Direct Tax

TCS applicability to small transactions under LRS

Press Release dated 19 May 2023

  • To avoid any procedural ambiguity, clarification regarding the applicability of Tax Collection at Source (TCS) to small transactions under the Liberalized Remittance Scheme (LRS) from 1 July 2023 has been provided.
  • It has been decided that any payments by an individual using international debit/credit cards upto INR 0.7 million per FY will be excluded from the LRS limit and hence will not attract any TCS.
  • Existing beneficial TCS treatment for education and health payments will also continue to remain the same.

CBDT notifies increased limit for tax exemption on leave encashment for non-government salaried employees

Press Release dated 25 May 2023

  • The tax exemption on leave encashment for non-government salaried employees at the time of retirement or otherwise was earlier upto a limit of INR 0.3 million under Section 10(10AA)(ii) of the Act.
  • However, as presented in the Budget Speech 2023, the Central Government has notified the increase in this exemption limit to INR 2.5 million w.e.f. 1 April 2023.
  • The aggregate amount exempt from income tax under Section 10(10AA) (ii) shall not exceed the limit of INR 2.5 million where a non-government employee receives such payments from more than one employer in the same previous year.
  • Furthermore, the amount exempt from income tax under Section 10(10AA)(ii) of the Act shall not exceed the limit of INR 2.5 million as reduced by the tax exemption already allowed in the total income of the employee under Section 10(10AA)(ii) in any previous year or years.

Indirect Tax

Goods & Services Tax

E-invoicing applicable to INR 50 million turnover businesses from 1 August 2023

Notification No. 13/2020–Central Tax dated 10 May 2023

The threshold for issuing e-invoices for B2B and export transactions has been reduced from INR 100 million to INR 50 million w.e.f. 1 August 2023. Accordingly, any person with turnover exceeding INR 50 million during any of the preceding financial years (commencing from FY 2017-18) would now be required to generate IRN/QR Code.

CBIC’s guidelines for Special All-India Drive against fake GST registrations

Instruction No. 01/2023-GST dated 4 May 2023

In order to safeguard Government revenue from suspicious/fake GSTINs, a Special All-India Drive has been announced from 16 May 2023 to 15 July 2023 at Central and State Tax administration levels.

The Special Drive would entail inter alia the following actions to weed out the fake billers from the GST ecosystem:

  • Identification of fraudulent GSTINs by GSTN and field formations through the use of analytical tools like BIFA, ADVAIT, NIC Prime, E-Way analytics, etc., as well as through human intelligence, Aadhar database and other local learnings.
  • Close coordination amongst the State Tax administrations and between the State and Central Tax administrations. For this purpose, the information shall be shared through a special mechanism wherein a Nodal Officer shall ensure that the data received from GSTN/ DGARM/other tax administrations are made available to the concerned jurisdictional formation within two days positively.
  • Suspension or cancellation of registration if, after detailed verification, it is found that the taxpayer is non-existent and fictitious. Furthermore, the matter may also be examined for blocking the Input Tax Credit in Electronic Credit Ledger without any delay.
  • Identification of the masterminds/ beneficiaries behind such fake GSTIN for further action, wherever required, and for recovery of government dues and/or provisional attachment of property/bank accounts, etc.

CBIC issues SOP for Scrutiny of Returns for FY 2019-20 onwards

Instruction No. 2/2023-GST dated 26 May 2023

the online functionality “Scrutiny of Returns” in the Central Board of Indirect Taxes and Customs (CBIC) ACESGST application, the CBIC has issued guidelines for risk-based scrutiny of GST returns by proper officers from FY 2019- 20 onwards. Some of the key points are summarized herein below:

  • The proper officer shall rely upon the latest available data as the data available on the scrutiny dashboard may change at the time of scrutiny due to subsequent compliances carried out by the taxpayers or their suppliers.
  • As far as possible, the scrutiny should have a minimal interface between the proper officer and the registered person and, there should normally not be any need for seeking documents/ records from the registered persons before the issuance of notice in Form GST ASMT-10.
  • The notice in Form GST ASMT- 10, issued by the proper officer through scrutiny functionality on the ACES-GST application, shall be communicated by the system to the concerned registered person on the common portal and therefore, there will be no need for sending any manual communication of notice by the proper officer to the registered person separately.
  • The proper officer may, as far as possible – (i) ensure that the discrepancies are specific in nature and not vague or general, and (ii) quantify the amount of tax, interest, and any other amount payable in relation thereto.
  • Scrutiny should be conducted in a timebound manner, as prescribed.

Customs

CBIC sensitizes about Extended Producer's Responsibility registration certificate requirement for the import of batteries and equipment containing batteries

Instruction No. 17/2023-Customs dated 18 May 2023

All the producers, including importers (with few exceptions) of batteries and equipment containing batteries, are required to get registration from the Central Pollution Control Board (CBCB) in accordance with the Battery Waste Management Rules, 2022. Accordingly, the Customs authorities shall verify the online-generated EPR registration certificate issued by CPCB at the time of clearing the import consignments.

Tax Street May 2023