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    CircularsService Tax
    How will the SBC be calculated for services under reverse charge mechanism?
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    CircularsService Tax
    How will the SBC be calculated for services under reverse charge mechanism?
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    Swachh Bharat Cess reverse charge shifts liability to the service recipient, applying existing reverse charge notifications mutatis mutandis.
    Swachh Bharat Cess for services under reverse charge is payable by the service recipient: Chapter V provisions apply to SBC, and government notification makes the existing service tax reverse charge notification applicable to SBC mutatis mutandis, so recipients compute and discharge SBC under the same reverse charge rules.
    CircularsService Tax
    Whether SBC is a ‘Cess’ on tax’ and we need to calculate SBC @ 0.50% on the amount of service ...
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    Swachh Bharat Cess: not levied on service tax but imposed on the value of taxable services.
    The Swachh Bharat Cess is not a cess on service tax but is imposed as a separate charge measured on the value of taxable services, rather than being calculated on the amount of service tax as was done for Education Cess and SHE Cess.
    CircularsService Tax
    What would be effective rate of service tax and SBC post introduction of SBC?
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    Service tax plus Swachh Bharat Cess yields a combined rate after SBC introduction, affecting taxable services.
    The operative tax burden on taxable services equals the prevailing service tax rate plus the Swachh Bharat Cess, expressed in the FAQ as an additive formula (for example, service tax rate plus 0.5% SBC) to determine the overall effective rate after SBC's introduction.
    CircularsService Tax
    Whether separate accounting code will be there for Swachh Bharat Cess
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    Separate accounting code for Swachh Bharat Cess to be notified, creating distinct heads for collection, receipts, penalties and refunds.
    Separate accounting codes for the Swachh Bharat Cess will be notified in consultation with the Principal Chief Controller of Accounts, establishing distinct minor head classifications to record cess Tax Collection, Other Receipts, Penalties and Deduct Refunds with corresponding numeric codes for government accounting.
    CircularsService Tax
    Whether SBC would be required to be mentioned separately in invoice?
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    Swachh Bharat Cess must be shown separately on invoices and accounted for independently from service tax.
    Swachh Bharat Cess (SBC) is levied independently of service tax and must be charged, collected and paid separately; it should appear as a distinct line item on invoices (may be shown after service tax), be accounted for separately in books of account, and remitted under a separate accounting code, with treatment similar to education cesses.
    CircularsService Tax
    How will the SBC be calculated?
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    Swachh Bharat Cess calculation mirrors service tax and is levied on the identical taxable value.
    The Swachh Bharat Cess is computed using the same methodology as service tax and is levied on the identical taxable value applied for service tax, with no separate valuation base or distinct computation formula for the Cess.
    CircularsService Tax
    Where will the money collected under SBC go?
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    Proceeds of Swachh Bharat Cess credited to Consolidated Fund of India, usable after parliamentary appropriation for sanitation initiatives.
    Proceeds of the Swachh Bharat Cess are to be credited to the Consolidated Fund of India, and after parliamentary appropriation the Central Government may utilise such sums for financing and promoting Swachh Bharat initiatives or for related purposes.
    CircularsService Tax
    Why has SBC been imposed?
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    Swachh Bharat cess imposed to finance and promote sanitation initiatives, obliging service providers to collect and remit the levy.
    Imposition of Swachh Bharat Cess is a statutory levy on taxable services to generate revenue expressly for financing and promoting Swachh Bharat initiatives and related purposes, creating an obligation on service providers to collect and remit the cess so funds are available for the designated sanitation objectives.
    CircularsService Tax
    Whether SBC would be leviable on exempted services and services in the negative list?
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    Swachh Bharat Cess on exempted and negative list services is not leviable under the FAQ circular.
    The circular clarifies that Swachh Bharat Cess is not leviable on services which are fully exempt from service tax and on services covered by the negative list, limiting the cess's chargeability to taxable services only.
    CircularsService Tax
    What is the date of implementation of SBC?
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    Swachh Bharat Cess implementation date fixed as 15 November 2015 under notification appointing its commencement.
    The Central Government appointed 15 November 2015 as the date on which provisions of the Swachh Bharat Cess come into effect, by notification No.21/2015 Service Tax dated 6 November 2015.
    CircularsService Tax
    What is Swachh Bharat Cess (SBC)?
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    Swachh Bharat Cess applies as a service cess on taxable services, increasing service tax liability and compliance obligations.
    Swachh Bharat Cess is a statutory cess levied as a service cess under Chapter VI of the Finance Act, 2015, imposed on all taxable services and collected in accordance with the Act's levy and collection provisions, thereby increasing service tax liability and requiring compliance with service tax accounting and remittance rules.
    ManualsIncome Tax
    STEPS NEED TO BE TAKEN AFTER APPROVAL ADVANCE PRICING AGREEMENT(APA)?
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    Advance Pricing Agreement requires modified returns and extends reassessment deadlines for affected assessment years by tax authorities.
    Entry into an Advance Pricing Agreement fixing the arm's length price requires the taxpayer to file a modified return for each affected assessment year within three months from the end of the month in which the APA is executed. If an assessment was already completed, the Assessing Officer must reassess under the APA and complete that reassessment within one year from the end of the financial year in which the modified return is filed. If the assessment was pending, the Assessing Officer may complete it within an extended timeframe permitted for APA-related assessments.
    ManualsIncome Tax
    What is the limit of PANCARD regarding payment to Life Insurance company ?
    Show AI Summary
    PAN requirement for life insurance premium payments: quoting PAN mandatory when annual premiums meet statutory threshold.
    A payer must quote PAN when annual payments of life insurance premium to an insurer aggregate to Rs. 50,000 or more, the aggregation determining whether the PAN quoting obligation is triggered as a compliance mechanism for identification and reporting of premium payments.
    ManualsIncome Tax
    What is the basic monetary limit required for PANCARD for amount deposit in mutual fund and shares?
    Show AI Summary
    PAN requirement for mutual fund and share deposits triggers mandatory identification and reporting when payments reach the statutory threshold.
    Quoting a Permanent Account Number (PAN) is mandatory for deposits into mutual funds and for share purchases when the payment amount is fifty thousand rupees or more, under the PAN provisions and implementing rules governing income-return and reporting obligations.
    ManualsIncome Tax
    What is the basic limit for PANCARD for payment to foreign country?
    Show AI Summary
    PAN requirement for foreign travel payments: cash disbursements above prescribed limit require PAN for travel, tour, or currency purchases.
    A PAN must be furnished where a single-instance cash payment connected with travel to a foreign country exceeds the prescribed cash threshold; this covers cash payments for fare, payments to travel agents or tour operators, payments to authorized persons under foreign exchange law, and purchases of foreign currency, while excluding travel to neighbouring countries and specified pilgrimage locations.
    ManualsIncome Tax
    Whether PANCARD is require for opening account in bank?
    Show AI Summary
    Permanent Account Number requirement: PAN is mandatory for opening bank accounts under income tax rules with no monetary threshold.
    Permanent Account Number (PAN) is mandatory for opening a bank account under the income tax statutory framework and implementing rules; the requirement applies generally and the source does not specify any monetary threshold limiting the obligation, reflecting PAN's function as an identification and compliance mechanism in return of income and assessment procedure contexts.
    ManualsIncome Tax
    What is the limit of PANCARD for amount depositing in securities.?
    Show AI Summary
    PAN requirement for securities transactions mandates furnishing PAN for deposits exceeding prescribed threshold to enable identity verification.
    A PAN furnishing requirement applies to sale and purchase of securities: where consideration in a securities transaction exceeds the statutory high-value threshold, the person transacting must furnish their Permanent Account Number to the counterparty, implementing identity verification and enabling tax reporting obligations under the income-tax rules.
    ManualsIncome Tax
    Is PANCARD is required for time deposit exceed a time of ₹ 5 lakhs?
    Show AI Summary
    PAN requirement for time deposits: PAN must be furnished when a time deposit exceeds the prescribed regulatory threshold.
    A PAN must be furnished when a depositor makes a time deposit with a bank, banking company, or banking institution that exceeds the prescribed monetary threshold; this imposes an identification and reporting obligation under the income tax PAN provisions and rules.
    ManualsIncome Tax
    What is the Basic limit of PANCARD for sale purchase of immovable property?
    Show AI Summary
    PAN requirement for immovable property transactions: PAN must be furnished where property value meets the statutory threshold.
    A Permanent Account Number (PAN) must be furnished for sale or purchase of immovable property when the transaction reaches the statutory value threshold, as part of PAN-related obligations in return of income and assessment procedure; this requirement applies to parties to the transaction to ensure tax documentation and compliance.
    ManualsIncome Tax
    Is Permission is Required For Filing Of Revised Return?
    Show AI Summary
    Right to file revised return: no prior permission required and permission-application cannot substitute for revision.
    No prior permission is required to file a revised return; the assessee has a right to submit a revised return. An application framed as seeking permission to revise the originally filed return cannot be treated as, or substitute for, a valid revised return, and therefore does not meet the statutory mechanism for revision.

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      Benami Property

      Application of provisions of section 5 of the Benami Transactions (Prohibition) Amendment Act, 2016 - non-retrospective application of punitive legal provisions.

      13 January, 2024

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      2023 (12) TMI 620 - MADRAS HIGH COURT

      The case of the Deputy Commissioner of Income Tax (Benami Prohibition) and Additional Commissioner of Income Tax (Benami Prohibition) versus M/s. Advance Infra Developers Pvt Ltd represented by its Director Ravi Rajagopal involves a complex dispute related to alleged benami transactions and property.

      Key Issues

      1. Alleged Benami Transactions: The case revolves around alleged benami transactions within the Marg Group of Companies. The Income Tax Department conducted a search revealing intricate transactions involving numerous shell companies.

      2. Property Acquisition and Transactions: The case particularly focused on the acquisition of 17.702 acres of land at Muttam Village, Nagore Vattam, by M/s. Advance Infra Developers Pvt Ltd, which was allegedly funded through a network of shell companies connected to Marg Limited.

      3. Legal Proceedings and Appeals: The proceedings have seen a series of legal developments, including writ petitions, appeals, and orders by various courts, including the Madras High Court and the Supreme Court.

      Court's Observation and Decision

      1. Review of Appellate Tribunal's Order: The Madras High Court reviewed the order passed by the Appellate Tribunal for Benami Property Transaction Act, 1988, which had concluded that the proceedings against the respondent were not legally sustainable.

      2. Prospective Application of the Amended Act: The court noted that the Appellate Tribunal, in its decision, relied on the Supreme Court judgment in Union of India vs. Ganpati Dealcom Pvt Ltd.[2022 (8) TMI 1047 - SUPREME COURT] , which held that the provisions under Section 5 of the Benami Transactions (Prohibition) Amendment Act, 2016, being punitive in nature, could only be applied prospectively and not retrospectively. This meant that transactions prior to the coming into force of the Amendment Act in 2016 could not be prosecuted under the new provisions.

      3. Constitutionality and Legal Interpretation: The court observed the declarations made by the Supreme Court regarding the constitutionality of certain sections of the unamended 1988 Act and the 2016 Amendment Act. The Supreme Court had declared Section 3(2) of the unamended 1988 Act as unconstitutional for being manifestly arbitrary, and the same section in the 2016 Act was also declared unconstitutional.

      4. Relevance of Supreme Court's Decision: The High Court emphasized the importance of adhering to the Supreme Court's ruling, stating that the High Courts must decide matters based on the law as it stands, without awaiting the outcome of a reference or a review petition unless specifically directed by the Supreme Court.

      5. Disposition of Appeals: The court disposed of the Civil Miscellaneous Appeals filed by the appellants, with the observation that it would always be open for the appellants to proceed further based on the outcome of the Review Petition pending before the Supreme Court.

      Implications

      1. Legal Precedent on Retrospectivity: This judgment reinforces the legal principle that punitive laws, especially those involving property and financial transactions, cannot be applied retrospectively unless explicitly stated.

      2. Clarity in Enforcement of Benami Laws: The decision provides clarity on the enforcement of benami laws, particularly in the context of transactions that occurred before the implementation of the 2016 Amendment Act.

      3. Guidance for Future Cases: The judgment serves as a guideline for handling similar cases, stressing the need for alignment with the highest court's interpretations and rulings.

      4. Implications for Tax and Property Laws: The case highlights the complexity of tax and property laws in India, especially concerning benami transactions and the interplay between various amendments and legal interpretations.

      Conclusion

      The 2023 (12) TMI 620 judgment by the Madras High Court provides significant insights into the application and interpretation of laws related to benami transactions in India. It underscores the importance of following the Supreme Court's rulings and the non-retrospective application of punitive legal provisions. The case is a noteworthy example of the dynamic nature of legal interpretations in the context of financial and property-related laws in India.

       

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      2023 (12) TMI 620 - MADRAS HIGH COURT

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