News

GST Relief for the Real Estate

In Munjaal Manishbhai Bhatt vs. UOI, the Appellant had entered into an agreement for the purchase of land from a developer and the construction of a building on the same land. Separate consideration was agreed upon for both the elements of the transaction. The Appellant filed a writ application before the Gujarat High Court on the grounds that Paragraph 2 of Notification No.11/2017 – Central Tax dated 28th June 2017 was ultra vires the provisions of the Goods and Services Tax Act, 2017. Paragraph 2 of Notification No.11/2017 states that the value of supply, in case of transfer of property in land or an undivided share in the land, would be the total amount charged for such supply reduced by the value of the land. The value of land is deemed to be one-third of the total amount of supply. 
 
The Appellant contended that the deeming provision of the value of land to be calculated as one-third of the total amount of supply was ultra vires the statutory provisions of the law when the actual value of land was ascertainable. The High Court held that the application of such a mandatory uniform rate of deduction was discriminatory, arbitrary, and violative of Article 14 of the Constitution of India which stated that all of the rights and freedoms set out in the Act must be protected and applied without discrimination.  Where the value of land was clearly ascertainable or where the value of construction can be derived with the prescribed valuation rules, such deduction can be permitted at the option of a taxable person. The High Court held that the deeming fiction prescribed under the said notification was ultra vires and not mandatory.
 

Example

Let’s assume that the value of land is Rs.5,00,000/- and after construction, the apartment constructed on top of the land is Rs.10,00,000/-. Applying the provisions of Notification No.11/2017, the value of supply for the transfer of the apartment would be Rs.6,66,667/- (Rs.10,00,000 – 1/3rd of 10,00,00).
 
However, if the said notification was not applied and the value of land which was ascertainable was used for the calculation of the value of supply then the value of supply would be Rs. 5,00,000 /-(Rs.10,00,000 – Rs.5,00,000).
 
The aforesaid judgement by the High Court has held that deeming fiction of reducing 1/3rd of the value of land was unnecessary and arbitrary. The High Court held that “when the value of land was ascertainable then the same could be used for calculating the value of supply.

News

AAAR-Gujarat Clarifies GST Exemption to ‘Healthcare Services.’

The Gujarat Appellate Authority for Advance Ruling (AAAR) in reference to ‘Healthcare Services’ has confirmed that a health-related service supplied by a clinical establishment irrespective of whether provided inside or outside a clinical institution is exempt from GST; also, when provided to its organization staff.

BMPL a speciality hospital running under the brand name “Sunshine Global Hospitals” approached the Gujarat Authority for Advance Ruling (AAR) to obtain clarity on whether the supply of medicines, surgical items, implants, consumables, and other allied services & items provided by its hospital through their in-house pharmacy, as well as food, room rent, other services to the in-patients, is part of composite supply of healthcare treatment exempted from levy of GST.

The query further sought clarification as to whether the supply of operational health checkup (OHC) services by the hospital i.e., nursing staff, Doctors, Paramedical staff on the hospital’s payroll, providing health check-up services, ambulance facilities, and allied medical services to hospital employees and also the camps conducted for health check-ups outside the hospitals, will qualify for exemption under the scope of Health Care service.

The AAR on examining the relevant sections and rules pronounced that the supply of services to in-patients was part of the healthcare services defined in the exemption notification. Hence exempted from the levy of GST. Regarding the applicability of taxes for OHC services, the AAR classified it as ‘Human Health and Social Care Services and confirmed a tax rate @ 18% (CGST+SGST).

Consequently, BMPL preferred an appeal before the Gujarat Appellate Authority for Advance Ruling (AAAR).

 

Submission made by the Applicant

 

BMPL submitted that OHC services are offered by their Nursing staff, Doctors and Paramedical staff by way of health check-ups in cases of medical emergencies and medical treatment required by its employees. It was further submitted that the major goal of service was to provide timely health check-ups, medical treatments, and other allied medical services to the organization’s employees as and when needed.

BMPL referred to the scheme of tax under the erstwhile Service Tax regime and places reliance on Notification No.30/2011 – Service Tax dated 25/04/2011, which fully exempted the services provided or to be provided by any hospital, nursing home or multi-speciality clinic to an employee of a business entity or to a person covered by a health insurance scheme subject to certain conditions.

 

Observations by AAAR

 

The AAAR observed that the definition of “health care services” as given under the exemption notification included diagnosis or treatment or care for illness, injury, deformity, abnormality, or pregnancy in any recognized system of medicines in India and admitted that the lower authority had erred in holding that Health Care Services do not include the services of Occupational Health Check-ups or preventive care.

 

Held

 

AAAR confirmed that the activity of providing operational health checkup services by BMPL to its employees and also the camps conducted for health check-ups outside the hospitals qualifies as Health Care services and are exempted from the levy of GST.

 

FM Comment

 

The above ruling clarifies the services which come under the purview of healthcare services. The Ruling will have persuasive value on Clinical establishments supporting rural healthcare by way of medical camps and will encourage employers in the Health Care sector to take steps to improve worker health and safety.

News

CBDT Notifies Income Tax Amendment (Thirteenth Amendment) Rules, 2022

On 6th May 2022, The Central Board of Direct Taxes notified Income Tax Amendment (Thirteenth Amendment) Rules, 2022, set to come into force on the date of their publication in the Official Gazette.

The amendment Rules lay down the formula for computing infrastructure investments of sovereign wealth funds (SWFs) and pension funds that are eligible for income tax incentives, and the scheme of computation of tax-exempt income attributable to these investments. Rule 2DCA has been inserted to this effect. 

Further, the Rules also state that, for the purpose of valuation, Section 10 of the Income Tax Act, 1961 identifies incomes that are exempted from such valuation. Where any income is not included in the specified person’s (Section 10(23FE) income, and where after any previous year if a person fails to meet any of the listed provisions for the valuation of that income that has to be excluded, it will be taxed as personal income.

The Rules also place the following responsibilities on The Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems) to: 

(i) specify the procedure, formats and standards for ensuring secure capture and transmission of the data in Form No. 10BBD. 

(ii) Specify the procedure, format, data structure, standards and manner of generation of electronic
verification code, referred to in sub-rule (9), for verification of the person furnishing the said Form. 

(ii) Be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the Form No 10BBD so furnished. 

The following modifications have also been introduced vide amendments to Rule 3: 

  1. Intimation Form (10BBB) has been substituted by the Pension Fund of investment under Section 10(23FE).
  2. Form 10BBC- Certificate of accountant in respect of compliance to the provisions is substituted by the notified Pension Fund.
  3. New Form 10BBD- Statement of eligible investment received has been inserted.

News

CBIC Issues Master Circular on Recovery and Write-offs of Arrears of Revenue

The apex indirect taxes body on 19 January 2022, published detailed guidelines for the recovery of arrears and write-offs in order to prevent multiplicity of recovery processes by various tax authorities and to minimise the scope of harassment for taxpayers or delay on the part of officials. The master circular enumerates a step-by-step process for the recovery and write-offs of revenue arrears by attachment of property and sale, setting a deadline of six months to complete the process.

In the circular, the Board states that “Considering the changes that have taken place, especially after the introduction of GST in July 2017, it has become imperative to update and revamp the procedure for recovery of arrears of Indirect taxes and Customs

For the purpose of recovery of departmental arrears, the circular prescribes that the claim can be filed with the Debt Recovery Tribunal either through direct application or through SARFAESI to prevent multiple claims and proceedings concerning the property.

The circular also maintains that in case of a bankrupt defaulter, tax officers shall not make any tax claims after the date of winding up order of a company has been set. The request for such a claim should be done within 30 days of commencement of liquidation.

The master circular supersedes at least 8 different previous circular instructions and shall be instrumental in ensuring that every officer follows the same set of protocols; thereby making the process transparent, uniform and beneficial to the interests of the relevant stakeholders in the process.  

News

NCDRC Issues Directions for Computation of Limitation Period

Following the surge in Covid-19 cases across the country, on 10th January, 2022, the Supreme Court of India directed that the period from 15.03.2020 till 28.02.2022 shall be excluded for the purposes of limitation as may be prescribed under any general or special laws for all judicial and quasi-judicial proceedings.

Consequently, on 14th January, 2021 the National Consumer Dispute Redressal Commission has issued directions to its Registry for compliance and computation of limitation period.

The order extends directions for compliance for;

  • Computation for delay in matters in which the Limitation has expired on or before 14.03.2020

 

  • Computation of delay in matters in which the Limitation expires between 15.02.2020 and 28.02.2022

 

The order also maintains that the directions issued by the Supreme Court shall not be applicable in matters filed/instituted against orders which shall be passed by the State Commissions on or before 01.03.2022. Such matters shall be subjected to standard procedure for computation of limitation period.

News

CBDT eases Income Tax and Audit Compliance Norms

In consideration of the challenges reported by the taxpayers and relevant stakeholders following the recent surge in the COVID-19 cases across the country and issues faced in electronic filing of various audit reports under the mandate of the Income Tax Act, 1961; the Central Board of Direct Taxes has notified the extension of timelines for filing  Income-tax returns and various reports of audit for the Assessment Year 2021-22, in the exercise of its powers under Section 119 of the Income-tax Act,1961.

The Circular provides the following clarifications and relaxations;

  • The extension shall not apply to Explanation 1 to Sec. 234A of the Act, and in cases where the tax on the total income is reduced by the amount as specified in clauses (i) to (vi) of sub-section (1) of that Sec. 207, exceeds one lakh rupees.
  • Under Sec. 207(2) of the income tax Act, 1961. individual Indian resident referring to Sec. 207(2) the tax paid by him Under Sec. 140A of the Income-tax Act 1961 shall be within the due date (without extension under Circular No.9/2021, Circular No.17/2021 and this Circular) provided in that Act, shall be deemed to be the advance tax.

Sr. No.

Due date of furnishing of Report of Audit 2020-21

Under Section 139(1) of the Income-tax Act,1961 was extended to

Circular No.

Date of Circular

Further extended

1.

 30th September 2021

31st October 2021

&

15th January 2022

Circular No.9/2021

 &

Circular No.17/2021

20.05.2021

&

09.09.2021

15th February, 2022

2.

 31st October, 2021

——

———

 

15th February, 2022

3

31st October 2021

30th November 2021

&

31st January 2022

Circular No.17/2021

09.09.2021

15th February, 2022

4.

31st October 2021

30th November 2021 & 15th February 2022

Circular No.9/2021

&

Circular No.17/2021

20.05.2021

&

09.09.2021

15th March, 2022;

5.

30th November 2021

31st December 2021

&

28th February 2022

Circular No.9/2021

&

Circular No.17/2021

20.05.2021

&

09.09.2021

15th March, 2022.

News

UNION BUDGET-2021: From Recovery to Rapid Growth

In association with Keiretsu Forum, Fox Mandal is organizing an event to deliberate on impact of Union Budget-2021. Apart from Budget analysis from the direct and indirect tax perspective, the event would also have a panel discussion focusing on Startups and early-stage investments.

Speakers: Denny Kurien, Jaijit Bhatacharya, Ganesh Shenoy, Pramod Banthia, Sandip Mukherjee, Gopala Rao

News

Post Budget Analysis with CII Telangana

The panelists decode the union budget 2021-22 and highlight the implications, summarizing the key themes and deep diving into tax and other policy announcements.

Panelists from Fox Mandal:

  • Sandip Mukherjee – Director, International Tax
  • Pramod Banthia – Director, Indirect Tax
  • Purnima Kamble – Partner, Fox Mandal
  • G.V. Gopala Rao – Director, Tax

 

 

News

Pramod Banthia Joins Fox Mandal as Director – Indirect Taxes

Fox Mandal & Associates is pleased to announce the appointment of Mr. Pramod Banthia as Director – Indirect Taxes. Pramod would operate from the Bangalore office and lead the Indirect Tax Practice of the firm in Southern & Western India. His addition is a part of the firm’s strategic expansion of its tax advisory vertical.  

Pramod has spent about 23+ years in the profession, primarily with PwC as a Partner. He has comprehensive experience in the application of indirect tax laws including Customs, GST, Central and State Excise, Service Tax, Entry Tax (including Octroi and LBT), Value Added Tax, FTP, EOU/STPI, SEZ, etc. while serving a broad range of international and Indian clients. Commenting on the appointment, he says, “Fox Mandal’s vision of being a trusted & holistic tax advisor seamlessly integrated with my goal of sharing my expertise and delivering value to my clients. I am delighted to be a part of such an esteemed market leader in the legal sector and eager to contribute to its continued success.”  

Established in 1896, Fox Mandal is one of the oldest full-service law firm in India and has been carrying a legacy of quality and integrity through the years. With a pan-India presence, over 200 fee-earners and a broad spectrum of practice areas, the firm has had the privilege of catering to a wide range of legal requirements of a diverse clientele.  

Mr. Shuva Mandal, the Managing Partner, says, “Pramod has immense knowledge and expertise as a tax practitioner owing to his long-standing association with a huge organization and varied clients. We are elated to have him on board with us and looking forward to harmonizing his goals with our vision.”