Insights

Tax INFORM- March 2022

The fifteenth 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:

  •  SC: Expenses incurred by pharmaceutical
    companies towards distribution of freebies
    to medical practitioners cannot be allowed as
    business expenditure under Section 37(1) of
    the Act.
    • Revenue cannot reject an application for
    compounding of an offence when accused’s
    conviction is already set aside.
    • Mumbai Tribunal: Difference between
    income appearing in Form 26AS vis-à-vis
    income recorded in books of account must
    be added back while computing book profits
    under section 115JB.

International Tax Rulings:

  •  Delhi Tribunal: No additions can be made
    under section 68 of the Act where such
    investment is confirmed by Mauritius tax
    authorities and is in compliance with RBI
    Guidelines.
    • Resident and Ordinarily Resident eligible to
    claim treaty benefit with respect to salary
    income earned in the USA.
    • No requirement to deduct tax at source on
    payment made for transponder charges to
    foreign entities.

Notifications/Circulars:

  •  CBDT issues circular on Income-tax
    deduction from Salaries during FY 2021-22
    under section 192 of the Act.

 

Indirect Tax – 

GOODS AND SERVICES TAX

Case Laws:

  • AAAR: “Supply of goods” includes shifting
    business from one state to another.
    • AAAR: “Mango Pulp/Puree” is taxable at the
    rate of 18%.
    • AAAR: Flavoured milk was to be classified as
    “beverage containing milk” and not “milk”.
    • AAAR: Only affiliate coaching centres of
    ICAI/ICMAI are eligible for exemption as an
    Educational Institution.
    • AAAR: GST at the rate of 18% is applicable
    for toys consisting of electric components.
    • AAR: Guest lectures incomes are taxable at
    18%.
    • AAR: No exemption is available for paid
    educational content used by healthcare
    professionals to fulfil the mandate of the
    professional body.
    • AAR: Law schools are not eligible for a “Nil”
    rate for subscription services of “online textbased information.
    • AAR: Yoga courses are taxable at the rate of
    18% due to the absence of specific
    registration under Income Tax.
    • AAAR: Demo Vehicles are not eligible for ITC
    as it is not received with the intention of
    “further supply”.
    • AAR: By-products of alcohol brewing are
    taxable at 5%.

Circulars

  • The Central Government vide Notification
    No.1/2022 – Central Tax has revised the
    limit from “fifty crore rupees” to “twenty
    crore rupees” for the preparation of invoice
    in terms of Sub-Rule 4 to Rule 48 of the
    Central Goods and Service Tax Rules, 2017