R.C. JAIN & ASSOCIATES LLP

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1 R.C. JAIN & ASSOCIATES LLP NEWSLETTER Head Office: , The Corporate Centre, Nirmal Lifestyles, L.B.S. Marg, Mulund (W), Mumbai Phone: /91, Website: www. rcjainca.com

2 INDEX 1. Income Tax GST RBI & FEMA Corporate Law 11 EDITORIAL TEAM EDITOR CA R. C. Jain MEMBERS SUPPORT TEAM CA Devangi Thosani Akhil Laxmeshwar Ulhas Jain Supriya Shelatkar Prajyot Chachle Rohini Veer Shilka Santhosh Ekta Pamnani Mangesh Kolekar HeenaKausar Khan Hitesh Motwani RuchikaRavi Sumit Makhija The contents provided in this newsletter are for information purpose only and are intended, but not promised or guaranteed, to be correct, complete and up-to-date. The firm hereby disclaims any and all liability to any person for any loss or damage caused by errors or omissions, whether such errors or omissions result from negligence, accident or any other cause.

3 DIRECT TAX Income Tax 1. ISSUANCE OF 7.75% SAVINGS (TAXABLE) BONDS, 2018 Government of India has announced to launch 7.75% Savings (Taxable) Bonds, 2018 commencing from 10th January 2018 to enable resident citizens/huf to invest in a taxable bond, without any monetary ceiling. The main features of the Bonds are: (i) Who can invest: (ii) Subscription: (iii) Issue Price: (iv) Period: The Bonds are open to investment by individuals (including Joint Holdings) and Hindu Undivided Families. NRIs are not eligible for making investments in these Bonds. Applications for the Bonds in the form of Bond Ledger Account will be received in the designated branches of agency banks and SHCIL in all numbering about The Bonds will be issued at par i.e. at Rs per cent. The Bonds will be issued for a minimum amount of Rs. 1000/- (face value) and in multiples thereof. Accordingly, the issue price, will be Rs. 1000/- for every Rs. 1,000/- (Nominal). The Bonds will be on tap till further notice and issued in cumulative and non-cumulative forms. (v)limit of investment: There will be no maximum limit for investment in the Bonds. (vi) Tax treatment: (vii) Maturity and rate of interest: (viii) Transferability: Income-tax: Interest on the Bonds will be taxable under the Income-tax Act, 1961 as applicable according to the relevant tax status of the bond holder. Wealth tax: The Bonds will be exempt from Wealth-tax under the Wealth- tax Act, The Bonds will have a maturity of 7 years carrying interest at 7.75% per annum payable half- yearly. The cumulative value of Rs at the end of six years will be Rs. 1703/-. The Bonds are not transferable. 1

4 DIRECT TAX 2. MISCELLANEOUS - DIRECT TAX COLLECTIONS FOR FINANCIAL YEAR SHOW GROWTH OF 18.2 PER CENT UP TO DECEMBER, 2017 The provisional figures of Direct Tax collections up to December, 2017 show that net collections are at Rs lakh crore which is 18.2% higher than the net collections for the corresponding period of last year. The net Direct Tax collections represent 67% of the total Budget Estimates of Direct Taxes for F.Y (Rs. 9.8 lakh crore). Gross collections (before adjusting for refunds) have increased by 12.6% to Rs lakh crore during April to December, Refunds amounting to Rs.1.12 lakh crore have been issued during April to December, An amount of Rs lakh crore has been received as Advance Tax up to December, 2017 reflecting a growth of 12.7% over the Advance Tax payments of the corresponding period of last year. The growth in Corporate Income Tax (CIT) Advance Tax is 10.9% and that in Personal Income Tax (PIT) Advance Tax is 21.6%. 3. INCOME-TAX DEPARTMENT STEPS UP ACTIONS UNDER PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT. The Income Tax Department has stepped up actions under the Prohibition of Benami Property Transactions Act (the 'Benami Act'), which came into force w.e.f 1st November, The Act provides for provisional attachment and subsequent confiscation of benami properties, whether movable or immovable. It also allows for prosecution of the beneficial owner, the benamidar and the abettor to benami transactions, which may result in rigorous imprisonment up to 7 years and fine upto 25% of fair market value of the property. The Department had set up 24 dedicated Benami Prohibition Units (BPUs) under its Investigation Directorates all over India in May, 2017 to ensure swift action in respect of Benami properties. 2

5 DIRECT TAX Due to intensive efforts undertaken by the Department, provisional attachment has been made in more than 900 cases of properties under the Act. These include plots of land, flats, shops, jewellery, vehicles, deposits in bank accounts, fixed deposits etc. The value of properties under attachment is more than Rs crore including immovable properties of more than Rs crore. In five cases, the provisional attachments of Benami properties, amounting to more than Rs. 150 crore have been confirmed by the Adjudicating Authority. In one such case, it was established that a real estate company had acquired about 50 acres of land, valued at more than Rs.110 crore, using the names of certain persons of no means as benamidars. This was corroborated from the sellers of the land as well as the brokers involved. In another case, post demonetization, two assessees were found depositing demonetized currency into multiple bank accounts in the names of their employees, associates etc. to be ultimately remitted to their bank accounts. The total amount attempted to be remitted to the beneficial owners was about Rs. 39 crore. In yet another case, a cash amount of Rs crore was intercepted from a vehicle with a person who denied the ownership of this cash. Subsequently, no one claimed ownership of this cash and it was held to be benami property by the Adjudicating Authority. 3

6 ITAT DIRECT TAX 1. Depreciable Assets held for more than 36 months do not lose its Character of being a Long Term Capital Asset even though Sec 50 is applied Facts: 1) The assessee claimed set off of Long Term Capital Loss arising on sale of land, against the deemed short term capital gain of Rs 7,18,74,000/- arising out of sale of residential property (being a long term capital asset as the holding period of them exceeded 36 months). 2) Based on the provisions of section 50(1) of theact, the assessee company computed short term capital gains on sale of depreciable assets, although the assets which were sold were long term capital asset as the holding period of them exceeded 36 months. 3) The AO in the draft assessment order denied the set off of above matter computed u/s 50 of the Act and by applying the provisions of section 74 of the Act, which permitted set off of long term capital loss only with long term capital gains. 4) The same was upheld by the DRP and aggrieved assessee went for an appeal before the tribunal 4

7 DIRECT TAX Held: 1) ITAT held that the depreciable assets which had been held for more than 36 months prior to its sale, does not lose its character of being a long term capital asset, even though it might get taxed as short term capital gain in terms of deeming fiction provided u/s 50 of the Act. 2) Accordingly bench allowed the appeal of assessee and granted the permission of set off the brought forward long term capital loss against the deemed short term capital gain. [DCIT, Circle-8(1), Kolkata.V. M/s EIH Limited] 2. CIT cannot reject Registration to Trust merely on Ground of Non-Production of Books and Vouchers. Facts: 1) The Object of the assesse society was to start, establish and maintain schools or colleges or technical. The assessee society filed an application for registration u/s 12A(1) 2) Since there was no compliance by the assessee as observed by the CIT in his order, he proceeded to decide the issue on the basis of material available on record. 3) From the details furnished by the assessee along with the application in Form No.10A, he observed that the assessee society has not carried on any charitable activities. 5

8 DIRECT TAX 4) Due to non-production of books and vouchers by the assessee, the genuineness of activities could not be verified. 5) He accordingly rejected the claim of assessee for grant of registration u/s 12A of the I.T. Act. and on the ground of not producing the books and voucher. 6) On appeal, the first appellate authority concluded that the assessee society has not carried on any charitable activities of registration rejected the claim of assessee for grant of registration 7) Not satisfied with the decision of CIT (A) assessee carried the matter before ITAT wherein the assessee had enclosed all the relevant documents and drew the attention of various tribunal bench decision regarding the issue. Held: 1) The assessee during the tribunal procedure argued that CIT (A) can grant the registration on the premise of looking at the objects of the society and pointed that they took improper way to examine the aspect of application of income at the stage of granting registration u/s 12AA, which is to be examined by the AO on a year basis for claiming exemptions. 2) Assessee relied on various decisions of tribunal and High Court which support his case. Finally the bench held that at this stage on granting 6

9 DIRECT TAX registration u/s 12A the CIT is required to see the objects of the society and not required to examine the application of income which will have to be undertaken by the Assessing Officer on a year to year basis after the assessee files the return of income claiming exemption u/s 11 of the I.T. Act and that the CIT was not justified in rejecting the claim of registration and directed him to allow registration u/s 12A of the I.T. Act. [Vidyadayani Shiksha Samiti. V. CIT (Exemptions)-5] 7

10 INDIRECT TAX GST Notification 1. Notification No. 1/2018 Central Tax, Dated 1 st January, 2018 The Tax Rate for a manufacturer under composition scheme has been reduced to half percent instead of 1 percent. Also Tax should be calculated on turnover of taxable supplies of goods as against turnover. 2. Notification No. 2/2018 Central Tax, Dated 20 th January, 2018 Time limit for furnishing the return by a taxable person in Form GSTR-3B for the month of December 2017 has been extended upto 22 nd January, Notification No. 3/2018 Central Tax, Dated 23 rd January, 2018 A detailed notification regarding E Way bill has been issued by the Government. The notification can be found in the link below: 4. Notification No. 4/2018 Central Tax, Dated 23 rd January, 2018 The late fee for delayed filing of GSTR 1 has been reduced to Rs. 25/- per day per Act. In case of delayed filing of NIL GSTR 1, the late fee would be Rs. 10/- per day per Act. 8

11 INDIRECT TAX 5. Notification No. 5/2018 Central Tax, Dated 23 rd January, 2018 The late fee for delayed filing of GSTR 5 (to be filed by Non-Resident Foreign Tax Payers) has been reduced to Rs. 25/- per day per Act. In case of delayed filing of NIL GSTR 5, the late fee would be Rs. 10/- per day per Act. 6. Notification No. 6/2018 Central Tax, Dated 23 rd January, 2018 The late fee for delayed filing of GSTR 5A [to be filed by Online Information and Database Access or Retrieval (OIDAR) service providers] has been reduced to Rs. 25/- per day per Act. In case of delayed filing of NIL GSTR 5A, the late fee would be Rs. 10/- per day per Act. 7. Notification No. 7/2018 Central Tax, Dated 23 rd January, 2018 The late fee for delayed filing of GSTR 6 (to be filed by Input Service Distributor) has been reduced to Rs. 25/- per day per Act. In case of delayed filing of NIL GSTR 1, the late fee would be Rs. 10/- per day per Act. 8. Notification No. 8/2018 Central Tax, Dated 23 rd January, 2018 Time limit for furnishing the return by an Input Service Distributor in Form GSTR-6 for the months of July 2017 to February 2018 has been extended upto 31 st March,

12 RBI RBI 1. RBI/ /127 DGBA.GBD.No.1972/ / Small Saving Schemes Payment of Agency Commission Notification F. No. 7/10/2014-NS dated October 10, 2017, by Government Of India has authorised all all Public Sector Banks, ICICI Bank Ltd., Axis Bank Ltd., and HDFC Bank Ltd to receive subscriptions under National Saving Time Deposit Scheme, 1981, National Saving (Monthly Income Account) Scheme, 1987, National Saving Recurring Deposit Scheme, 1981 and National Saving Certificates (VIII Issue) Scheme, 1989 in addition to the existing small saving schemes. RBI has advised to expedite the process. Under this process the agency banks would be required to provide the report of All Transactions on daily basis in order to maintain uniformity. The authority for reporting purposes as well as necessary agreements will be Central Account Section, Reserve Bank of India, Nagpur. 10

13 CORPORATE LAW CORPORATE LAW 1. Companies Amendment Act, 2017 Notification G.S.R. - The Central Government hereby appoints the 26 th January, 2018 as the date on which the provisions of section 1 (i.e. applicability of the act) & section 4 (matters related to incorporation of the company) of the said Act shall come into force. 8.pdf 2. A new web service called as "RUN (Reserve Unique Name) for reserving name of proposed company: Notification G.S.R. - The Ministry of Corporate Affairs (MCA) has introduced a new web service called as "RUN (Reserve Unique Name) for reserving name of proposed company. The same will be launched with effect from January 26, ndmentrules2018_ pdf entrules2018_ pdf 11

14 CORPORATE LAW 3. (Appointment and Qualification of Directors) Amendment Rules, Application for allotment of Director identification Number before appointment in an existing company. ramendmentrules2018_ pdf 12

15 Allow us to tell you more! R.C. JAIN & ASSOCIATES LLP Chartered Accountants Website: Head Office: Mumbai - Branch Offices: Bhopal - Aurangabad , The Corporate Centre, Nirmal Lifestyles, L.B.S. Marg, Mulund (W), Mumbai rcjainca@vsnl.com Phone: /91, , Plot No. 75 B, First Floor, Above Apurti Supermarket, Near Chetak Bridge, Kasturba Nagar, Bhopal. Madhya Pradesh hmjainca@rediffmail.com Phone: Su-Shobha, Plot No.7, Mitranagar, Behind Akashwani, Near Maratha Darbar Hotel, Aurangabad sskasliwal@gmail.com Phone: