Tax Inform – August 2021

The eighth issue of our monthly tax newsletter – Tax Inform is out. Through these newsletters, we provide a monthly compilation of key tax-related case laws, circulars, notifications, etc. issued by the authorities impacting entities & individuals operating in India.

The highlights of the current issue are:

Direct Tax – 

• SC holds that issuance of debentures in lieu of payment of interest, as per loan rehabilitation plan, amounts to ‘actual payment’ of interest under section 43B of the Income-tax Act, 1961 (Act).

• Fresh claim can be made before the assessing officer during the course of reassessment proceedings.

• Business losses can be set-off against income surrendered during survey.

• Forfeiture of advance received against sale of property is a capital receipt and cannot be construed as cessation of trading liability under section 41(1) of the Act.

• Re-domiciliation of an entity cannot be a ground for denial of tax treaty benefits.

• Delay in furnishing TRC condoned and treaty benefits under India-USA DTAA allowed.

• The CBDT, vide Circular no. 15/2021, dated 3rd August 2021 has extended the time limits for undertaking various compliances under the Act.

• Guidelines have been issued under section 9B and Section 45(4) of the Income tax Act.

• Retrospective tax on indirect transfer of Indian assets withdrawn.

• Draft Foreign Exchange Management (Non-debt Instruments – Overseas Investment) Rules, 2021 (ODI Rules) introduced.

Indirect Tax – 

• Litigant barred from filing writ petition citing the existence of alternative remedy of appeal.

• Revenue directed to expedite refund following Assessee’ s refund application for unutilized-ITC on “zero-rated supplies.”

• Supply of goods for personal/household effect, exempt from e-way bill requirement.

• Provisional attachment of Bank Account to be validated for one year.

• Attachment of Bank Account lifted upon the furnishing of Bank Guarantee.

• Stipend reimbursed by Industry Partner to skill trainees does not attract GST.

• Potable water made exempt from GST.

• Marine generators to attract GST @ 5%.

• Edible-oil manufacturers are allowed to factor in Input Tax Credit on Captive Solar-Plan design/supply/installation.

• Supply of e-vouchers taxable as goods at 18%.

• Importation of leasing services into India attracts IGST.

• 18% IGST applicable on the commission received for rendering services as an Intermediary.

• Due date extended for the reduced late fee for non-furnishing Form GSTR-3B.

• Timeline extended for revocation of cancellation of registration.

• Time extended for application of notification for reduction in rate of crude soya oil etc.

• Exemption on import of Covid Relief Items further extended.

• Guidelines and rates for the new Scheme for Remission of Duties and Taxes on Exported Products notified.