Tax INFORM- April 2022

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

The highlights of the current issue are:

Direct Tax – 

Domestic Tax Rulings:

• Exchange fluctuation loss on repayment of loan taken in foreign currency for business expansion allowable as revenue expenditure.
• TDS applicable on year-end provisions; default can lead to proceedings u/s 201.

International Tax Rulings:

• Payment for accessing online database would not constitute Royalty under India-US DTAA.
• Tax rate computed on a presumptive basis u/s 44BBB with a bonafide belief of non -existence of PE would not attract penalty.
• Payment made to non-resident for rendering centralised marketing services not liable for withholding tax.

Individual Tax Rulings:

• Funds which are originated outside India and invested by non-resident in India are not taxable as unexplained investment of non-resident.
• TDS on life insurance maturity benefit to be deducted only on the non-exempt portion of net proceeds and not on the entire amount.

Circulars and Notifications:

• Notification No 18 dated 29th March 2022.
• Notification No 19 dated 30th March 2022.
• Notification No 20 dated 30th March 2022.
• Notification No 22 dated 30th March 2022.
• Notification No 24 dated 4th April 2022.
• Notification No 26 dated 5th April 2022.
• Notification No 37 dated 21st April 2022.
• EPFO circular dated 6th April 2022.

Indirect Tax – 

Goods & Services Tax

Case Laws:

• AAAR held that IGST is applicable on a reverse charge basis for the supply of e-goods from foreign suppliers.
• Ancillary activities to Environmental projects performed for consideration are not
  considered as “charitable”.
•  Retailers receiving rewards under sales promotion scheme are not eligible for ITC.
• AAAR held that Preferential Location Service charges are taxable at the rate of 18%.
• AAAR held that GST is not applicable on coupons distributed to employees.
• Provisions of Schedule III of the CGST Act, 2017 are not applicable to Educational &
  Training Services.
• Retail packages of “ready to eat popcorn” are taxable at 18%.