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    ManualsIncome Tax
    Can ICDS apply to a person following cash system of accounting and to the person whose books of acco...
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    ManualsIncome Tax
    Show AI Summary
    ICDS applicability limited to mercantile accounting; excludes cash-accounting and individuals/HUFs not subject to tax audit.
    ICDS applies to persons following the mercantile system of accounting and does not apply to those following the cash system. For individuals and HUFs, ICDS is applicable only if they carry on business or profession and their books are required to be audited under the tax audit provisions; it does not apply where there is no business or professional income even if mercantile accounting is followed for other heads.
    ManualsGST
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    Reversal of Input Tax Credit on switching to composition scheme; capital goods credit prorated by remaining useful life.
    Switching to the composition scheme requires reversal of Input Tax Credit on inputs, inputs in semi finished or finished goods held in stock, and capital goods held in stock as on the day before the option is exercised, by payment from the electronic credit or cash ledger after prescribed reductions. For capital goods, reversal is prorated by remaining useful life using an assumed five year useful life, with the credit attributable to remaining months computed as original credit multiplied by remaining months divided by sixty.
    ManualsGST
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    Input tax credit eligibility on switching from composition to normal scheme - capital goods credit reduced over time, subject to time bar.
    A taxpayer switching from the composition scheme to the normal scheme may claim Input Tax Credit for inputs, inputs in goods held in stock, and capital goods held immediately before liability to pay tax, but credit for capital goods must be reduced by the prescribed periodic reduction measured from the invoice or receipt date, and no credit may be claimed for supplies after one year from the tax invoice date.
    Act RulesGST
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    Input Tax Credit denial: purchases from composition taxpayers are ineligible for ITC under the GST regime.
    A composition scheme taxpayer is excluded from the input tax credit chain, cannot issue a tax invoice or collect tax, and must state that no credit is available. Consequently, a registered person purchasing from a composition dealer cannot claim Input Tax Credit because the supplier does not charge GST in a manner that would enable the recipient to treat the payment as tax paid for ITC purposes.
    Act RulesGST
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    Composition scheme threshold triggers monthly tax payment and monthly returns requirement for the affected taxpayer.
    A taxpayer under the Composition Scheme may pay and file on the quarterly schedule (guidance noting payment on the 18th and quarterly return on the 18th after quarter-end). If the taxpayer crosses the threshold or withdraws from composition, they become a regular taxable person and must pay tax and furnish returns monthly by the 20th of the following month for the remainder of the financial year and subsequent years.
    Act RulesGST
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    GST payment due date: monthly filers pay with next-month return; composition filers pay with quarterly return.
    Tax under GST must be paid not later than the return's due date. Monthly filers must file GSTR-3 and pay tax by the twentieth day of the month following the tax month. Composition taxpayers under the composition scheme file quarterly in GSTR-4 and must pay tax by the eighteenth day after the quarter ends.
    Act RulesGST
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    Composition levy on exempt supplies raises eligibility ambiguity due to turnover inclusion versus ineligibility for non leviable supplies.
    The composition levy's tax base, as defined by turnover, expressly includes exempt supplies, indicating that composition tax is payable having regard to exempted goods; however, Section 10(2)(b) disqualifies persons making supplies "not leviable to tax," creating an ambiguity whether exempt supplies (which definitionally includes nil rated and wholly exempt supplies and non taxable supplies) render a person ineligible for composition. Commentators note this tension and call for clarification or amendment to reconcile the turnover inclusion with the eligibility restriction.
    Act RulesGST
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    Eligibility for composition scheme may be barred by prior inter state supplies, even if current turnover is below threshold.
    A registered person who made inter state supplies during the previous year is ineligible to opt for the composition scheme in the current year, because eligibility under Section 10 is determined with reference to the preceding financial year; thus the absence of inter state supplies must be assessed for the previous year even if turnover remains below the threshold.
    Act RulesGST
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    Composition scheme eligibility: turnover in preceding financial year determines entitlement; aggregate turnover is all-India and fresh declaration required.
    Eligibility for the composition scheme depends on aggregate turnover in the preceding financial year not exceeding the prescribed threshold; aggregate turnover is computed on an all India basis and includes taxable supplies (excluding inward reverse charge supplies), exempt supplies, exports and inter State supplies by the same PAN, while excluding GST and cess. Eligibility is reassessed each year; a fresh declaration is required to opt into the scheme after becoming eligible.
    Act RulesGST
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    Composition scheme validity continues while statutory conditions are met; annual intimation is not required for eligible taxpayers.
    The composition levy remains valid so long as statutory eligibility conditions and applicable CGST Rules are complied with; no fresh annual intimation is required if those conditions continue to be met.
    Act RulesGST
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    Composition levy option must be elected before the financial year begins; prior electronic intimation required.
    The option to pay tax under the composition levy must be exercised by giving electronic intimation in FORM GST CMP-02 prior to the commencement of the relevant financial year under the Central Goods and Services Tax Rules, 2017.
    Act RulesGST
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    Composition levy withdrawal: file FORM GST CMP-04 and submit FORM GST ITC-01 detailing stock within the prescribed period.
    Withdrawal from the composition scheme is effected by filing a duly signed or verified application in FORM GST CMP-04, and the applicant must electronically furnish FORM GST ITC-01 detailing stock of inputs and inputs contained in semi-finished or finished goods held on the date of withdrawal within thirty days of withdrawal.
    Act RulesGST
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    Composition scheme: importers may remain in composition though IGST on imports may not yield input tax credit, service providers excluded.
    Importers can opt for the composition scheme where otherwise eligible; there is no categorical bar on importers availing composition levy. IGST is payable on import and such tax may not yield input tax credit for a composition taxpayer. Pure service providers remain ineligible for composition, and importing services for business or captive consumption does not automatically make a person a service provider or disqualify composition eligibility.
    Act RulesGST
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    Composition scheme eligibility: exporters cannot use composition tax where their supplies are treated as inter State, barring such option.
    Exports are treated as inter State supplies for GST purposes. The composition levy prohibits a taxpayer from making inter State outward supplies of goods while paying tax under the composition scheme. Therefore, an exporter whose transactions are classified as inter State supplies cannot opt to pay tax under the composition scheme in respect of those export supplies.
    Act RulesGST
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    Composition scheme: suppliers cannot make inter State outward supplies to SEZ while remaining in the scheme.
    Supplies from the domestic tariff area to an SEZ are treated as inter State supplies, and Rule 5/Section 10 conditions for the composition levy prohibit a composition taxpayer from making inter State outward supplies; therefore a person paying tax under the composition scheme cannot make outward supplies of goods to an SEZ while remaining in the scheme.
    Act RulesGST
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    Composition scheme eligibility denied where stock on appointed day was purchased inter state, imported, or received from outside State.
    Persons below the turnover threshold who hold stock on the appointed day cannot opt for the composition scheme if that stock was purchased inter state, imported, or received from an out of State branch, agent or principal; possession of such goods on the appointed day disqualifies a registered person from the composition levy.
    Act RulesGST
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    Composition scheme eligibility barred for casual and non-resident taxable persons; cannot claim composition as casual dealer.
    A taxpayer acting as a casual taxable person or a non-resident taxable person is expressly excluded from the composition levy; therefore casual dealers and non-resident taxable persons cannot avail the composition scheme while operating in that capacity.
    Act RulesGST
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    Composition scheme ineligibility: manufacturers of ice cream, pan masala and tobacco and certain suppliers cannot opt.
    Section 10(2) excludes five categories from the composition scheme: suppliers of services (except restaurant services), suppliers of non taxable goods, inter State suppliers, persons supplying through electronic commerce operators, and manufacturers of notified goods. Rule 5 adds further ineligible classes. A notification further specifies that manufacturers of ice cream, pan masala, and all tobacco and manufactured tobacco substitutes are not eligible for composition levy.
    Act RulesGST
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    Composition scheme lapse triggers transition to regular tax liability and requires issuing tax invoices and filing withdrawal notice promptly.
    Crossing the aggregate turnover threshold causes the composition option to lapse from the day the threshold is exceeded; the person is liable to pay tax under section 9 from that day and must issue tax invoices for every taxable supply made thereafter. The person must also file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days of the occurrence of such event.
    Act RulesGST
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    Composition scheme eligibility may be available for suppliers using e-commerce operators while TDS/TCS provisions remain inoperative.
    Eligibility for the composition scheme is negated for suppliers making supplies through an electronic commerce operator required to collect tax at source; however, because the TDS/TCS provisions are not yet operative and ECOs are not required to collect tax, suppliers using ECOs may currently opt for the composition scheme until the collection provisions are brought into force, and an administrative clarification from the government is recommended to remove uncertainty.

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      CUSTOMS DUTY EXEMPTIONS / CONCESSIONS BEING ALLOWED TO LAPSE

      24 July, 2024

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      Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

      Certain BCD exemptions entries under S No. 50/2017-Customs dated 30.6.2017 and other notifications are being allowed to lapse with effect from 30.9.2024.

      (a) The following entries of notification no. 50/2017-Customs dated 30.6.2017 are being allowed to lapse with effect from 30.9.2024:

      S. No.

      S N of 50/2017 Customs

      Description

      1.

      478

      Wireless apparatus, accessories and parts as specified in List 29 imported by a licensed amateur radio operator

      2.

      353

      Foreign currency coins when imported into India by a Scheduled Bank

      3.

      387

       Zinc metal recovered by toll smelting or toll processing from zinc concentrates exported from India for such processes

      4.

      441

      Spinnerettes made inter alia of Gold, Platinum and Rhodium or any one or more of these metals, when imported in exchange of worn-out or damaged spinnerettes exported out of India

      5.

      238

      Organic/inorganic Coating material for manufacture of electrical steel

      6.

      254

      Catalyst for manufacture of cast components of Wind Operated Electricity Generator

      7.

      255

      Resin for manufacture of cast components of Wind Operated Electricity Generator

      8.

      277A

      Calendared plastic sheet for manufacturing of Smart Card under chapter heading 8523

      9.

      339

      Concessional rate on import of Toughened glass with low iron content and transmissivity of minimum 91% and above, for use in manufacture of solar thermal collectors or heaters

      10.

      421

      Specified goods required for basic telephone service, cellular mobile telephone service, internet service or closed users’ group 64 KBPS domestic data network via INSAT satellite system service and parts, for manufacture of the goods

      11.

      479

      Mono or Bi polar Membrane electrolysers and parts thereof including secondary brine purification components, jumper switches, filtering elements for hydrogen filters for caustic soda or potash units; Membrane and parts thereof or other parts for caustic soda or potash units;

      12.

      475

      Specified goods including scramblers, descramblers, encoders, decoders, jammers, network firewalls, network sniffers, scanners and monitoring systems, probes for data monitoring and SMS/MMS monitoring systems

      13.

      482

      Newspaper page transmission and reception facsimile system or equipment; and Telephoto transmission and reception system or equipment

      14.

      495

      Batteries for electrically operated vehicles, including two and three wheeled electric motor vehicles.

      15.

      497

      Active Energy Controller (AEC) for use in manufacture of Renewable Power System (RPS) inverters

      16.

      579

      Survey (DGPS) instruments, 3D modeling software for ore body simulation cum mine planning and exploration (geophysics and geochemistry) equipment required for surveying and prospecting of minerals

      17.

      419

      Aluminium Oxide for manufacture of washcoat of catalytic converter

      18.

      420

      Clay 2 powder for use in ceramic substrate for catalytic convertor

      19.

      340

      Solar tempered glass or solar tempered (anti-reflective coated) glass for use in manufacture of solar cells/panels/modules

      20.

      565

      Specified goods for use in the manufacture of Flexible Medical Video Endoscope [heading 9018]

      21.

      566

       Specific input goods for manufacture of syringes, needles, catheters and cannulae

      22.

      568

      Parts and components for manufacture of blood pressure monitors and blood glucose monitoring system (Glucometers)

      Note: Description of entries is indicative. Notification may be referred to for complete description.

      (b) The following notifications are being allowed to lapse with effect from 30.9.2024:

      S. No

      Notification No.

      Description

      1.

      97/99-Customs dated 21 July 1999

      Exempts BCD and additional duty under Sections 3(1), 3(3) and 3(5) on standard gold bars imported by a RBI authorised bank

      2.

      30/2004-Customs dated 28 January 2004

      Provides full exemption from BCD to second-hand computers/accessories and peripherals received as donation by schools, charitable institutions.

      3.

      102/2007-Customs dated 14 September 2017

      Provides exemption from Special Additional Duty (SAD) levied vide section 3(5) of CTA on to all goods imported for subsequent sale when IGST, CGST, SGST or UTGST paid by importer.

      4.

      45/2005-Customs dated 16 May 2005

      Provides exemption from Special Additional Duty levied under Section 3(5) of CTA on goods cleared from SEZ to DTA.

      5.

      151/94-Customs dated 13 July 1994

      Provides exemption to imports of duty-paid fuel and lubricating oil on aircrafts taken during the outward flight; goods imports by United Arab Airlines; aircraft engines, spares imported by Indian Airlines and Air India International. Re-import entries will operate from re-import notification 45/2017-Cus

      6.

      26-Customs dated 19th February 1962

      Provides exemption from import duty under the Sea Customs Act on catering cabin equipment, food and drink on re-importation by aircrafts of the Indian Airlines Corporation from foreign flights

      Note: Description of entries is indicative. Notification may be referred to for complete description.


      Full Text:

      Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

      Topics

      ActsIncome Tax