One months relief of interest in case of delay payment of TDS

The Hon’ble ITAT – Ahmedabad Bench in the case of Bank of Baroda v. Deputy Commissioner of Income-tax [2017] (Ahmedabad – Trib.) held that the interest chargeable under section 201(1A) of the Income-tax Act should be levied from the date of deduction of tax to the date on which such tax is actually paid to the Government.

  • Following are the examples that may help to understand the levy of interest u/s. 201(1A):-
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How profit from Bitcoin will be taxed in India?

How profit from Bitcoin will be taxed in India?

Bitcoin is the buzzing word on social media and all want to become rich by investing in the crypto currency. Many Indian despite RBI warning has invested in to Bitcoin few months back and have made handsome gains. The question now remains is the gains on sale of Bitcoin is taxable under Income Tax Act? If yes then it shall be taxed as business Income or Capital Gains or something else ?

Any gain on Bitcoin is taxable as any gain on account of Bitcoin exchange is certainly (100%) taxable because the definition of income u/s 2(24) under Income Tax Act is inclusive, which mean every kind of income unless clearly exempt .

When will Bitcoin Tax Liability Arise

The buying and holding of Bitcoin wont attract any Income tax liability. The selling of Bitcoin will lead to profits or gains which will be considered as Income and taxed in India

Speculative Income

This is debatable on account of lack of any law related to taxation of Bitcoin in the Income Tax Act . It will be determined on the basis of each facts and circumstances. In case of trading it will be considered as speculative income and will attract tax as per slab rate of Individuals.

Capital Gains

If the transaction are not frequent and are in nature of Investment in the currency, it would be classified as capital gains and would attract either long-term capital gain tax or short-term capital gain tax, depending on the holding period. Long-term capital gains tax will be taxed at 20% if Bitcoins were held for at least 36 months. In all other cases, short-term capital gains tax at 30% would be applicable

RBI warning

RBI issued fresh warnings, reminding investors that it has not authorised any entity to deal in Bitcoins and that any investor or trader dealing with virtual currencies “will be doing so at their own risk”.

Bitcoin sale by Non Resident

Income from sale of Bitcoins earned outside India and received outside India will not be taxable in India if you qualify as non resident or resident but not ordinarily resident in India. Subsequent remittance of the said income will also not be taxable in India. But since the issue is not a settled concept, there can be possible litigation with the tax authorities on this issue.

Advance Tax and Future

Advance tax deadline is on December 15, Bitcoin investors and their consultants are trying to figure out a way to deal with the returns on Bitcoin investment along with other cryptocurrencies. We can expect some clarity once the Finance Ministry finalises its opinion on a report on virtual currencies that was submitted to it recently. It would be interesting to see if GST will be applicable or not? Only future has answer to it.


Assessee is Eligible for Interest on Excess Amount Paid on Self-Assessed Tax: Kerala HC

A two-judge bench of the Kerala High Court in The Commissioner of Income-Tax, Thiruvananthapuram v. The Kerala Minerals And Metals Ltd, held that the assessee would be entitled to the interest on the excess tax paid under self-assessment under the Income Tax Act, 1961. Assessee, in the instant case, made a self-assessment of tax and paid tax, far in excess of that determined under the regular assessment. Subsequently, the assessee claimed refund of the amount along with interest. However, the department rejected the claim and said that no interest can be granted on account of excess tax paid under self-assessment. Aggrieved by the order, the assessee approached the High Court.

Justice K Vinod Chandran and Justice Ashok Menon noticed that the issue has already been settled by the division bench while deciding W.A No.817/2010 dated 08.10.2013 wherein it was held that “The argument is that going by the explanation to Section 244A (1) (b) of the Income Tax Act the liability to pay interest is only in respect of the tax paid after a demand is made under section 156 of the Act. We do not think that such a differentiation can be made to the aforesaid provision and explanation does not give a different meaning at all. Any amount due to the assessee under the Act mentioned in section 244(1) clearly takes in all forms of refund, either self assessed tax or tax paid as per notice under Section 156 of the Act. As far as the explanation is concerned it only indicates the date on which the interest is liable to paid. That being the position, we do not think that there is any illegality or perversity in the judgment of the learned Single Judge.” Following the above decision, the bench allowed the petition and held in favour of the assessee.


Five things government can do to make GST more effective

The 23rd GST Council meeting in Guwahati on 10 November came as a big relief for most businesses with the council announcing a slew of measures that not only lessen the compliance burden on businesses, but also reduced the tax rates on several consumption goods.

This may be the first step towards the much-awaited overhaul in the Goods and Services Tax (GST), the overhaul is anything but over. There are more other steps that the government must take to make GST indeed a good and simple tax as prime minister Narendra Modi has promised.

Here are some of the steps that government may/should take in future to make GST more effective and hassle-free tax regime:

Move towards simpler tax structure: The government has cut down the number of goods and services in the 28% tax bracket from 228 to just 50. Probably, this is the first step towards doing away with the 28% tax bracket completely. For now, a 3-rate structure — 5%, 12% and 18% — would make GST regime much more simpler.

Quarterly filings: For now, the GST Council has given by exempting taxpayers from filing GSTR 2 and GSTR 3 till March 2018. But one of the main demand from industry was to allow quarterly filings for businesses with revenue of more than Rs 1.5 crore. For now, the council is silent on allowing for quarterly filings for all. It may need to consider this demand as and when the invoice matching concept kicks in after March 2018.

Allowing input tax credit for composition scheme:Those businesses availing composition schemes are not allowed to claim input tax credit. This could prove to be a spoil sports for many businesses availing this scheme. Since the government is considering increasing the composition threshold in the future, allowing input tax credit may make the scheme more attractive.

Bringing many exempted goods under GST: There are certain sectors like petroleum, electricity, real estate and liquor out of GST. Keeping them out of GST means businesses operating in these segments would not get the benefit of input tax credit. This is a loss for these businesses. Besides, it means that these sectors would be at the mercy of state government in terms of indirect tax rates. Some of these sectors especially oil and gas sectors have been demanding that they should be included in the GST. Experts say ideally all sectors should be under GST, but doing it would take some time.

Doing away with E-way bill: Another demand of the industry is doing away with e-way bill, which is an electronically generated document for movement of goods worth Rs 50,000 or more. Though implementation of e-way bill has been deferred till April 2018, experts say in GST, which is a consumption tax, there is no need for a check on movement of goods and hence e-way bills. However, Council has been silent on this. Meanwhile, GST Network has been running a pilot in Karnataka and is likely to expand it in other states.

But the industry fears that e-way bills, which have to be uploaded on GST Network, would be another technology mess waiting to happen as an when it is implemented.

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Taxing times for coconut growers after GST rollout

Traders, according to growers, are bringing down copra prices citing the increase in tax rate

Coconut growers, already in distress because of continuous drought, have another burden to bear. With the rollout of the Goods and Services Tax, the tax on copra has gone up by 3 percentage points. Traders, according to the growers, are bringing down copra prices citing the increase in tax rate.

Under the previous tax regime, copra attracted 2% VAT, besides 1.5% market fee. Now, the tax has gone up to 5% under GST. “Earlier, traders would quote less saying the demand from northern States had come down. Now, they use GST as another excuse to price the commodity very low,” said Putte Gowda, a coconut grower of Shettihalli in Channarayapatna taluk.

Tiptur in Tumakuru district and Arsikere in Hassan district are the prime coconut markets in the State. G.B. Basavaraj, a commission agent at Arsikere APMC market, told The Hindu: “If a quintal of copra is sold at ₹15,000, the additional tax burden is ₹450. In case of a truckload, the additional burden is over ₹45,000,” he said. The additional burden falls on the growers and customers. “For consumers, the burden is marginal. Farmers are the worst hit.”

However, Biligere Nagesh of Tumakuru, a graduate in agriculture, feels differently — that GST does not affect farmers. “The rate of copra does not depend on GST, but on the demand. If copra is in surplus, the rate falls even if there is demand. If the quantity of copra coming to the market is less and the demand is more, then the rate rises,” he said.

Soundaraj T.S., a trader in Tiptur, believes the same. “The trader’s job is to collect 5% tax from the buyer and remit it to the government. There is no loss or gain for the trader. The trade has come down in the market as many traders are not ready to switch over to GST,” he said. Officials blame traders for the fear of GST among farmers. B.R. Srihari, Deputy Director of Agriculture Market, Hassan,said: “Copra is valued anywhere between ₹12,000 and ₹14,000 a quintal. Last year, there was no GST, yet the price went below ₹6,000 a quintal, forcing the government to announce a minimum support price. This shows that GST has hardly any impact on copra price,” he said.

Traders are glum because the GST regime streamlines the copra market, discouraging off-market transactions. “Traders have to maintain records, issue bills and pay taxes regularly. Earlier, some traders used to avoid income tax through off-market transactions. Now such activities are not easy,” Mr. Srihari said.

Another official said, “It is true that the traders put the burden of additional tax on farmers. However, given the current price in the market, farmers need not worry much.”

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How India’s GST is different from that in other countries

By Zee Media Bureau, New Delhi: Goods and Services Tax (GST) is an indirect tax which was introduced in India on 1 July 2017 and is applicable throughout India. It replaced multiple cascading taxes levied by the central and state governments. France was the first country to implement GST.

Concept of GST is not new to the world as nearly 160 countries up till now, have opted this mode for bringing individually tax rates into a single tax.

In case of India, GST still is not a uniform tax since the government has categorised items in five major slabs – 0%, 5%, 12%, 18% and 28%. For it to be called a single tax, many more changes are still required.

How India’s GST differs from others?

When compared to other emerging markets, India’s maximum rate of GST stands at 28%, which is the highest. Most of the commodities in China and Brazil fall under 17%, 10% tax rate respectively.

On the other hand developed economies such as France, Germany and United Kingdom have higher GST rates set between 19% to 20%.

Latest data of Organisation for Economic Co-operation and Development stated that average VAT/GST rate in major OECD countries is between 20-22% higher than the rate proposed for India

New Zealand:

GST in New Zealand was introduced in 1986 at a rate of 10%. GST is a tax of 15% on all goods, services and other items sold or consumed in New Zealand.

You become liable to pay GST when your annual turnover exceeds NZ$60,000 in any 12-month period.

Depending on your turnover, you can elect to file returns monthly, two-monthly or six-monthly.

This led to adoption of GST at single rate with food included in the GST base at the full rate. At present, the country is highest tax productive nations among OECD countries.


GST is a broad-based consumption tax. It was introduced on 1 July 2000 and replaced a wholesale sales tax.

The GST rate is set at 10% of the price of the goods being sold or services being supplied, where GST is applicable.

The US:

The only major economy that does not have GST. States enjoy high autonomy in taxation.


VAT is the substitute for GST, though levies vary from 17% in Sao Paulo to 18% in Rio de Janerio and rate of inter-state supplies within Brazil vary between 4% and 25%


Canada introduced GST in the form of a multi-level VAT in 1991 on supplies of goods and services purchased in the country – included almost all products except certain essentials like groceries, residential rent and medical services.

Once implemented, the bill led to new processing operations and techniques to verify the accuracy of the returns submitted by small entrepreneurs. However, Canada imposes their own sales tax besides GST – this has created price distortions in the country.


The country introduced the bill in April 1194 at a tax rate of 3% to make it acceptable to the public and to minimize inflation. The government committed not to raise tax for next 5 years which came in as a important decision in reviving consumer spending.

Also, Singapore introduced a compensation scheme under the GST which provided support to the needy and underprivileged.


GST in this country has been imposed in the year 2015, after a 26 years of debate over its potential merits and shortcomings. It was introduced at a standard rate of 6% – which is relatively low compared to VAT rates in other ASEAN countries.

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J&K set to bring petrol, electricity, liquor under GST

Jammu and Kashmir (J&K) is poised to be the first state to bring petrol, electricity, liquor and real estate under the state goods and services tax (GST).

A formal decision is likely to be part of the state’s budget for 2017-18, scheduled for presentation in the first week of January.

Not only will the state’s decision revive the debate over extending the purview of GST to all sectors, including petroleum, alcohol and real estate, it may also serve as a template for other states.

Since these items are not part of the GST framework, the state will not have to share the revenues even while it avails of the efficiency associated with this piece of indirect tax reform.

A J&K government official said on condition of anonymity that a high-level panel has been set up to prescribe the modalities.

Once implemented, businesses will be able to benefit from tax rebates which, at present, are not available to them. For example, businesses can offset part of their final tax liability against the state GST (SGST) paid on the electricity consumed or on purchase of real estate for business. It will offer a competitive edge for businesses operating from J&K, incentivizing new businesses in the state.

Experts said the move is to replace value-added tax (VAT) on fuel, state excise duty on liquor, state-level duty on electricity and stamp duty on land with SGST. “If SGST is extended to supplies of these items, it will be beneficial for the industry,” said Prashant Deshpande, partner, Deloitte Haskins & Sells Llp.

While inclusion of these items in SGST will be beneficial, experts also pointed out that it has to be achieved without making the GST structure more complex.

“States should reach a consensus on bringing into GST’s ambit the items left out earlier so that central GST and SGST on goods and services remain equal,” said Bipin Sapra, tax partner at consulting firm EY.

India follows a dual GST structure, where the tax rate is divided equally and shared by Union and state governments. If SGST and CGST rates are unequal, it could pose challenges in settling taxes on inter-state trade. The J&K government’s panel will look into all implementation issues.

Select petroleum products, liquor, real estate and electricity were kept out of GST at the final stage of consensus-building during the early days of the Narendra Modi government as part of a ‘give and take’ deal to win the support of states for the historic tax reform.

Agreeing to keep these items out of GST and full compensation of any revenue loss arising from GST rollout from the projected growth rate for five years had helped finance minister Arun Jaitley generate consensus.

Jaitley has already promised further simplification of GST by the GST Council in due course. Delivering a lecture at Harvard University on Thursday, he said there was a strong case to bring real estate under GST as the one sector where maximum amount of tax evasion takes place, PTI reported from Washington. The matter will be discussed in the next meeting of the GST Council, to be held on 9 November.


Now, it’s easier to buy from unregistered dealers

The Centre has put into effect the recent GST Council decision suspending the reverse charge mechanism on purchases of goods or services by registered dealers from unregistered dealers within the State. This dispensation will now be available till end-March 2018.

With this move, any registered dealer can purchase goods or services from unregistered dealers without forking out GST under reverse charge.

This move will bring significant compliance relief to large businesses and encourage them to buy from unregistered dealers, say tax experts.

Post the July 1 GST rollout, several large businesses had stopped buying from unregistered dealers owing to difficulties under the reverse charge mechanism — the paperwork and other processes were rather cumbersome.

MS Mani, Partner-GST, Deloitte India, told BusinessLine the latest move is a welcome measure. However, it is hoped that this will become a permanent measure and reverse charge on purchases from unregistered dealers, which essentially nullified the concept of the threshold exemption, is not revived any time in the future, he said.

Date matters

Abhishek Jain, Partner, EY, said the Centre, in line with the GST Council decision, has finally issued the notification.

However, it is important to note that this notification is dated October 13, which means that any such transaction effected prior to this date would be liable to GST, he added.

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Import of oil-drilling rigs kept out of GST purview

Import of oil-drilling rigs has been exempted from the goods and services tax (GST) levy to give a boost to domestic exploration and production, the government has said. The GST Council has also cut tax rate on bunker fuel to 5% from 12%.

Nearly all deep sea drilling rigs are imported, and a bulk of the ones used in shallow waters to drill wells to probe and produce oil and gas are also of foreign origin. Petrol, diesel, jet fuel, natural gas and crude oil have been kept out of the GST regime, resulting in continuation of cascading effect of tax-on-tax.

The issue had figured during the meeting Prime Minister Narendra Modi held on Monday with CEOs of top international and Indian energy firms. They demanded the inclusion of fuels, especially natural gas, in the GST regime.

The council has also decided that offshore works contract services with associated services relating to oil and gas exploration and production in the offshore areas beyond 12 nautical miles shall attract GST of 12%, and transportation of natural gas through pipeline will face 5% without input-tax credits (ITC) or 12% with full credit.

Revenue secretary Hasmukh Adhia had briefed the meeting about the decisions the GST Council had taken on October 6 to grant some relief to the sector that has been hit because of GST paid on inputs could not be set off against the taxes paid on the final product.

The Central Board of Excise and Customs in a statement on Wednesday gave details of the decisions taken at the council meeting, which would “incentivise” investments in exploration and production, and downstream.

“Import of rigs and ancillary goods imported under lease will be exempted from Integrated-GST, subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions,” it said.

Tax experts are of the opinion that petro products should be brought under the GST.

“…Instead of these ad hoc relief measures, it would be great if the Council uses this momentum to include these products into GST which would provide complete relief to this sector,” said Abhishek Jain, tax partner, EY India.

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Bringing fuel under GST: Govt on the horns of a dilemma

After the Central government reduced the excise duty on motor fuels, state governments matched the move by cutting the VAT imposed on motor fuels. Gujarat and Maharashtra have announced a reduction of 4 percent and Himachal Pradesh has announced a 1 percent cut. Meanwhile Uttarakhand has proposed a 2 percent cut in VAT and another 2 percent in cess. This move helps in easing the rising prices of retail fuel and has reignited the debate on uniform taxation on motor fuels and their inclusion under GST.

Even as a section of the Street argues that petroleum products (a key input for almost all industries) should be brought under the ambit of GST, we examine the feasibility of the same in the wake of the raging debate.


International crude prices have been on the rise and countries like India with almost 70 percent dependence on crude imports are feeling the heat. With deregulated pricing, the entire burden of the hike is being passed on to the consumer, who have all the reason to feel aggrieved. Thanks to an increase in fuel taxes, they did not benefit when crude prices were sliding. Now that crude prices are rising, they are being forced to shell out more.

What is the furor about?

Even after excise and VAT cuts, prices for petrol and diesel at Rs 72 per litre and Rs 59 per litre, stand close to their three-year highs. Over these last three years global crude prices have halved from around USD 110 per barrel to USD 56 per barrel. This effectively means that Indian consumers are paying almost the same for petrol and diesel when crude was at USD 110/barrel.

Taxation conundrum and price buildup

Currently, two taxes, VAT and excise duty, are imposed on petrol and diesel. The VAT component varies across cities and the percentage is decided by individual state governments. Excise duty is imposed by the central government and is a fixed amount per litre across states. Nearly half the current price of petrol and diesel is attributable to taxes imposed by the Central and the state government. This means the cumulative rate of current taxes (VAT+excise) amounts to a whopping 71 percent on diesel and 99 percent on petrol which was around a mere 15 percent at the start of 2014.

Benefits of inclusion in GST?

Implementation of GST on petrol and diesel prices would bring about pricing parity across states and facilitate free movement across the country. Moreover, petroleum products are key inputs for many industries and since they are outside the ambit of GST, the user industries cannot claim input tax credit (ITC) on a key raw material. Inclusion in GST would enable companies to claim an input tax credit thereby reducing their overall tax burden. This would specially be beneficial for oil marketing companies.

Question of feasibility

At present, cumulative tax rate on petrol and diesel stands around 99 and 71 percent, which are much above the highest GST slab of 28 percent. This raises questions about feasibility of petrol and diesel under GST in the current fiscal.

A mere Rs 2 reduction in excise duty recently amounts to around Rs 26,000 crore reduced collections annually (around 10 percent of total collections from fuels). The cut would reduce the FY18 receipts by a whopping Rs 13,000 crore, which is approximately 0.8 percent of our total budgeted receipts for FY18 and around 2.4 percent of the year’s total estimated fiscal deficit.

A reduction in the VAT imposed by state governments will further add to a loss in revenue for states, although the degree of impact for states would be lower given that VAT is charged as percentage of total fuel price which have been rising sharply.

It is unlikely that the government would want to tinker with the recently implemented GST structure and introduce any slab higher than 28 percent. A straight forward implementation of GST at 28 percent on fuel would result in a deep hit on the government revenues.

Another possibility is to include fuel under a demerit category (or maybe introduce a new category name) and levy a cess to compensate for the loss of revenue (currently Delhi government charges 0.25 percent as pollution cess on diesel).

This, too, has its own set of problems. Currently, demerit goods attract a cess. Petrol and diesel, on the other hand, are basic needs for retail and commercial consumers. Given the huge difference between the maximum GST rates and current taxation rate on petrol and diesel, the government would require a cess of nearly 50-75 percent to make up for lost revenue. Without such a cess, the government will have to take a huge hit on its revenues which could impact infrastructure spending.

Although recent steps of excise and VAT reduction stand favorable for customers and cool down the heat around price hike for the time being, an altogether implementation of GST seems distant. Till such time the government manages to find an alternative source of revenue, it will continue to play ‘heads I win, tails you lose’ with the consumer.