplace model, any warrantee/guarantee of goods and services sold will be responsibility of the seller.

     

    (ix)E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field.

     

    • Guidelines on cash and carry wholesale trading as given in para 5.2.15.1.2 of the Consolidated FDI Policy dated 7th June, 2016 will apply on B2B e-commerce.

     

     

     

     

     

     

     

     

     

     

     

     

    7 | P a g e


    FDI into eCommerce

     

     

    SBS Wiki                                                                                                                                                       www.sbsandco.com/wiki

     

    1. Subject to the conditions of FDI policy on services sector and applicable laws/regulations, security and other conditionalties, sale of services through e-commerce will be under automatic route.

     

    Currently, eTravel comprises close to 70% of the total eCommerce market. eTailing, which comprises of online retail and online marketplaces, has become the fastest-growing segment in the larger market having grown at a CAGR of around 56% over 2009-2014. The size of the eTail market is pegged at 6 billion USD in 2015. Books, apparel and accessories and electronics are the largest selling products through eTailing, constituting around 80% of product distribution. 4

     

    The increasing use of smartphones, tablets and internet broadband and 3G/4G has led to developing a strong consumer base likely to increase further. This, combined with a larger number of homegrown eTail companies with their innovative business models has led to a robust eTail market in India rearing to expand at high speed.

     

    The ecommerce business may further give impetus once the GST Mechanism is put in place and the echo system is tuned to the new law.

    Tags:

    Introduction

    As Ronald Regan rightly said, “Trust, but Verify”.The fact that one has to trust beyond oneself is more of a psychological challenge. 

    As per section 143(3)(a) of the Companies Act,2013 the auditor’s report shall also state whether he has sought and obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of his audit and if not, the details thereof and the effect of such information on the financial statements. 

    Section 143(9) stated every auditor shall comply with the auditing standards. 

    Tags:

    INTRODUCTION:

    The Manufacturer or Service Provider buys inputs and capital goods in order to use it for provision of taxable service or for manufacturing the final products. The assessee avails the credit of excise duty on such inputs/ capital goods which is utilised while making payment of output tax as per Rule 4 of CENVAT Credit Rules, 2004. 

    In manufacturing Industry, it is a common practice to remove goods (inputs/capital goods) from factory place without even using it in the manufacturing activity. There could be various reasons for clearing goods as it is from factory place. Few reasons are as follows: 

    1. Assessee buys inputs/ capital goods in order to sell them as it is, at higher amount and make profits, or
    2. The quality of goods might not be up to the mark for using it in manufacturing and so rejected it and return back or sell to another person or the goods might be sold as it is if it is not needed because of change in production plan etc. which occasionally happens; 

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