VAT and Sales Tax – Classification of goods – Levy of tax on Image Runners @4% or @12% – Image Runners (Multi-function Network Printer) – Goods in question partake the character of peripheral of a com
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Goods and Service Tax – GST – By: – Deepak Aggarwal – Dated:- 7-2-2015 – GST……Goods and Services Tax Part-D First Discussion Paper on GST Fourth Segment (annexure) has twenty (20) Frequently Asked Questions and Answers (FAQ) on GST. 1st Question- Justification of GST- already covered in earlier articles. In net shell, GST is not simply VAT plus Service tax but a major improvement over the previous current system. 2nd Question- Meaning of GST and its working model- already covered in earlier articles. In net shell, GST is a tax on goods and services in which final consumer will be charged only GST charged by the last dealer. There will be no double taxation and tax on tax impact anywhere in supply chain. 3rd Question- Logic that GST will reduce the burden of tax, in general- already covered in earlier articles. In net shell, there will be no cascading effect of taxes on goods and services. There will be a set off from the producer s point to the retailer s point. Also
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gested in GST model. 7th Question- Benefits of GST to the common consumers- Already explained in 3rd Question. In general, burden of tax on goods would fall under GST and would benefit the consumers. 8th Question- Salient features of the proposed GST model- Already covered in earlier articles. In net shell, GST will be charged on all goods and services except exempted goods and services. There will be dual GST. One will be charged by the central in the form of CGST and second concurrently will be charged by the States in the form of SGST. For interstate sale, IGST mechanism is introduced. Cross utilization of input tax credit between the CGST and SGST will not be allowed. Each taxpayer will be allotted a PAN linked tax payer identification number with a total of 13/15 digits. 9th Question- Requirement of Dual GST- Due to constitutional requirement of fiscal federalism, dual GST model is recommended. 10th Question- Mechanism of Concurrently taxation by centre and states on a particu
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exemption for GST- Threshold exemption is provided to keep small traders out of tax net. Also Small traders get advantage over large enterprises on account of lower tax. Same time it is difficult to administer small traders and cost of administering of such traders is very high in comparison to revenue contribution by them. 14th Question- Scope of Composition and Compounding scheme- The Composition/ Compounding scheme under GST will have an upper ceiling on gross annual turnover and a floor tax rate. Limit of ₹ 50 lacs of the gross annual turnover and 0.5% floor tax rate is recommended in GST model. Also optional registration will be allowed for the dealers with turnover below the compounding cutoff. 15th Question- Mechanism of taxation of Imports under GST- A constitutional amendment is required for taxation of imports. Both CGST and SGST will be levied on imports. The incidence of tax will be destination of goods and services and the tax revenue in case of SGST will accrue th
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Goods and Service Tax – GST – By: – Deepak Aggarwal – Dated:- 7-2-2015 – GST……Goods and Services Tax Part-C First Discussion Paper on GST Second Segment explains the process of preparation for GST which is already covered in my first article- Part-A. Third Segment explains in detail the comprehensive structure of the GST model in India. India is country which have a federal system in which Centre and State both have powers in their domain and legislation in which they operate. Due to federal system, a Dual GST structure is recommended in India. In Dual GST structure, Central and State will have pre-defined functions and responsibilities. GST will have two components. One component will be Central GST (CGST) which will b
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ss all states. In case of CGST, threshold limit suggested for goods is ₹ 1.5 crore and in case of services, a higher limit is desirable. The CGST and SGST will be paid separately to accounts of Central and state government respectively. The CGST and SGST will be treated separately. In books of accounts, there will be separate accounts for the utilization or refund of credit. Cross utilization of Input tax credit (ITC) between the CGST and SGST will not be allowed. The Central government and State government would have concurrent jurisdiction in GST model. CGST will be administered by Central government and SGST will be administered by State government. A Composition / Compounding scheme is also suggested in GST model. The Scheme
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State Taxes will be subsumed in GST. Central Taxes subsumed in GST are Central Excise duty, Additional Excise duties, Excise duty levied under MTP Act, Service Tax, Additional Custom duty (CVD), Special additional duty (SAD), Surcharges and Cesses. State Taxes subsumed in GST are VAT/Sales tax, Entertainment tax, Luxury tax, Taxes on lottery, betting and gambling, State Cesses and Surcharges related to supply of goods and services and Entry tax. Regarding Purchase tax, it is not clear that whether it will be subsumed in GST or not. Some specific provisions for specific commodities are also suggested. E.g. Alcoholic beverage, Petroleum products would be kept outside ambit of GST. In case of Interstate transactions, IGST model is suggeste
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Goods and Service Tax – GST – By: – Deepak Aggarwal – Dated:- 6-2-2015 – GST……Goods and Services Tax Part-B First Discussion Paper on GST- 1st Segment First Segment of First Discussion Paper on GST explains a brief reference to the process of introduction of VAT in the Centre and in the States and also areas where needs further improvements i.e. justification for GST. Introduction of VAT In India, VAT was introduced at the Central level for a selected number of commodities in terms of MODVAT w.e.f March, 1986 and later it is extended to all commodities in terms of CENVAT w.e.f. 2002-03. Later on Service tax was added to CENVAT w.e.f. 2004-05. Vat was introduced at the State level beginning from April, 2005. Before introdu
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veral Central taxes e.g. additional customs duty, surcharges etc. – Non-inclusion of value added chain in the distribution trade below the manufacturing level Shortcomings- at State level -Non-inclusion of several state taxes e.g. luxury tax, entertainment tax etc. -Cascading effect on account of Cenvat element i.e. excise duty on the goods remains included in the value of goods to be taxed under state VAT – No credit of input services at state level After introduction of GST, all shortcomings at Central and State level will be removed. At Central level -GST will provide comprehensively more indirect central taxes -Integrate goods and service taxes for the purpose of set-off relief -Widening of dealer base by capturing the value addition i
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Goods and Service Tax – GST – By: – Deepak Aggarwal – Dated:- 5-2-2015 – GST……Goods and Services Tax Part-A First Discussion Paper on GST GST comes in picture when in Central Budget 2007-08, Union Finance Minister made an announcement that GST will be introduced from 1st April, 2008. The task given to Empowered Committee of State Finance Ministers to make a road map for GST in consultation with Central Government. The Empowered Committee decided to setup a Joint Working Group in May, 2007. The Joint Working Group submits its report on GST in Nov.2007. The report submitted by Joint Working Group was discussed in detail and a final version of the views on GST of Empowered Committee was sent to the Government of India in Ap
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Goods and Services Tax – Started By: – ganeshan kalyani – Dated:- 31-1-2015 Last Replied Date:- 11-2-2015 – Dear Expert, I would request to give a list of country in sequence of implementation of GST. regards, ganeshan – Reply By Pradeep Khatri – The Reply = Dear Ganeshan, Please check the following link:- http://gst.customs.gov.my/en/gst/Pages/gst_ci.aspx Regards Sameer Malhotra – Consultant YAGAY and SUN (Management, Business and Indirect Tax Consultants) – Reply By MARIAPPAN GOVINDARAJAN – T
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Goods and Service Tax (GST) – PPT by Indirect Committee of ICAI – Dated:- 17-1-2015 – Constitution Amendment Bill in the Lok Sabha today with respect to Goods and Services Tax (GST) – News – Press release
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VAT and Sales Tax – TNGST – when the invoice of the petitioner contemplates interest on delayed payment, the Tribunal was justified in including the same in the taxable turnover – HC – TMI Updates – Highlights
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Goods and Service Tax – GST – By: – CA.Ankit Gulgulia – Dated:- 31-12-2014 Last Replied Date:- 30-12-1899 – One of the major Indirect tax reforms that the country is now on road to witness is the incarnation of a single GST law instead of multiple indirect taxes viz Service Tax, Central Excise, VAT, CST, Local Body Tax, Entry Tax etc. After a round of discussions of Hon ble Finance Minister with State FM s, the Government of India has tabled the GST Bill (No. 192 – Constitutional Amendment), 2014 on 19th December,2014. The clause by clause analysis of GST Bill, 2014 is as under:- Insertion of Clause 246A – To Facilitate the Parliament and States to make laws in regard to Goods and Service Tax Imposed by Union or such State 246A(1) – Notwithstanding anything contained in articles 246 and 254, Parliament, and. subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such state. (2) Parliament has ex
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ase where the service tax / excise was centre s domain in union list and sales tax on goods was state s domain except in case of interstate transactions. Article 246(2) reestablishes the centre s exclusive control on interstate supply of goods and services. Importantly interstate supply of services will mark its separate significance in the proposed GST regime. Article 279A is proposed for setup of GST Council within 60 days of commencement of this Act, 2014. The items proposed in article 279A (5) includes petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel. The date on which GST is to be levied on these items is to be recommended by GST council. Facilitative amendments in Article 248(1), 249(1), 250(1), 268(1), 269(1), 270(1), 286. Omitting Article 268A. BRIEF ANALYSIS Article 248(1) empowers the parliament to make laws on any matters not covered in state list and concurrent list. Hence in a sense this article is giving powers on residual
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the same to be assigned to states. Now, the interstate supply of goods and services has been made an exception to this pure assignment to states since service now covered. A separate article 269A has been inserted to apportionate the taxes. Article 270 provides for apportionment of taxes and duties between Union and State. The Interstate GST has been kept out of this by inserting necessary exception. The reason for this exception is since the apportionment in interstate s case is not to be undertaken as per Article 270 laid mechanism but on recommendations of GST council as facilitated under Article 269A. In other cases of GST levied by government of India, a new clause 270(1A) is inserted and apportionment to be in accordance with normal provisions of Article 270 only. Article 286 imposes restrictions for imposition of taxes on sale or purchases of goods in case of interstate trade, imports or exports or trade outside the state. It empowers the parliament for the same. Now, this is e
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e of interstate trade or commerce would also required to be made a commodity of due apportionment between union and states instead of pure assignment as in cases of goods. This article 269A is inserted precisely to mitigate this aspect. The apportionment shall be undertaken pursuant to GST Council s recommendation. To understand what transaction would constitute interstate trade, the rules of supply, origin and point of incidence would be required to be framed. The same would be in parliament s domain. Surcharge by Parliament not to Apply to GST Article 271 empowers the parliament to increase taxes and duties on articles. The GST has been made an exception to power of parliament. Hence, the parliament cannot impose surcharge on GST. Constituting the GST Council vide Article 279A BRIEF ANALYSIS Article 279A is to be inserted to empower the Hon ble President of India to constitute GST Council . Brief features shall be :- To be incorporated within 60 days of Commencement of Act. Membe
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mir, Manipur; Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and Any other matter relating to the goods and services tax, as the Council may decide. Date of levy of GST on items like petrol, diesel and natural gas. Quorum shall be 50% of members Decision by 75% of total weighted votes of members present and voting. Centre to have 1/3rd of weight of total votes and states to have 2/3rd of total votes cast. Dispute resolution modalities. New Definitions – Article 366 12A) goods and services tax means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption Hence it would exclude alcoholic liquor currently. '(26A) Services means anything other than goods Anything other than goods is service reflects wide interpretation of what constitutes services. Amendments in Union, State List of Schedule VII of Constitution. Also, amendment in Sixth Schedule. BRIEF ANALYSIS Schedule VI Par
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rade or international trade or commerce. Other Modalities An additional tax on supply of goods, not exceeding one per cent. in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (I) of Article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend and such tax shall be assigned to the states in manner as provided hereunder in (b) The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable to the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates. The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of tax under clause (1). Key Note: – This is exemption pertaining to the additional tax as referred above. Parliament may, by law
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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 30-12-2014 Last Replied Date:- 30-12-1899 – Meaning of Goods / Services / GST The Constitutional Amendment Bill defines these terms- goods includes all materials, commodities, and articles; [article 366 (12)] services means anything other than goods: [article 366 (26A)] goods and services tax means any tax on supply of goods or services or both except taxes on the supply of the alcoholic liquor for human consumption; [article 366 (12A)] Loss of Revenue / Compensation Parliament may, by law, on the recommendation of the Goods and Services Tax Council, provide for implementation of the goods and services tax for such period which may extend to five years. GST Structure Th
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will be formed by the Parliament. The Central Government would also have power to grant exemption to any goods from this tax. The point to be noted here is that this tax is to be levied on goods only, thus the differentiation between goods and services would again resume significance. The proposed amendment in Article 271 restricts the power of the Central Government to levy any surcharge on the GST. Taxes to be subsumed in GST GST will subsume the following Central and State indirect taxes: Union Taxes State Taxes Central Excise Duty and additional excise duty, CVD and SAD on import of goods, Excise duty levied under Medicinal and Toilet Preparation (Excise Duties) Act, 1955,
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ambling and entertainment and amusement are covered under the GST. However, alcoholic liquor for human consumption has been kept out of GST ambit. Way forward Going by the present mood, the Government of the day feels that it may be able to introduce GST in India w.e.f. 1st April 2016, replacing a host of indirect taxes presently levied by the centre, states and local bodies. It hopes for the parliamentary nod (two-third majority) in the forthcoming Budget session in February, 2015. This is necessary as the Indian Constitution requires amendment to allow states to tax services and the centre to tax goods at the retail level and to provide legal framework for GST by providing for constitution of a GST Council and dispute settlement mechanism
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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 29-12-2014 Last Replied Date:- 31-1-2015 – The Union Government on 19 December, 2014 introduced Constitution (122 Amendment) Bill, 2014 in Parliament which when passed shall pave the way for introduction of proposed Goods and Service Tax (GST) in India. It is to be very clearly understood that this is not a GST Bill. In fact, GST Bill is not in sight at all at this moment. What has been introduced is the Constitutional Amendment Bill enabling or empowering the Government to levy a tax called GST which it cannot levy under the present Constitution. The Bill on passage would enable the Central Government and the State Governments to levy GST. This tax (GST) shall be levied concurrently by various states as well as Union Government. Once this is passed by two-third majority in the Parliament, atleast 50 percent of the states will have to pass it. Once this amendment is through, the road will be clear for GST Bill (and then
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and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. Clause 269A Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council. Supply of goods or services, or both in the course of import into the territory of India shall be deemed to be supply of goods or services, or both in the course of inter-state trade or commerce. Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods or of services, or both takes place in the course of inter-state trade or commerce. Clause 279A The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and Twenty-second Amendme
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and Kashmir, Manipur; Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and (h) any other matter relating to the goods and services tax, as the Council may decide. What will Service Tax Council do Apart from aforementioned recommendations, it shall undertake the following – The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel. While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services. The Goods and Services Tax Council shall determine the procedure in the performance of its functions. The Goods and Services Tax Council may decide about the modalities to resolve disputes arising out of its rec
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Goods and Service Tax – GST – By: – CA Akash Phophalia – Dated:- 26-12-2014 Last Replied Date:- 30-12-1899 – GST Modality There are three models namely Central GST, State GST and Dual GST. Dual GST can further be implwmented in two ways – Concurrent GST and Non- Concurrent GST. 1. CENTRAL GST : Under this option, the two levels of government would combine their levies in the form of a single National GST, with appropriate revenue sharing arrangements among them. The tax could be controlled and administered by the central government. 2. STATE GST : The second model is to have a state GST in which the states alone levy Tax and the Centre withdraws from the field of GST or VAT completely. In this case, the state GST will work as the redistrib
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Goods and Service Tax – GST – By: – CA Akash Phophalia – Dated:- 26-12-2014 Last Replied Date:- 30-12-1899 – Why GST??? Presently the tax structure of India is very complex and Central and State both are charging taxes on goods. Although tax credit mechanism is in place but that too needs to be rationalized. Central is also imposing taxes on services. Looking to the global developments and tax structure of developed countries GST is the need of the hour. The need of GST can further be explained in the following points :- In the present tax structure there is no system of providing input credit mechanism in between taxes levied by state and the centre. Thus, cascading effect arises. There are various definitional issues related to manufac
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By: – Deepak Aggarwal – Goods and Services Tax – GST – Dated:- 24-12-2014 – – THE CONSTITUTION (122 nd AMENDMENT) BILL, 2014 It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the commencement of that provision. (Refer Italic portion for changes) Insertion of new article 246A (Main provision inserted for GST) Special provision with respect to goods and services tax Subject to below clause, the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State. Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State
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tanding anything in the foregoing provisions of this Chapter, if the Council of States has declared by resolution supported by not less than two-thirds of the members present and voting that it is necessary or expedient in the national interest that Parliament should make laws with respect to goods and services tax provided under article 246A or any matter enumerated in the State List specified in the resolution, it shall be lawful for Parliament to make laws for the whole or any part of the territory of India with respect to that matter while the resolution remains in force. Amendment of article 250 Existing clause : Notwithstanding anything in this Chapter. Parliament shall, while a Proclamation of Emergency is in operation, have power to make laws for the whole or any part of the territory of India with respect to any of the matters enumerated in the State List. Amended clause : Notwithstanding anything in this Chapter. Parliament shall, while a Proclamatio
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States within which such duties are respectively leviable. Omission of article 268A Omitted Clause : (1)Taxes on services shall be levied by the Government of India and such tax shall be collected and appropriated by the Government of India and the States, in the manner provided in clause (2). (2) The proceeds in any financial year of any such tax levied in accordance with the provisions of clause (I) shall be- (a) collected by the Government of India and the States; (b) appropriated by the Government of India and the States, in accordance with such principles of collection and appropriation as may be formulated by Parliament by law. Amendment of article 269 Existing clause : (1) Taxes on the sale or purchase of goods and taxes on the consignment of goods shall be levied and collected by the Government of India but shall be assigned and shall be deemed to have been assigned to the States on or after the 1st day of April, 1996 in the manner provided in cla
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n taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce; (b) the expression taxes on the consignment of goods shall mean taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-State trade or commerce. Insertion of new article 269A Levy and collection of goods and service tax in course of interstate trade or commerce Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council. Explanation.For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territo
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ctively, surcharge on taxes and duties referred to in article 271 and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the States in the manner provided in clause (2). (1A) The goods and services tax levied and collected by the Government of India, except the tax apportioned with the States under clause (I) of article 269A, shall also be distributed between the Union and the States in the manner provided in clause (2). Amendment of article 271 Existing clause : Notwithstanding anything in articles 269 and 270 . Parliament may at any time increase any of the duties or taxes referred to in those articles by a surcharge for purposes of the Union and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India. Amended clause Notwithstanding anything in articles 269 and 270 . Parliament may at any time incre
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all, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide. (4) The Goods and Services Tax Council shall make recommendations to the Union and the States on- (a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax; (b) the goods and services that may be subjected to, or exempted from the goods and services tax; (c) model Goods and Services Tax Laws, principles of levy, apportionment of integrated Goods and Services Tax and the principles that govern the place of supply; (d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax; (e) the rates including floor rates with bands of goods and services tax; (f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; (g) special prov
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ctions. (9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely: (a) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and (b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting. (10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of- (a) any Vacancy in, or any defect in, the constitution of the Council: or (b) any defect in the appointment of a person as a member of the Council; or (c) any procedural irregularity of the Council not affecting the merits of the case. (11) The Goods and Services Tax Council may decide about the modalities to resolve disputes arising out of its recommendation.
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of the tax as Parliament may by law specify. Amended clause: (1) No law of a State shall impose, or authorise the imposition of a tax on the supply of goods or of services or both, where such supply takes place the sale or purchase of goods where such sale or purchase takes place (a) outside the State; or (b) in the course of the import of the goods goods or services or both into, or export of the goods goods or services or both out of, the territory of India. (2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place supply of goods or of services or both in any of the ways mentioned in clause (I). (3) Any law of a State shall, in so far as it imposes, or authorises the imposition of,- (i) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or (b) a tax on the sale or purchase of goods, being a tax of the natu
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Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two-thirds of the members of that House present and voting, it shall be presented to the President who shall give his assent to the Bill and thereupon the Constitution shall stand amended in accordance with the terms of the Bill: Provided that if such amendment seeks to make any change in- (a) article 54 , article 55 , article 73 , article 162 or article 241 , or (b) Chapter IV of Part V, Chapter V of Part VI, or Chapter I of Part Xl. or (c) any of the Lists in the Seventh Schedule , or (d) the representation of States in Parliament, or (e) the provisions of this article, the amendment shall also require to be ratified by the Legislatures of not less than one-half of the States by resolutions to that effect passed by tho
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or (e) the provisions of this article, the amendment shall also require to be ratified by the Legislatures of not less than one-half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent.. Amendment of Sixth Schedule Existing Schedule: 8 (3) The District Council for an autonomous district shall have the power to levy and collect all or any of the following taxes within such district, that is to say (c) taxes on the entry of goods into a market for sale therein, and tolls on passengers and goods carried in ferries; and (d) taxes for the maintenance of schools dispensaries or roads. Amended Schedule: 8 (3) The District Council for an autonomous district shall have the power to levy and collect all or any of the following taxes within such district, that is to say (c) taxes on the entry of goods into a market for sale therein, and tolls on passe
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published in the newspapers and advertisements broadcast radio or television. 62. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling. Amended Schedule: List I- Union List 84. Duties of excise on tobacco and other goods manufactured or produced in India except (a) alcoholic liquors for human consumption (b) opium Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry. Duties of excise on the following goods manufactured or produced in India, namely:- (a) petroleum crude; (h) high speed diesel; (c) motor spirit (commonly known as petrol); (d) natural gas; (e) aviation turbine fuel: and (f) tobacco and tobacco products. : 92. Taxes on the sale or purchase of newspapers and on advertisements published therein . 92C. Taxes on services. List II State List
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of goods to States for two years or such other period recommended by the Council 18. (1) An additional tax on supply of goods, not exceeding one per cent. in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (I) of article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend, and such tax shall be assigned to the States in the manner provided in clause (2). (2) The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable to the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates. (3) The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of tax under clause (1). (4) Parliament may, by law, formulate the princ
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y, difficulty arises in giving effect to the provisions of the Constitution as amended by this Act (including any difficulty in relation to the transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the President may, by order, make such provisions, including any adaptation or modification of any provision of the Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty: Provided that no such order shall be made after the expiry of three years from the date of such assent. (2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament. – – Scholarly articles for knowledge sharing authors experts professionals Tax Management India – taxmanagementindia – taxmanagement – taxmanagementindia.
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Dated:- 22-12-2014 – The Union Finance Minister, Shri Arun Jaitley said that Goods and Services Tax (GST) will benefit most of the States from day one especially the consumer States. He said that to remove any apprehension among the States about the fall in their revenue collections, provisions have been made in the Constitution Amendment Bill on GST introduced by him in the Lok Sabha on the last Friday, 19th December, 2014 to ensure that none of them lose any revenue after the implementation of the GST. In this regard he mentioned that it is proposed to levy a non-vatable additional tax of not more than 1% on supply of goods in the course of inter-State trade or commerce. The Finance Minister said that this tax will be for a period not ex
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ntary Consultative Committee attached to his Ministry. The Finance Minister Shri Jaitley briefed the members about the series of meetings held by him with the Empowered Group of State Finance Ministers wherein concerns of the various States were addressed. The Finance Minister said that as the volume of trade expands and the growth momentum picks-up, then every State will be benefitted with the rise in their revenue collections with the implementation of GST. Members of the Committee also gave various suggestions with regard to GST. Most of the Members of the Consultative Committee supported the decision of the Government to implement the GST and said that this will help in better tax collections, better tax compliance, less cases of tax ev
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with GST and how Revenue Neutral Rates (RNR) are going to be worked-out among others. Replying to the various queries of the Members, the Finance Minister Shri Jaitley said that GST will help in reducing tax on tax and therefore, will be beneficial to the consumers. Besides it, GST will also be beneficial to the Centre, States and industrialists, manufacturers, common man and the country at large since it will being more transparency, better compliance, increase in GDP growth and the revenue collections of both States and the Centre. He said that the Government is open for any suggestion for making further improvement(s) in the GST Constitutional Amendment Bill introduced by him in the current Session of Parliament. He said that GST is a co
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Allied Laws – Finance Minister tabled the Constitution Amendment Bill in the Lok Sabha today with respect to Goods and Services Tax – TMI Updates – Highlights
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Dated:- 19-12-2014 – Finance Minister tabled the Constitution Amendment Bill in the Lok Sabha today with respect to Goods and Services Tax The Union Cabinet approved on 17th December,2014 the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in the country. The Union Finance Minister Shri Arun Jaitley introduced the said Bill in the Lok Sabha today. The proposed amendments in the Constitution will confer powers both to the Parliament and State legislatures to make laws for levying GST on the supply of goods and services in the same transaction. GST will simplify and harmonise the indirect tax regime in the country. GST will broaden the tax base, and result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one state to another in the chain of value addition, there is an in-built mechanism in the design of GST that woul
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nder the Constitution. • Centre will compensate States for loss of revenue arising on account of implementation of the GST for a period up to five years. A provision in this regard has been made in the Amendment Bill (The compensation will be on a tapering basis, i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year). The proposed GST has been designed keeping in mind the federal structure enshrined in the Constitution and will have the following important features: • Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. • At the State level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST. • All goods and services, except alcoholic liquor for human consumption, will be brought under the purview of GST. Petroleum
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on-based tax. All SGST on the final product will ordinarily accrue to the consuming State. • GST rates will be uniform across the country. However, to give some fiscal autonomy to the States and Centre, there will a provision of a narrow tax band over and above the floor rates of CGST and SGST. • It is proposed to levy a non-vatable additional tax of not more than 1% on supply of goods in the course of inter-State trade or commerce. This tax will be for a period not exceeding 2 years, or further such period as recommended by the GST Council. This additional tax on supply of goods shall be assigned to the States from where such supplies originate. AS INTRODUCED IN LOK SABHA Bill No. 192 of 2014* THE CONSTITUTION (ONE HUNDRED AND TWENTY-SECOND AMENDMENT) BILL, 2014 A BILL further to amend the Constitution of India. BE it enacted by Parliament in the Sixty-fifth Year of the Republic of India as follows:- Short title and commencement. 1. (1) This Act may be called the Constitutio
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trade or commerce. Explanation.-The provisions of this article, shall, in respect of goods and services tax referred to in clause (5), of article 279A, take effect from the date recommended by the Goods and Services Tax Council. . Amendment of article 248. 3. In article 248 of the Constitution, in clause (1), for the word Parliament , the words, figures and letter Subject to article 246A, Parliament shall be substituted. Amendment of article 249. 4. In article 249 of the Constitution, in clause (1), after the words with respect to , the words, figures and letter goods and services tax provided under article 246A or shall be inserted. Amendment of article 250. 5. In article 250 of the Constitution, in clause (1), after the words with respect to , the words, figures and letter goods and services tax provided under article 246A or shall be inserted. Amendment of article 268. 6. In article 268 of the Constitution, in clause (1), the words and such duties of excise on medicinal and toilet
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ds, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce. (2) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. . Amendment of article 270. 10. In article 270 of the Contitution,- (i) in clause (1), for the words, figures and letter articles 268, 268A and article 269 , the words, figures and letter articles 268, 269 and article 269A shall be substituted; (ii) after clause (1), the following clause shall be inserted, namely:- (1A) The goods and services tax levied and collected by the Government of India, except the tax apportioned with the States under clause (1) of article 269A, shall also be distributed between the Union and the States in the manner provided in clause (2). . Amendment of article 271. 11. In
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d to in sub-clause (c) of clause (2) shall, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide. (4) The Goods and Services Tax Council shall make recommendations to the Union and the States on- (a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax; (b) the goods and services that may be subjected to, or exempted from the goods and services tax; (c) model Goods and Services Tax Laws, principles of levy, apportionment of Integrated Goods and Services Tax and the principles that govern the place of supply; (d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax; (e) the rates including floor rates with bands of goods and services tax; (f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; (g) special provi
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n of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:- (a) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and (b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting. (10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of- (a) any vacancy in, or any defect in, the constitution of the Council; or (b)any defect in the appointment of a person as a member of the Council; or (c) any procedural irregularity of the Council not affecting the merits of the case. (11) The Goods and Services Tax Council may decide about the modalities to resolve disputes arising out of its recommendation. . Amendment of article 286. 13. In article 286 of the Constitution,-
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8, 269, 269A and article 279A includes a Union territory with Legislature; . Amendment of article 368. 15. In article 368 of the Constitution, in clause (2), in the proviso, in clause (a), for the words and figures article 162 or article 241 , the words, figures and letter article 162, article 241 or article 279A shall be substituted. Amendment of Sixth Schedule 16. In the Sixth Schedule to the Constitution, in paragraph 8, in sub-paragraph (3),- (i) in clause (c), the word and occurring at the end shall be omitted; (ii) in clause (d), the word and shall be inserted at the end; (iii) after clause (d), the following clause shall be inserted, namely:- (e) taxes on entertainment and amusements. . Amendment of Seventh Schedule. 17. In the Seventh Schedule to the Constitution,- (a) in List I – Union List,- (i) for entry 84, the following entry shall be substituted, namely:- 84. Duties of excise on the following goods manufactured or produced in India, namely:- (a) petroleum crude; (b) high
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her period recommended by the Council. 18. (1) An additional tax on supply of goods, not exceeding one per cent. in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (1) of article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend, and such tax shall be assigned to the States in the manner provided in clause (2). (2) The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable to the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates. (3) The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of tax under clause (1). (4) Parliament may, by law, formulate the principles for determining the place of origin from where supply of go
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to the provisions of the Constitution as amended by this Act (including any difficulty in relation to the transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the President may, by order, make such provisions, including any adaptation or modification of any provision of the Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty: Provided that no such order shall be made after the expiry of three years from the date of such assent. (2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament. STATEMENT OF OBJECTS AND REASONS The Constitution is proposed to be amended to introduce the goods and services tax for conferring concurrent taxing powers on the Union as well as the States including Union
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al Surcharges and Cesses so far as they relate to the supply of goods and services; (b) subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, Taxes on lottery, betting and gambling; and State cesses and surcharges in so far as they relate to supply of goods and services; (c) dispensing with the concept of declared goods of special importance under the Constitution; (d) levy of Integrated Goods and Services Tax on inter-State transactions of goods and services; (e) levy of an additional tax on supply of goods, not exceeding one per cent. In the course of inter-State trade or commerce to be collected by the Government of India for a period of two years, and assigned to the States from where the supply originates; (f) conferring concurrent power upon Parliament and the State Legislatures to make laws governing good
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ted by each State Government. It is further provided that every decision of the Council shall be taken by a majority of not less than three-fourths of the weighted votes of the members present and voting in accordance with the following principles:- (A) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and (B) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast in that meeting. Illustration: In terms of clause (9) of the proposed article 279A, the weighted votes of the members present and voting in favour of a proposal in the Goods and Services Tax Council shall be determined as under:- WT = WC+WS Where, WT = WC+WS × SF Wherein- WT = Total weighted votes of all members in favour of a proposal. WC = Weighted vote of the Union = i.e., 33.33% if the Union is in favour of the proposal and be taken as 0 if, Union is not in favour of a proposal. WS = Weighted votes of the States
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cle 274, of the Constitution of India, the introduction of the Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 in Lok Sabha and also the consideration of the Bill. FINANCIAL MEMORANDUM Clause 12 of the Bill seeks to insert a new article 279A in the Constitution relating to Constitution of Goods and Services Tax Council. The Council shall function under the Chairmanship of the Union Finance Minister and will have the Union Minister of State incharge of Revenue or Finance as member, along with the Minister in-charge of Finance or Taxation or any other Minister nominated by each State Government. 2. The creation of Goods and Services Tax Council will involve expenditure on office expenses, salaries and allowances of the officers and staff. The objective that the introduction of goods and services tax will make the Indian trade and industry more competitive, domestically as well as internationally and contribute significantly to the growth of the economy, such additional
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7th India-China Financial Dialogue held Today;, Both Countries agreed to Coordinate Policy Action in facing Common External Challenges and Strengthen Cooperation amongst Financial Sector Regulatory Agencies;, Both Sides Underscored the need to Strengthen Cooperation under Multilateral Frameworks and Fora – Dated:- 19-12-2014 – The 7th India-China Financial Dialogue was held here today. A high level Chinese delegation led by Mr. Yu Weiping, Assistant Minister in the Ministry of Finance, People s Republic of China interacted with the Indian delegation led by Mr. Dinesh Sharma, Additional Secretary in the Department of Economic Affairs, Ministry of Finance, on wide-ranging bilateral issues of mutual concern and interest. The India-China Financ
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Goods and Service Tax – GST – By: – Deepak Aggarwal – Dated:- 19-12-2014 Last Replied Date:- 22-12-2014 – GST-2016 Latest development Union Cabinet gave its assent on Wednesday to the constitutional amendment bill. GST on April 1, 2016, replacing a range of indirect taxes levied by the Centre, states and local bodies with one unifying levy. The bill all set to be presented in the current session of Parliament; it would be seen as enormously positive towards GST implementation on April 1, 2016. The bill will have to be ratified by a two-thirds majority. The government is hoping for parliamentary approval in the budget session. The constitution has to be amended to allow states to tax services and the Centre to tax goods at the retail le
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revenue sources for states, are not likely to be covered by GST. Finance minister held a series of meetings over the past few days with state finance ministers to address their concerns including compensation. He had also announced compensation of ₹ 11,000 crore to make up for the cut in the central sales tax (CST) rate to 2% from 4% and assured an additional sum in the coming budget. The issue of CST compensation had been a key irritant. – Reply By THAMBUSAMY SEKAR – The Reply = Dear Deepak,Whether statutory forms viz. C / F / H will play role in GST-2016 ? can you brief about it ? With Warm Regards,Nirmal NithishPondicherry. – Reply By Deepak Aggarwal – The Reply = Dear Sir,As such there is no clarity about to use form C /
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Goods and Services Tax – Started By: – JAGANATHAN KUMARAVEL – Dated:- 16-12-2014 Last Replied Date:- 26-12-2014 – REQUEST THE EXPERTS TO COMMENT ON THE PROPOSED GST MODULE IN INDIA. INITIALLY IT WAS SUGGESTED THAT THE GST WILL BE DESTINATION BASED , BUT STATES WHICH WERE MAJOR PRODUCERS HAD OBJECTED THE SAME. PLEASE CLARIFY THE PRESENT STAND ON GST AND WHEN WILL GOI RELEASE THE NEW DOCUMENT ON THE BASIS OF GST IN INDIA. – Reply By MARIAPPAN GOVINDARAJAN – The Reply = Dear Sir,The Constitution (
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VAT and Sales Tax – Started By: – MAHESWARAN KANAGARAJAN – Dated:- 11-12-2014 Last Replied Date:- 11-1-2016 – Dear Forum,I am exporter of Readymade Garments,my queries:-am i eligible to purchase packing material, Button, Labels from local and central against which the supplier charging Excise duty, can we get exemption form tax in karnataka State.if yes, pls let me know the notification to satisfy my management.if no, also pls let me know any documentary proof.is there any citation on it.waitin
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Dated:- 28-11-2014 – The latest India Development Update of the World Bank published in October 2014 has mentioned that the implementation of the Goods and Service Tax (GST), combined with dismantling of inter-state check-posts, is the most crucial reform that could improve competitiveness of India s manufacturing sector. It is proposed to introduce GST in the country in April 2016. The various aspects of GST design are being discussed in the Empowered Committee of State Finance Ministers so that there is broad consensus regarding modalities of its implementation. GST has been so designed that credit of taxes paid at every stage of value addition from the point of manufacture to the point of consumptions, can be availed at the next stage.
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VAT and Sales Tax – Settlement of arrears of tax – TNVAT / TNGST – Deferral scheme of sales tax – Cancellation of scheme and demand of tax for the entire period – designated authority directed to re-c
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2014 (11) TMI 690 – ITAT HYDERABAD – TMI – – Transfer pricing adjustment – Back office support services in the field of investment and insurance management to AE – Exclusion of comparables – Held that:- Following the decision in Capital IQ Information Systems (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax (International Taxation) [2014 (3) TMI 626 – ITAT HYDERABAD] – Coral Hub works as an agent by outsourcing its work to third party vendors and cannot be taken as a comparable to the ITES functions being involved by assessee – the company is not comparable functionally to the assessee, there is no reason to interfere with the order of CIT(A) – because of exceptional financial results due to merger/demerger, Moldtek Ltd., cannot be taken as comparable – Decided against revenue.
Computation of deduction u/s 10A – Inclusion of communication charges from export turnover – Held that:- AO excluded the communication charges from export turnover holding that they are no
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d upon such verification that the amalgamation in fact ahs taken place, then the aforesaid comparable has to be excluded – the previous year there were extra ordinary events that took place in this company which warrants exclusion of this company as a comparable – this company cannot be considered as a comparable.
Acropetal Technologies Ltd. (Seg.) – Held that:- The major source of income for the company is from providing Engineering Design Service and Information Technology Services – The functions performed by the Engineering Design Services segment of the company cannot be considered as comparable to the ITES/BPO functions performed by the Assessee – The performance of Engineering Design Services is regarded as providing high end services among the BPO which requires high skill whereas the services performed by the Assessee are routine low end ITES functions – this company could not have been selected as a comparable, especially when it performs engineering design service
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tunity of hearing to the assessee – the matter is remitted back to the TPO.
Wipro Limited – Industrial giants – Held that:- The TPO has excluded the companies whose turnover is less than Rs. One Crore on the ground that they may not be representing the industry trend – That very logic also applies to the companies having high turnover of over ₹ 200 crores as against the assessee's turnover of only ₹ 15 crores, and therefore, it would be fair enough to exclude those companies also – the companies cannot be treated as comparable, considering their substantially high turnover as compared to that of the assessee – these companies cannot be regarded as comparables – since the seven comparables are held not comparable in various decisions of coordinate benches, A.O. / TPO is directed to exclude the above comparables and reworkout the ALP – Assessee should be given an opportunity to make submissions on the risk adjustments/working capital adjustment if so required befor
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E). Flagstone India was established to provide back office support services in the field of investment and insurance management primarily to its associated enterprises. The company provides services only to its associated enterprises. Flagstone India primarily performs the tactical managerial functions regarding day to day management business. Financial Results of taxpayer for the F.Y. 2007-08 : Description Amount Operating Revenue Rs.12,96,53,298 Operating Cost Rs.11,21,56,923 Operating Profit (PBIT) ₹ 1,74,96,375 Operating Profit to Cost Ratio 15.60% International Transactions (as mentioned in the 92 CE report): Provision of IT Enabled Services Rs.12,64,08,934 Payment of interest on convertible debentures ₹ 43,71,230 The matter was referred to the TPO on account of the international transactions with AE. The TPO suggested an adjustment of Rs. l,84,52,948 under section 92CA of the Income-tax Act, 1961. Assessee decided to file an appeal before the CT(A) and accordingly did
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it C. Mehta 4.82 9.10 5. Caliber Point Business Solution (Seg.) 53.00 10.97 6. Coral Hub (Vishal Info) 13.07 51.84 7. Cosmic Global 5.86 24.30 8. Crossdomain Solution P. Ltd 27.40 26.96 9. Datamatics Financial (BPO Div.) 16.72 34.87 10. e4e (earlier known Nitanny Outsourcing) 25.99 17.50 11. Eclerx 123.45 66.50 12. Genesys International 47.52 51.91 13. HCL Comnet Systems & Services Ltd., (seg.) 388.05 32.97 14. ICRA Online Ltd. (Seg.) 82.29 11.22 15. Infosys BPO Ltd., 825.08 20.03 16. I-service India Pvt. Ltd., 13.39 10.92 17. Mold Tek Technologies Ltd., 17.84 106.82 18. R System International Ltd. (seg.) 21.33 4.30 19. Spanco Ltd., (seg.) 42.27 8.94% 20. Wipro Limited 1158.80 30.23 Arithmetic Mean 29.16 3.1. Ld. CIT(A) also noted that assessee has no objection for inclusion of 11 comparables. Sl.No. Name of the Comparable Company 1. Aditya Birla Minacs 2. Asit C. Mehta 3. Caliber Point Business Solution (Segl.) 4. Crossdomain Solution P. Ltd., 5. Datamatics Financial (BPO Div.) 6.
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parables are excluded from the list of comparables for calculation of ALP, assessees ALP is well within the band of arithmetic mean arrived at by TPO and other grounds on T.P. adjustments become academic in nature and are not required to be adjudicated upon. Accordingly, Ld. CIT(A) directed to exclude two comparables out of 9 objected and issued directions accordingly. 3.4. In addition to the adjustments on T.P. Assessing Officer also excluded communication charges from export turnover while working out the deductions under section 10A. Considering the objections raised by assessee and principles governed by various decisions on the issue, Ld. CIT(A) directed the A.O. to exclude the communication charges from total turnover as well. 4. Revenue is aggrieved on the exclusion of two comparables and direction of Ld. CIT(A) on exclusion of communication charges from both export turnover as well as total turnover for the purpose of computing deduction under section 10A of the I.T. Act. Reven
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chnologies, Ld. CIT(A) followed the decision in the case of Capital IQ Information Systems P. Ltd., of ITAT and gave a finding that because of exceptional financial results due to merger/demerger, Moldtek Ltd., cannot be taken as comparable. Ld. CIT(A) also followed the Coordinate Bench decision of Mumbai in the case of M/s. Stream International Services P. Ltd., Mumbai vs. ADIT (Intl. Taxation) 7(2), Mumbai ITA.No.8997/Mum/2010 dated 11.01.2013 on the unreliability of the data. Since Ld. CIT(A) order is in tune with the various decisions of the Coordinate Benches, we do not see any reason to interfere with the order of Ld. CIT(A) on the exclusion of two comparables. Accordingly, ground Nos. 2 and 3 raised by Revenue are dismissed. 6. Ground No.4 is on the issue of exclusion of communication charges both from export turnover as well as total turnover. As briefly stated, A.O. excluded the communication charges from export turnover holding that they are not to be included in the Export t
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Now coming to assessee s appeal, it was submitted that Ld. CIT(A) has wrongly considered exclusion of only two comparables when assessee has objected to 9 comparables. Ld. AR pointed out that assessee has given written submissions that not only the above two comparables but also working capital adjustments as suggested by assessee would make the ALP within the band approved under I.T. Act. However, Ld. CIT(A) did not consider the issue of working capital adjustment. Therefore, assessee is contesting the inclusion of other comparables objected before Ld. CIT(A). Ld. Counsel referred to the submissions made before Ld. CIT(A) to submit that if the working capital adjustment was provided then the ALP would be within the norms as approved. However, since the issue of working capital adjustment was not adjudicated by Ld. CIT(A), assessee is objecting to the balance of comparables. It was submitted that 7 comparables objected by assessee before Ld. CIT(A) were already rejected as comparables
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mparable companies chosen by the TPO. The ld. Counsel for the assessee drew our attention to the fact that there are extra ordinary events that occurred during the previous year in this company. Our attention was drawn to the annual report of this company for the A.Y. 2007-08 wherein the fact that this company had acquired Thunga Software Pvt. Ltd., GSR Physicians Billing Services Inc., GSR Systems Inc. and Denmed Inc. was mentioned. Our attention was also drawn to the decision of the Hyderabad ITAT Bench in the case of Capital IQ Information Systems India ITA No.1316/Bang/2012 Pvt. Ltd. v. DCIT [ 2013] 32 Taxman.com 21 (Hyd. Trib). In the aforesaid decision, the Hyderabad Bench of the Tribunal had to deal with a case of determination of ALP in the case of an assessee who was providing ITES business support services for the A.Y. 2007-08. The TPO had considered Accentia Technologies Ltd. as a comparable. The DRP however held that the said company cannot be compared as a comparable owing
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erger of Plastic Division of the company and the resulting company is known as Moldtek Plastics Limited. The de-merger from the Moldtek Technologies took place with effect from 1st April, 2007. The merger and the de- merger needed the approval of the Hon'ble High Court of Andhra Pradesh and also the approval of the shareholders. The shareholders of the company gave approval for the merger and the de-merger on 25.01.2008 and the Hon'ble High Court of Andhra Pradesh had approved the merger and de-merger on 25th July, 2008. Subsequently, the ITA No.1316/Bang/2012 accounts of Moldtek Technologies for FY 2007-08 were revised. On a perusal of the annual report it is noticed that Teckmen Tools Pvt. Ltd. and the Plastic Division of the company were demerged and the resulting company was named as Moldtek Plastics Ltd. The KPO business remained with the company. A perusal of the Annual report revealed that to give effect to the merger and demerger, the financial statements were revised a
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n case of the aforesaid company, there is amalgamation in December, 2006, which has impacted the financial result. This fact has to be verified by the TPO. If it is found upon such verification that the amalgamation in fact ahs taken place, then the aforesaid comparable has to be excluded." We have considered the submissions of the ld. counsel for the assessee and are of the view that the ratio laid down by the Hyderabad Bench of the ITAT is squarely applicable to the present case also. Similar View was also taken in the case of Symphony Marketing Solutions India(p) Ltd (supra) by the Bangalore Bench. It is clear that during the previous year there were extra ordinary events that took place in this company which warrants exclusion of this company as a comparable. We therefore hold that this company cannot be considered as a comparable. II. ACROPETAL TECHNOLOGIES LTD. (Seg.) This company is listed at Sl.No.2 of the comparables chosen by the TPO. As far as this company is concerned,
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) Ltd (supra) by the Bangalore Bench, so the same require exclusion. In the above case it was considered like this: 13. We have considered the submissions of the learned counsel for the Assessee. On a perusal of the Note No.15 of notes to accounts which gives segmental revenue of this company, it is clear that the major source of income for this company is from providing Engineering Design Service and Information Technology Services. The functions performed by the Engineering Design Services segment of the company cannot be considered as comparable to the ITES/BPO functions performed by the Assessee. The performance of Engineering Design Services is regarded as providing high end services among the BPO which requires high skill whereas the services performed by the Assessee are routine low end ITES functions. We therefore hold that this company could not have been selected as a comparable, especially when it performs engineering design services which only a Knowledge Process Outsourcin
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ed at by the TPO was 24.30% whereas, after inclusion of interest and bank charges that comes to 23.30%. This revised working was furnished as part of the objections with a request for taking the revised margin against this comparable. However, subsequently, vide letter dated 30.07.2012 assessee objected to the comparable on the reason that it fails employee cost filter. The employee cost shown was at ₹ 1.17 crores which is 19.96% of the operating revenue of ₹ 5.87 crores. It was submitted by the learned Counsel that employees cost filter determined by the TPO was between 45% to 60% whereas, this company has only 19.96% as employee cost. Accordingly, this company is not a comparable company as it may be outsourcing the work. The learned D.R. however, submitted that assessee has accepted the same in the TPO proceedings. Therefore, should not be excluded now. While there was no objection for assessee objecting to the comparable even at a later stage when it comes to know of ne
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have been pointed out. It has further been submitted that extra ordinary events and peculiar circumstances prevail in the case of the assessee in as much as this company acquired a UK based company which has significantly contributed to the increase in the customer and revenue base of the company. This Tribunal in the case of Capital IQ Information Systems India Pvt. Ltd. (supra) had an occasion to deal with comparability of this company in the case of an ITES company such as the Assessee and the Tribunal held as follows:- "14. The assessee has objected for this company being taken as comparable mainly on the ground that it was having a supernormal profit of 89%, and as such it cannot be taken as a comparable in view of the decision of the Mumbai Bench of the tribunal in the case M/s. Teva India Ltd. (supra). That apart, relying upon the annual report of the company, the learned Authorised Representative for the assessee has contended that that the concerned company is engaged in
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and that it has a different employee skill set and that this company performs R&D services and also owns intangibles. This company is a geospatial services content provider specialising in land based technologies. From the notes to accounts of this company, it is seen that this company is engaged in providing geographical information services comprising of photogrammetry, remote sensing cartography, data conversion related computed based services and other related services. Further the business of this company requires skilled manpower and scientists, civil engineers, etc. Besides the above, this company also carries out R&D services and own intangibles. The aforesaid facts, in our view, will take this company out of the list of comparables. Similar view was also taken in the case of Symphony Marketing Solutions India(p) Ltd (supra) by the Bangalore Bench. In view of the above, we are of the view that this company cannot be regarded as a comparable and deserves to be excluded
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sed Representative for the assessee further contended that when the TPO has rejected companies with turnover of less than Rs. One crore, by stating that these companies may not be representing the industry trend, by applying the very same logic, he should not have also considered the companies having turnover of more than ₹ 200 crores. In this context, the learned Authorised Representative for the assessee has relied upon the decision of the ITAT Bangalore Bench in the case of M/s. Genesys Integrating System(India) P. Ltd. (2011) (2012) 53 SOT 159 / 20 taxmann.com 715 (Bang.) (URO) / 64 DTR 225. On considering the submissions of the assessee in relation to these companies, we find that the TPO has excluded the companies whose turnover is less than Rs.One Crore, on the ground that they may not be representing the industry trend. That very logic also applies to the companies having high turnover of over ₹ 200 crores as against the assessee's turnover of only ₹ 15 cr
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iant in the area of development of software and it assumes all risks, leading to higher profit. On the other hand, the assessee is a captive unit of its parent company in the USA and it assumes only limited currency risk. Having considered these points, we are of the view that the case of the aforesaid Infosys and the assessee are not comparable at all as seen from the financial data etc. of the two companies mentioned earlier in the order. Therefore, we are of the view that this case is required to be excluded." Similar view has also been expressed by the Hyderabad Bench of the Tribunal in the case of Trinity Advanced Labs P. Ltd. (supra). In the case of M/s. Genesys Integrating India P. Ltd. (supra), the Bangalore Bench of the Tribunal has observed in the following manner- "9. Having heard both the parties and having considered the rival contentions and also the juridical precedents on the issue, we find that the TPO himself has rejected the companies which are making losse
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n & Bradstreet and NASSCOM has given different ranges. Taking the Indian scenario into consideration, we feel that the classification made by Dun & Bradstreet is more suitable and reasonable. In view of the same, we hold that the turnover filter is very important and the companies having a turnover of ₹ 1.00 crore to 200 crores have to be taken as a particular range and the assessee being in the range having turnover of 8.15 crores, the companies which also have turnover of 1.00 to 200.00 crores only should be taken into consideration for the purpose of making TP study." In view of the aforesaid consistent decisions of the Tribunal, we accept the contention of the learned Authorised Representative for the assessee that the aforesaid companies cannot be treated as comparable, considering their substantially high turnover as compared to that of the assessee. We accept the contention of assessee that these companies can not be regarded as comparables. 10. Since the seve
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Dated:- 17-11-2014 – The Union Finance Minister Shri Arun Jaitley said that the Government has taken series of measures to tackle various challenges being faced by the infrastructure sector in the country. The Finance Minister said that many more such measures are in offing in near future. The Finance Minister Shri Jaitley said that he is in discussion with the members of opposition parties to make necessary procedural changes in Land Acquisition Act in order to avoid delay in the implementation of the infrastructure projects. The Finance Minister was delivering the Key Note Address at the Citi s Investor Summit: India – Poised for Higher Growth here today. The Finance Minister Shri Jaitley further said that various sectors have been opene
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Winter Session of Parliament. He said that he is in touch with the Parliament Select Committee in this regard and will try to persuade it to give its report at the earliest. As regards GST, the Finance Minister said that he is in touch with the various State Governments and most of the contentious issues have already been resolved. He said there are two areas including liquor and petroleum products where the States want to have taxation authority. Two States want entry tax and octroi to be kept-out of the purview of the GST. The Finance Minster said that all these issues will be sorted-out soon. He will also apprise the Empowered Committee of State Finance Ministers about the draft Constitution Amendment Bill on GST before introducing the s
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