SPC GROUP INDIA NEWSLETTER

TAX AND REGULATORY CONSULTING SERVICES (TRCS)
By Gaurav Singh | 15 min Read

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SPC TAX TRAX-JULY '21

DIRECT TAX

Direct Tax Notifications

1. SECTION 194Q TO BE INTRODUCED FROM 1 JULY,2021

Section 194Q of the Income Tax Act has been recently introduced in Finance Act 2021 and will be applicable from July 1, 2021.

Under Section 194Q of Income Tax, “Any person being a buyer, whose total sales, gross receipts or business turnover exceeds 10 Crores ( for the financial year preceding the financial year of purchase of goods ), is responsible for paying any sum to the seller for the purchase of  goods exceeding 50 Lakhs, at a rate of 0.1% of the value exceeding fifty lakh rupees as income tax.”

The rate of TDS would be applicable as:

Transactions, wherein, TDS is deductible under both provisions i.e. Sec 194Q and Sec 206C (1H), Section 194Q shall override Section 206C (1H) and hence in such a case only buyer is required to deduct TDS and seller need not require to deduct TDS under Section 206 C (1H).

TDS provisions covered under Section 194Q are not applicable under the following cases-

  • Transactions on which TDS is already deductible under other provisions of the Income Tax Act; or
  • Transactions on which TCS is collectible as per provisions of Section 206C [other than a transaction on which TCS is collectible under section 206C(1H)].

2. SECTION 206AB & 206CCA OF INCOME TAX ACT 1961

Finance Act, 2021 inserted two new sections 206AB and 206CCA in the Income-tax Act 1961  which takes effect from July 1, 2021. These sections mandate tax deduction (section 206AB) or tax collection (section 206CCA) at a higher rate in the case of certain non-filers with respect to tax deductions (other than under sections 192, 192A, 194B, 194BB, I 94LBC and I 94N) and tax collections.

The higher tax rate is prescribed to be twice or 5%, whichever is higher.

To ease the compliance burden the Central Board of Direct Taxes is issuing a new functionality “Compliance Check for Sections 206AB & 206CCA”. This functionality is made available through reporting portal of the Income-tax Department. The tax deductor or the collector can feed the single PAN (PAN search) or multiple PANs (bulk search) of the deductee or collectee and can get a response.

A specified person means a person who satisfies both the following conditions: –

  • He has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately before the previous year in which tax is required to be deducted/collected. Two previous years to be counted are required to be those whose return filing date under sub-section (1) of section 139 has expired.
  • An aggregate of tax deducted at source and tax collected at source is rupees fifty thousand or more in each of these two previous years.

3. VIVAD SE VISHWAS ACT 2020 DATE FURTHER EXTENDED

The last date of payment under Direct Tax Vivad se Vishwas Act, 2020 (without additional amount) has been extended from 30th June 2021 to 31st August 2021. With the additional amount, the new date has been notified as 31st October 2021.

4. INCOME TAX DEPARTMENT LAUNCHED NEW E-FILING PORTAL

The Income Tax Department on June 7 launched its new e-filing portal 2.0.

The new portal facilitates the users by displaying all interactions, pending actions, and uploads on a single dashboard. The immediate processing of ITRs allows the users to receive quick refunds. Free-of-cost software will also be available for ITR preparation.

Taxpayers can update their salaries, property, and profession/business while pre-filing their ITR at “www.incometax.gov.in”.

5. EXTENSION OF TIME LIMIT UNDER CERTAIN COMPLIANCE TO PROVIDE RELIEF TO TAXPAYERS IN VIEW OF PANDEMIC

EXTENSION OF TIME LIMIT UNDER CERTAIN COMPLIANCES TO PROVIDE RELIEF TO TAXPAYERS IN VIEW OF PANDEMIC

INDIRECT TAX

Goods and Services Tax

1. 44TH GST COUNCIL MEETING

44th meeting of Goods & Services Tax was chaired by Finance Minister Nirmala Sitharaman. The last meeting(28th May,2021) decided a full exemption from IGST on specified Covid-19 related goods like oxygen concentrators, medical oxygen etc.

Following it, the Council constituted a group of ministers to recommend on the rates of individual items.

 

44TH GST COUNCIL MEETING

REGULATORY

Reserve Bank of India

1. RBI EXTENDS RBIA TO HFCs

RBI on June 12 extended the Risk-Based Internal Audit (RBIA) rule to all Deposit-taking Housing Finance Companies, irrespective of their size and Non-Deposit taking HFCs with assets above Rs. 5,000 Crores. This rule will be effective from June 30, 2022.

The RBI guidelines came with rising instances of financial irregularities and government issues in NBFCs.

2. GOVERNMENT SIMPLIFIED MSME REGISTRATION PROCESS

Minister of MSME,  Nitin Gadkari has simplified the process for registration of Micro, Small & Medium Enterprises. This announcement came after the World Bank declaration of financial aid of $500 million to India.

The registration process for MSME requires only PAN & AADHAR details. The process is Online, Paperless, and based on Self Declaration. The ITR & GST linked details on investment and turnover would be fetched from government databases.

3. ATM CASH WITHDRAWAL RULES CHANGED

On June 10 the RBI has announced some hike in ATM cash withdrawal rules along with changes in the free permissible limit. The last changes in the interchange fees structure for ATM transactions were observed in 2012, while the last change in charges payable by customers was done in 2014. Considering the general escalation in costs RBI has revisited these rules:

Free cash withdrawal limit from own bank’s ATM:

Bank Customers are now eligible for 5 free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs.

Free ATM transaction limit from other banks:

ATM cardholders are now eligible for free transactions (inclusive of financial and non-financial transactions) from other bank ATMs as well.

Free ATM transaction limit from other bank

Hike in charges on ATM cash withdrawal beyond the free limit:

RBI has allowed the banks to increase the customer charges to Rs. 21 per transaction. This will be effective from January 1, 2022.

New Charges on ATM withdrawal beyond free transaction limit:

According to the new circular, the bank consumer will pay Rs. 21 (previous amount Rs. 20) for each cash withdrawal beyond the free transaction limit. This will be effective from January 1, 2022.

The rise in interchange fee:

The RBI has also increased the interchange fees per transaction effective from August 1, 2021.

 

Rise in interchange fee

4. SEBI INCREASES FOREIGN INVESTMENT LIMIT FOR MUTUAL FUNDS 

The market regulators of India, SEBI on June 5 increased the Foreign Investment Limit for an individual mutual fund house from $600 million to $1 billion. The industry-wide cap for abroad investment remains unchanged at $7 billion.

Exchange-Traded Funds (ETFs) overseas investment has been increased from $200 million to $300 million. However, the overall industry limit remains unchanged at $1billion. This rule came after the investor reached SEBI to raise the limit to quench their thirst for global portfolio diversification.

COMPLIANCE CALENDAR

Compliance Calendar July 2021
Extensions in Compliance Calendar

Precautions to be taken by you

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