Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

CBDT issues Circular regarding use of functionality under section 206AB and 206CCA of the Income-tax Act, 1961

CBDT issues Circular regarding use of functionality under section 206AB and 206CCA of the Income-tax Act, 1961 vide Circular No. 10 of 2022 dated 17.05.2022,

Vide this circular CBDT has highlighted the fact that even though the functionality provided is user friendly and has been explained through a circular, some of these deductors/collectors are still asking the deductee/collectee to produce evidences of their filing of return of income. 

It has been highlighted that the functionality has been developed to ease compliance for tax deductors/collectors. Asking the deductee/collectee to file evidence of furnishing of their return defeat the purpose of this taxpayer friendly measure. All tax deductors/collectors are requested to make note of this circular for compliance.

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CBIC extends due date for filing GSTR-3B for the month of April 2022

The due date for filing FORM GSTR-3B for the month of April, 2022 has been extended till 24th May, 2022 (refer notification No. 05/2022-Central Tax dated 17.05.2022). (1/2)

The due date of payment of tax for the month of April, 2022 by taxpayers under QRMP scheme in FORM GST PMT-06 has been extended till 27th May, 2022 (refer notification No. 06/2022-Central Tax dated 17.05.2022) (2/2)

 


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Extension of due date of filing GSTR-3B for April 2022 is being considered by CBIC

Extension of due date of filing GSTR-3B for April 2022 is being considered by CBIC as per the latest tweet posted on the twitter handle.

"A technical glitch has been reported by @Infosys_GSTN in generation of April 22 GSTR-2B & auto-population of GSTR-3B on portal. Infosys has been directed by Govt for early resolution.Technical team is working to provide GSTR-2B & correct auto-populated GSTR-3B at the earliest(1/2)

Considering the difficulties faced by taxpayers in filing their GSTR-3B for the month of April 2022, a proposal to extend the due date of filing GSTR-3B for April 2022 is under active consideration. Inconvenience caused to the taxpayers is regretted. @Infosys_GSTN (2/2)"

 
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Over ₹50,000-crore fake input tax credit detected in 18 months

 The Centre, with support from States, has managed to detect fake Input Tax Credit (ITC) amounting to over ₹50,000 crore in a period of 18 months. However, the recovery has been much less and experts have called for more such initiatives to check fake invoices.

Vivek Johri, Chairman of the Central Board of Indirect Taxes & Custom (CBIC), said the special drive, which commenced in November 2020 along with States, has so far resulted in the booking of more than 6,700 cases and arrests of over 650 persons. More than 20,000 fake GSTNs have been unearthed and over ₹50,000 crore fake ITC detected.

“We have recovered over ₹2,400 crore through this drive and attempts are on to improve recovery,” he said while talking to people from industries. As per Section 132 of the CGST Act, 2017, issuance of an invoice or bill without supply of goods or services and wrongful availing or utilisation of ITC is a cognisable and non-bailable offence, if the amount is over ₹5 crore.

‘More initiatives needed’

Though experts acknowledge the success achieved so far, through the special drive, they suggest further initiatives. MS Mani, Partner with Deloitte India, said several businesses that take input tax credits based on their vendors’ invoices have already put in place stringent tax processes to weed out suspicious vendors. This will need to become a way of life for all businesses in order to end the menace of fake invoices. “In addition, there would be increased scrutiny on invoices issued to related parties,” he said.

Prateek Bansal, Associate Partner (Tax and Custom) with White and Brief, a law firm, called for a multi-pronged strategy. There is a mechanism of physical scrutiny/verification of all premises and business activities of a company/firm by GST authorities before granting registration. Now, the system may be devised where the concerned jurisdictional officer should also be held accountable, in the event the said registered entity is found to be non-existing or engaged in fake invoicing without actual supply/receipt of goods/services, he said.

“Quarterly verification and mapping of various GST related documents/procedures (returns, invoices, e-Way bills, exports, etc.) in the capacity of system-generated short-listed taxpayers should be undertaken by jurisdictional GST authorities to ensure there is no leakage of revenue,” he suggested.

Tanushree Roy, Director — Indirect Tax, Nangia Andersen LLP, said it is equally important to identify users of fake invoices, and this can be done by examining unusual ITC utilisation (say, above 95 per cent). In addition, sectors historically prone to tax evasion should also be investigated. Additionally, it may also be required to keep a database of offenses committed by entities involved in fake invoicing. “Blocking ITC of entities issuing fake invoices, as well as their users would also help deter the issuance of fake invoices. In case any entity has availed ITC basis fake invoices, adequate recovery proceedings should be put in place for recovery,” she said.

Source:https://business-journal.in/

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LLP CAN FORM A PARTNERSHIP FIRM WITH AN INDIVIDUAL OR OTHER PERSONS- RULES KERALA HIGH COURT

 In a significant ruling, the Kerala High Court held that a Limited Liability Partnership could form a partnership with an individual or other persons. 

 BRIEF FACTS

  1. A partnership deed was executed between an individual and an LLP.
  2. When the said deed was submitted for registration, the Registrar of Firms refused registration of the partnership firm on the reasoning that an LLP cannot be a partner in the firm.
  3. The Petitioner claimed that a partnership and an LLP are not prohibited under the Partnership Act and that LLP is a legal entity, as defined under the LLP Act, and it is separate from its partners. It has perpetual succession and has a common seal. The Petitioner argued that on its registration, it is capable of suing and being sued under Section 14. It can also acquire, develop, or dispose of movable or immovable properties. Therefore, the petitioner claims that the LLP is liable to be treated as a person, and there cannot be any objection to registering a partnership with an LLP.
  4. The respondent filed a statement reiterating his stand in the impugned order.
  5. According to the respondent, Section 25, 26, and 49 of the Indian Partnership Act, 1932 makes the partners jointly and severally liable with all other partners.
  6. At the same time, under Section 28 of the LLP Act, 2008, the provisions regarding the liability of the partnership firm are restricted only to the extent provided in the agreement. Such a provision runs contrary to Section 25 and 49 of the Indian Partnership Act.
  7. It is also pointed out that foreign investment is permissible in LLP, whereas it is not permissible under the Partnership Act.

THE QUESTION THAT AROSE WAS:

Whether LLP can be treated as a person, who can be permitted to form a partnership with an individual?

THE HIGH COURT’S RULING

The High Court of Kerala held that-“a partnership can be entered into between two persons. Such persons can be an incorporated body of individuals. LLP is a body corporate. It can be said to be a person, as defined in Section 3(42) of the General Clauses Act, 1897 if there is no repugnancy in the subject or context. To examine the same, it is necessary to look at some more provisions in both the Acts viz. Partnership Act and LLP Act”

The High Court of Kerala further held that the liability of partners of LLP and liability of the LLP as a partner under the Partnership Act would be different. The liability of partners in an LLP cannot be relevant when the LLP becomes a partner, as the provisions in the Partnership Act would bind it. The liability of the LLP would be as in the case of a company that joins a firm after entering into a partnership.

Section 26 in The Indian Partnership Act, 1932- Liability of the firm for wrongful acts of a partner—Where, by the wrongful act or omission of a partner acting in the ordinary course of the business of a firm, or with the authority of his partners, loss or injury is caused to any third party, or any penalty is incurred, the firm is liable therefor to the same extent as the partner.

Section 49 in The Indian Partnership Act, 1932- Payment of firm debts and of separate debts—Where there are joint debts due from the firm, and also separate debts due from any partner, the property of the firm shall be applied in the first instance in payment of the debts of the firm, and, if there is any surplus, then the share of each partner shall be applied in payment of his separate debts or paid to him. The separate property of any partner shall be applied first in the payment of his separate debts, and the surplus (if any) in the payment of the debts of the firm.

Section 27 in The Limited Liability Partnership Act, 2008

Extent of liability of limited liability partnership .-

(1) A limited liability partnership is not bound by anything done by a partner in dealing with a person if-

 (a) the partner in fact has no authority to act for the limited liability partnership in doing a particular act; and

(b) the person knows that he has no authority or does not know or believe him to be a partner of the limited liability partnership.

 (2) The limited liability partnership is liable if a partner of a limited liability partnership is liable to any person as a result of a wrongful act or omission on his part in the course of the business of the limited liability partnership or with its authority.

 (3) An obligation of the limited liability partnership whether arising in contract or otherwise, shall be solely the obligation of the limited liability partnership.

 (4) The liabilities of the limited liability partnership shall be met out of the property of the limited liability partnership.

Section 28 in The Limited Liability Partnership Act, 2008

Extent of liability of partner .-

(1) A partner is not personally liable, directly or indirectly for an obligation referred to in sub-section (3) of section 27 solely by reason of being a partner of the limited liability partnership.

 (2) The provisions of sub-section (3) of section 27 and sub-section (1) of this section shall not affect the personal liability of a partner for his own wrongful act or omission, but a partner shall not be personally liable for the wrongful act or omission of any other partner of the limited liability partnership.

Source:https://thetaxtalk.com/2022/05/14/llp-can-form-a-partnership-firm-with-an-individual-or-other-persons-rules-kerala-high-court/

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Banks to seek change in definition of 'fraud'

 Synopsis

A rigid regulation requires all banks to label a borrowing company and all its accounts as 'fraud account (s)' when one lender puts a fraud tag. It sets off a process where lenders have to file police complaints and take a knock- which is often disproportionately higher than the size of the fraud -on their bottom lines.


All high-street banks will jointly move the Reserve Bank of India (RBI) to urge a change in the sweeping definition of 'fraud' which cripples businesses, scares away financiers and results in legal tangles.


A rigid regulation requires all banks to label a borrowing company and all its accounts as 'fraud account (s)' when one lender puts a fraud tag. It sets off a process where lenders have to file police complaints and take a knock- which is often disproportionately higher than the size of the fraud -on their bottom lines.

The combined action rapidly worsens the fortunes of the borrowing corporate, driving away creditors, suppliers, investors and other stakeholders. And lenders which place all the information in public domain may face legal action - as some of the court battles bear out - when angry borrowers think they were disgraced without being properly heard.

Bank CEOs decided to make a representation to RBI at a meeting held a few weeks ago to discuss certain issues faced by the lenders, two senior bank officials told ET.

When contacted, Sunil Mehta, chief executive of the industry body Indian Banks Association, said, "We should have a system where the entire company is not tarnished bec

ause of a small diversion of funds and its entire borrowing is declared as 'fraud'. Such a declaration and associated procedure like filing of FIR can deepen the problems for a company, creating a negative perception and holding back banks from taking lending decisions."

"We plan to take up the matter with the RBI, but I would not like to discuss the matter further at this point," said Mehta, a former banker.

While fraud is linked to malafide intention and cheating in the criminal law, banks categorise any diversion of funds as fraud. According to existing regulations, if a Rs 300 crore fraud surfaces in a company whose total borrowings from a dozen banks is Rs 15,000 crore, all banks classify the entire borrowing as 'fraud', initiate criminal proceedings, and make full provisioning on their books. "In such a case, banks want RBI to allow them to restrict the categorisation of fraud to only the Rs300 crore, or the 'value-at-risk'. Today, even banks to whom the company has not defaulted have to grade the company as a fraud account," said a senior bank official.

A borrower account is declared as fraud based on the findings of a forensic report where the loan has become a non-performing asset (where interest or principal payment is overdue for 90 days).

"A forensic audit will always come out with something. Even if it can't conclusively prove, it would point at certain lapses. Now, if the end-use of the loan is changed, it is a fraud. But a change in end-use may not necessarily mean that funds have been siphoned off to purchase personal assets. Also, fraud is a criminal offence, not a civil recovery action - hypothetically, even if the amount is repaid, the criminal proceedings may continue," said another banker.


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Clarification issued by GSTN on Incomplete GSTR-2B in some cases

Incomplete GSTR-2B in some cases - regarding.

15/05/2022

1. It has been noticed that in a few cases, certain records are not reflected in the GSTR-2B statement for the period of April 2022. However, such records are visible in GSTR-2A of such recipients.

2. The technical team is working to resolve this issue for the impacted taxpayers and generate fresh GSTR-2B at the earliest.

3. In the interim, affected taxpayers interested in filing GSTR-3B are requested to file the return on self-assessment basis using GSTR-2A.

Inconvenience caused in this regard is deeply regretted.

Regards,
Team GSTN

 

 


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Updation of UDINs at e-filing Portal | Further changes made on Income Tax Portal

 UDIN Directorate

The Institute of Chartered Accountants of India

13th May 2022

Updation of UDINs at e-filing Portal


Various instances of invalidation of UDINs at the e-filing portal of Income Tax Department are being reported by Members. In view of these, certain technological changes have been made. The Members are advised to try again to update those UDINs which have been invalidated earlier at the e-filing Portal.

Members are also hereby advised to kindly update all the pending UDINs at the e-filing portal immediately. Please note that the last date for updating UDINs at the e-filing portal is 31st May 2022.

Further, all the members are advised to be more careful in selecting correct fields while generating UDIN.

For any clarification, please write us at udin@icai.in.

UDIN Directorate


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Revenue Dept seeks RTI exemption for its big data wing on GST, tax evasion

 Synopsis

DGARM, set up in 2017, to provide taxmen intelligence inputs and data analysis to identify, track and profile tax evaders, is also key to national policy formulation and targeted action by the investigation wings of the Central Board of Excise and Customs (CBEC). It is learnt that the revenue department has made a strong pitch for keeping DGARM out of the ambit of the RTI Act citing sensitivity of big data, its potential misuse and national security implications of the same.

The revenue department is learnt to have sought exemption from the Right to Information Act, 2005, for its GST and tax evasion analytics wing -- the Directorate General of Analytics and Risk Management (DGARM).

The Ministry of Electronics and Information Technology (MEITY) has sought a similar exemption from the RTI Act, 2005, for a high-level agency citing serious cyber security concerns, ET has reliably gathered.

The Indian Computer Emergency Response Team 
CERT-in -- a nodal national agency that deals with cybersecurity threats -- is likely to be the agency proposed for RTI exemption.

The proposals for both exemptions have been discussed in detail during meetings of a committee of secretaries and were taken up for discussion by Cabinet Secretary Rajiv Gauba on April 28 at a high-level meeting.

The law ministry has so far opined that these are not designated intelligence agencies and hence such a blanket exemption could come under question. A final decision, however, is yet to be taken, ET has learnt.

The two proposals have already been discussed in detail with stakeholder ministries in the Committee of Secretaries, beside the long-pending proposal of the armed forces for inclusion under the second schedule of the RTI Act, 2005, as first reported by ET.

DGARM, set up in 2017, to provide taxmen intelligence inputs and data analysis to identify, track and profile tax evaders, is also key to national policy formulation and targeted action by the investigation wings of the Central Board of Excise and Customs (CBEC).

It is learnt that the revenue department has made a strong pitch for keeping DGARM out of the ambit of the RTI Act citing sensitivity of big data, its potential misuse and national security implications of the same.

That apart, it has been pointed out that the CBEC has recently begun scrutiny of over 50,000 GST identification numbers (GSTINs) of taxpayers for alleged lapses in the 2018 financial year when the GST came into effect.

Information on the same through RTI applications has serious implications for both data confidentiality of the taxpayers involved as well, it has been argued by the Department of Revenue.

Similarly, MEITY has pointed to the sensitivity of data involved, especially with reference to agencies dealing with cyber security and cyber laws and e-security. Both departments have sought inclusion under the second schedule of the RTI Act, 2005, which lists out 26 "Intelligence and security organisation established by the Central government" that have been kept out of the law's purview for security reasons.

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Advisable to furnish the statement in Form 10BD at least 15 days earlier preferably by 15th May

 

Form 10BD

Form 10BE

Applicability

 

All Trusts or institutions or funds or NGOs whether formed as a society or a section 8 company or a Trust having approval under section 80G or section 35 is required to furnish Form 10BD. For obtaining approval under section 80G or section 35, an application is required to be filed before the Pr. CIT/CIT in Form No. 10A.

 

Consequent to the furnishing of Form No. 10BD, a certificate of donation in Form 10BE is required to be issued to each donor by the Trusts or institutions or funds or NGOs whether formed as a society or a section 8 company or a Trust and who has received the donation from the donors.

 

For FY 2022-23

The first annual statement of donation in Form 10BD is required to be filed in FY 2022-23 in respect of donations received in FY 2021-22.

 

The certificate for donation received in FY 2021-22 is required to be furnished in FY 2022-23.

 

Due Date of Furnishing Statement

As per sub-rule (9) of Rule 18AB, the Statement of Donation in Form 10BD is required to be furnished to the prescribed income-tax authority as per the provisions of section 80G(5)(viii) or section 35(1A)(i) on or before the 31st May, immediately following the financial year in which the donation is received.

Thus, the due date for furnishing the statement of donation for FY 2021-22 is 31st May, 2022.

 

As per sub-rule (8) of Rule 18AB, the Certificate of Donation in Form 10BE is required to be furnished to the donor as per the provisions of section 80G(5)(ix) or section 35(1A)(ii) on or before the 31st May, immediately following the financial year in which the donation is received.

Thus, the due date for furnishing the certificate of donation for FY 2021-22 is 31st May, 2022.

 

Note: As per Rule 18AB(8) and (9), both the due date for the furnishing statement and certificate of donation is 31st May. One should note that as per the prescribed procedure, the donation certificate can be furnished after the same is generated online from the designated income-tax portal. This can be done by the donee only after furnishing the Form 10BD. It would not be possible to furnish both the statement in Form 10BD and download the certificate in Form 10BE on the same day. It is, thus, advisable to furnish the statement in Form 10BD at least 15 days earlier preferably by 15th May.


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