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    GST VALUATION OF STOCK TRANSFERS TO AGENTS, RELATED AND DISTINCT PERSONS

    Introduction:

    It has been a year since GST has rolled out. Though the trade is familiar with the concept of supply and valuation under GST law, yet few of them are facing certain practical difficulties in aligning their business to GST. In this article, we are going to touch up on the GST aspects relating to establishment of a branch, agent or any other related entity. 

    The Concept of Related Persons, Distinct Persons & Agents under GST Law:

    • Related persons mean a person who is a member of family, officer, director of another business, partners, employer and employee, a person or an entity who holds 25% or more voting stocks or shares in a company and they can either directly or indirectly controls the other. Related persons also include legal persons, and sole agent or sole distributor or sole concessionaire.
    • Distinct persons are the offices or establishments of a single entity which are located in different states for which more than one registration under GST is required to be obtained in each of the states in which such offices or establishments are located. Each such offices or establishments located in different states having separate registration shall be treated as distinct persons for GST law.
    • Agent means a person who acts in a way of representative character to supply or to receive goods or services or both on behalf of principal. Agent includes a factor, broker, commission agent and del credere agent etc.,

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    MCA UPDATES RULES, CIRCULARS, NOTIFICATIONS AND ORDERS ISSUED  DURING THE MONTH OF NOVEMBER, 2018

     

    RULES 

    • Companies (Registered Valuers and Valuation) Fourth Amendment Rules, 2018, Dated: 13.11.2018. 

    Vide the said amendment rules, the Central Government has made some amendments/insertions to the Principal rules, in relation to the applicability of the valuation rules in relation to the types of valuations; giving relaxation to the qualifications for a person to become a Registered valuer, and the experience/qualification required for undertaking valuation in respect of the various asset classes. 

    http://www.mca.gov.in/Ministry/pdf/CompaniesRegisteredValuers4AmdtRules_13112018.pdf 

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    Introduction

    • ICAI has issued Accounting Standards and Standards on Auditing for performance of Statutory Audit and finalization of books of Accounts. Apart from those there is a set of standards which solely deals with internal audit. These set of standards are known as “Standard on Internal Audit”
    • In general terms, Standard on Internal Audit (SIA) are a set of systematic guidelines used by internal auditors to ensure the accuracy and consistency of their actions and reports;
    • Like any other standard, they provide the guidance in determining the nature, timing and extent of audit procedures that should be applied to fulfill the objective of Internal Audit;
    • They are the criteria or yardsticks against which the quality of the Internal Audit results are evaluated.
    • The Standards on Internal Audit are issued by Institute of Chartered Accountants of India (ICAI). Apart from standards, ICAI has also issued the Guidance Notes.

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    Introduction:

    • Section 145(2) of the Income Tax Act,1961(“the Act”) grants power to Central Government to notify Income Computation Disclosure Standards. 
    • 10 ICDS were notified by Central Government on 31stMarch,2015. However, they are made applicable from the Assessment Year 2017 -18 with a specified deferment period of one year from date of its implementation. 

    This article is written to clear the confusion established in the industry as to what rate of tax is to be applied on the supply of old and used motor vehicles which are purchased pre and post GST regime.

    Introduction

    When the Goods and Services Tax has rolled out, the entire nation was expecting a single rate of tax across the country as campaigned by the Government with the slogan “Good and Simple Tax” but the Government came up with 4 slab rates by breaking this expectation. The four slab rates have been set at 5%, 12%, 18%, 28% for different goods and services.

    The rate applicable for the Motor Vehicles is at 28%. Further in case of luxury vehicles, where there is an additional Compensation Cess at varied rates of 15%, 3% and 1% depending upon the make specifications. The rates of excise duty and VAT on Motor Vehicles were also on a higher side under the pre-GST regime. In addition to these high rates, input tax credit is also not allowed both in pre and post GST regime except in certain specified cases.

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