Registration for GST reopens on June 1.

CBDT Issues Clarification on furnishing Statement of Financial Transaction (SFT) & SFT Preliminary Response

Government of India 
Ministry of Finance 
Department of Revenue 
Central Board of Direct Taxes 

New Delhi, 26th May, 2017. 
PRESS RELEASE
 
CBDT Issues Clarification on furnishing Statement of Financial Transaction (SFT) & SFT Preliminary Response 

Section 285BA of the Income-tax Act, 1961 requires furnishing of a statement of financial transaction (SFT) for transactions prescribed under Rule 114E of the Income-tax Rules, 1962. The due date for filing such SFT in Form 61A is 31st May 2017. 

In case there are reportable transactions for the year, the reporting person/entity is required to register with the Income Tax Department and generate Income Tax Department Reporting Entity Identification Number (ITDREIN) The same can be generated by logging-in to the e-filing website (https://incometaxindiaefiling.gov.in/) with the log in ID used for the purpose of filing the Income Tax Return of the reporting person / entity. Entity having PAN can take only PAN based ITDREIN. Entity having TAN can generate an ITDREIN only when such TAN's Organisational PAN is not available. 

The registration of reporting person (ITDREIN registration) is mandatory only when at least one of the Transaction Type is reportable. A functionality "SFT Preliminary Response" has been provided on the e-Filing portal for the reporting persons to indicate that a specified transaction type is not reportable for the year. 

Detailed procedure of ITDREIN registration and upload of Form 61A is available under the “Help” section and Form 61A utility and Schema are available under the download section of http://www.incometaxindiaefiling.gov.in and https://www.cleanmoney.gov.in. Online filing of form 61A requires a valid class 2 or 3 digital signature certificate of person responsible for filing the same. Please refer “DSC Management Utility” manual under help section on how to generate the signature file, attaching the XML with signature and uploading of XML with signature file in e-Filing portal. 

(Meenakshi J Goswami) 
ommissioner of Income Tax 
(Media and Technical Policy) 
Official Spokesperson, CBDT.
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Enforcement Directorate arrests CA in money laundering case, suspects political links

The Enforcement Directorate (ED) has arrested a chartered accountant (CA) in connection with its probe into a Rs 8,000 crore money laundering racket involving two Delhi-based brothers.

The CA, Rajesh Agarwal, has been arrested under provisions of the Prevention of Money Laundering Act (PMLA) and will be produced in court today, officials said.

Agarwal was allegedly instrumental in providing accommodation entries to many high-profile people to help launder their funds. These included those being probed by the Income Tax Department in the Rs 1,000 crore dubious land deals case allegedly linked to Rashtriya Janata Dal (RJD) chief Lalu Prasad's family, they said.
The CA, officials said, was also allegedly involved in routing funds for the Jain brothers, Virendra and Surendra, arrested by the ED in a Rs 8,000 crore money laundering racket allegedly being run through shell firms.

Agarwal would be questioned in detail about all such deals and people linked to him once the agency gets his custody, an official said.

The ED had last week filed a chargesheet against the Jain brothers. It had also attached agricultural land worth Rs 1.12 crore belonging to them in Bhatti village in the National Capital Region.

With this, the total amount of property attached so far in the case amounts to Rs 65.82 crore.

The ED has identified at least 90 shell firms in this probe case. It has identified 26 of them for allegedly laundering about Rs 62.20 crore.

Shell companies are firms set up with nominal paid-up capital, high reserves and surplus on account of receipt of high share premium, investment in unlisted companies and no dividend income or high amount of cash-in-hand.

The case emerged after the ED filed a criminal complaint in February this year under the PMLA. It was based on a chargesheet filed by the Serious Fraud Investigation Office against certain individuals and firms "for providing accommodation entries by accepting funds from their beneficiaries through mediators and converting the same into share premium transactions in the beneficiary company".

The ED suspects the entire racket to be worth about Rs 8,000 crore of slush funds.
Read more at:
http://economictimes.indiatimes.com/
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Service Tax Exemptions to be continued in GST as decided by GST Council

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SERVICES UNDER REVERSE CHARGE AS APPROVED BY GST COUNCIL

The fitment of rates of services were discussed on 19 May 2017 during the 14th GST Council meeting held at Srinagar, Jammu & Kashmir. The Council has broadly approved the GST rates for services at Nil, 5%, 12%, 18% and 28%. The list of services that will be under reverse charge as approved by the GST Council is given below. The information is being uploaded immediately after the GST Council’s decision and it will be subject to further vetting during which the list may undergo some changes. The decisions of the GST Council are being communicated for general information and will be given effect to through gazette notifications which shall have force of law.

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SCHEDULE OF GST RATES FOR SERVICES AS APPROVED BY GST COUNCIL

The fitment of rates of services were discussed on 19 May 2017 during the 14th GST Council meeting held at Srinagar, Jammu & Kashmir. The Council has broadly approved the GST rates for services at Nil, 5%, 12%, 18% and 28% as listed below. The information is being uploaded immediately after the GST Council’s decision and it will be subject to further vetting during which the list may undergo some changes. The decisions of the GST Council are being communicated for general information and will be given effect to through gazette notifications which shall have force of law. 



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Advertising by members in practice engaged in Coaching/Teaching activities

ANNOUNCEMENT 

Regulation 190A of the Chartered Accountants Regulations, 1988 provides that a chartered accountant in practice shall not engage in any business or occupation other than the profession of accountancy, except with the permission granted in accordance with a resolution of the Council.

The Council has passed a Resolution under Regulation 190A granting general permission (for private tutorship, and part-time tutorship under Coaching organization of the Institute) and specific permission (for part-time or full time tutorship under any educational institution other than Coaching organization of the Institute). Such general and specific permission granted is subject to the condition that the direct teaching hours devoted to such activities taken together should not exceed 25 hours a week in order to be able to undertake attest functions .

Keeping in view the broad purview of Clause (6) of Part I of the First Schedule to the Chartered Accountants Act, 1949, an advertisement of Coaching /teaching activities by a member in practice may amount to indirect solicitation, as well as solicitation by any other means, and may therefore be violative of the provisions of Clause (6) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

In view of the above, such members are advised to abstain from advertising their association with Coaching /teaching activities through hoardings, posters, banners and by any other means, failing which they may be liable for disciplinary action, as per the provisions of Chartered Accountants Act, 1949 and Rules /Regulations framed there under .

Subject to the above prohibition, such members may put, outside their Coaching /teaching premises, sign board mentioning the name of Coaching/teaching Institute, contact details and subjects taught therein only. As regards the size and type of sign board, the Council Guidelines as applicable to Firms of Chartered Accountants would apply.

V. Sagar
Secretary
The Institute of Chartered Accountants of India
18th May, 2017
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GST services tax rates: Hotels to be charged 12-18%; casinos, cinemas at 28%

India moved towards a multi-tiered service tax structure with the Finance Minister Arun Jaitley-headed GST Council deciding on Friday to place services under four slabs—5, 12, 18 and 28 percent— compared to the current uniform 15 percent levy on all eligible services.

“GST in relation to the service sector was completely adopted in today’s meeting,” Jaitley told newspersons after the conclusion of the two-day GST council meeting in Srinagar.

“In the services sector depending on the nature of the service, and for special reasons, various categorisations have been made,” he said.

Jaitley said that the current exemptions on services such as healthcare and education will continue, and the overall impact on services costs after GST will be non-inflationary.

“The weighted average and given the large number of exemptions, the impact (inflationary) will be significantly below that. Keep one fact in mind that they will also start getting the input credit of goods consumed,” he said.

Transport services including air services and goods transport will be taxed at 5 percent from the existing 15 percent, raising prospects of lower air fares after GST’s roll-out from July 1.

Most other services split up into 12-18 percent, Jaitley said.

Restaurants with an annual turnover of less than Rs 50 lakh will fall under the 5 percent tax slab, while non-ACs food joints will be taxed at 12 percent. Air-conditioned restaurants with liquor licences will be taxed at 18 percent.

Hotels and lodges will a tariff below Rs 1000 a day will be exempted from GST, while those with a room rate of between Rs 1000-Rs 2,500 will be taxed at 12 percent. Five star and luxury hotels will be taxed at 28 percent.

Services related to gambling, race club betting and cinema halls will also be taxed at 28 percent.

Cinema halls were currently paying a service tax of 15 percent plus a state entertainment tax that ranged from 28 percent to about 100 percent. All these will be subsumed under the 28 percent GST rate, bringing out the costs of service significantly, Jaitley said. Casinos will also come under the 28 percent tax bracket.

Work contract services such as those paid by civil contractors for infrastructure construction currently pay a central tax of 6 percent, state taxes ranging from one to five percent, but without any input credit.

Input credit means at the time of paying tax on output, a producer, trader or service provider can reduce the tax already paid on inputs.

In the current system, work contractors were paying a lot of embedded taxes. For instance, they used to pay a tax on cement that they procure as well as other taxes.

Under GST, they will pay a uniform GST rate of 12 with all input credits available.

“So, effectively, though the rate is 12 percent, the level of taxation with input credit will come down below the present level,” Jaitley said.

The finance minister said most of the work relating to GST’s rollout from July 1 has been completed.

“We will also be looking at the state of preparedness of GSTN,” Jaitley said.

Goods and Services Tax Network (GSTN), a special purpose vehicle (SPV), is a robust IT backbone and portal to enable real-time taxpayer registration, filing returns, handle invoices, execute inter-state tax settlements, and connect states for two-way data flow.

Jaitley said GST rates on six categories of products—bio-diesel, beedi and cigarettes, footwear, textiles, agricultural implements and gold—will be finalised in the council’s next meeting on June 3 in Delhi.

On Thursday, the Council fixed rates for thousands of goods, placing these in four slabs—5, 12, 18 and 28 percent.

An officers’ panel over the last six weeks had been working towards the fitment or classification exercise – an exhaustive list specifying the tax rate of goods and services, which was presented at the Council meeting.

The fitment panel has been working on the principle to fix tax rates closest to the present incidence of taxation on good or services.

The final rates have been fixed in a way such that the impact on inflation as well as revenue to the government is near neutral.

The two-day GST Council meet began today in Srinagar, as ministers and officials from 29 states and union territories, along with Jaitley and senior finance ministry officials converged in the Jammu and Kashmir capital to decide and fix rates on a long list of goods and services.

GST, billed as India’s most ambitious reforms move, will stitch together a common national market, dismantle fiscal barriers among states and consolidate a patchwork of local and central duties into a single levy.

“Hopefully, the remaining decisions will be taken on June 3,” Jaitley said.

Refer:http://www.moneycontrol.com
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Bitcoin sale profit is taxable capital gains for investor?

India is not isolated from the rising popularity of bitcoins, which got a boost post-demonetisation. According to industry sources, nearly 300-plus enthusiasts of the cryptocurrency trade daily on Indian bitcoin exchange platforms. Most of these platforms boast of user registrations of more than a lakh. Thus, many taxpayers in India need to understand the I-T nuances of their bitcoin transactions.

Curiosity prompted Rakesh M, a Bengaluru-based techie (identity changed), to make his first investment in bitcoins. He sold his investment during the financial year 2016-17 (year ending March 31, 2017) and earned a profit.The perplexing issue for him is: How should he treat the income on sale of the bitcoin for I-T purposes? As a salaried employee, he has to file his I-T return by July 31. The Central Board of Direct Taxes (CBDT) has not yet issued any guidance. Tax authorities in many countries, such as the US, treat bitcoins a capital asset in hands of investors, with the sale resulting in a capital gain. 

The I-T department can catch up if you try to evade tax on sale of bitcoins. Benson Samuel, co-founder, Coinsecure, a trading platform for bitcoins in India, points out, "When you sell your bitcoins over an exchange such as Coinsecure, the money flows directly into your bank account.The transaction is completely transparent. Even though not obliged to do so, most bitcoin exchanges also adopt KYC norms for their customers."

Bitcoins in India are unregulated but are not yet illegal. However, the RBI has on occasion cautioned investors of inherent risks. An inter-disciplinary committee set up by the government is examining the framework of virtual currencies. "That said, even if bitcoins were illegal, income earned needs to be declared and tax paid," says an I-T official.

Harshal Kamdar, tax partner, PwC India, says, "Taxability of bitcoins is a nuanced is sue and will depend on facts of each case. In the absence of CBDT guidelines, the logical conclusion is to treat profits on sale of bitcoins as 'capital gains', unless the person is in the business of trading bitcoins, in which case it would likely be 'business income'.

However, we have seen instances, where to be on the safe side, individuals have preferred to treat it as 'income from other sources' where the relevant slab rate of I-T applies, as opposed to a 20% tax with indexation (if applicable), on long-term capital gains".

Capital gains for a bitcoin investor

Nishith Desai, founder of an international law firm which is working closely with the bitcoin industry, says, "Given the wide nature of definition of capital assets under Section 2(14) of the I-T Act, the purchase of bitcoins, if it has been made for the purpose of investment, should be treated as a capital asset. Thus, any gains arising on transfer (ie: sale) should be characterised as capital gains."

Caution point: Short-term capital gains are taxed at the applicable I-T slab rate, which for those with a taxable income of more than Rs 10 lakh is 30% plus applicable surcharge and cess.

On the other hand, long-term capital gains (LTCGs) attract a tax rate of only 20%. The time period for which an asset is held before its sale determines whether it is a longterm asset that is eligible for a lower rate of tax on sale. For equity , the holding period prescribed is just 12 months. "The period of holding of bitcoins should be like any other property. If they are held for three years or more, it should be considered longterm and if less than shortterm," says Desai.

Hot tip: Indexation benefit (which is an adjustment to account for inflation for the period between purchase and sale of a capital asset) can be availed of. This would reduce the total tax outgo on capital gains. A cost inflation index (CII) figure is issued by the CBDT each year and the prescribed formula is to be followed.

Business income for a bitcoin trader
It may be a bit perplexing to understand whether one would be regarded as an investor or trader. Desai points out, "The CBDT has in the past issued a circular (4 2007) which, after taking into consideration various judicial precedents, has set out various tests to determine whether shares are held as investment or stock in trade.The same parameters can also be applied to bitcoins."

For instance, if the transactions in bitcoins are substantial and frequent, it could be said that the individual is trading in bitcoins. In this case, income on sale of bitcoins would be a business income, to which the applicable slab rate of income tax would apply. Thus, for those having a taxable income of more than Rs 10 lakh (including on bitcoin sales) the applicable tax slab rate of 30% plus surcharge and cess is higher than the tax rate of 20% on LTCGs.

There is also an additional catch. If you haven't paid any advance tax on income from your bitcoin transactions, it's likely that penal interest will be levied.

Read more at:
http://economictimes.indiatimes.com
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What is bitcoin? A look at the digital currency

It's worth more than an ounce of gold right now, it's completely digital and it's the currency of choice for the cyber attackers who crippled computer networks around the world in recent days.

When the attackers' "ransomware'' sprang into action, it held victims hostage by encrypting their data and demanding they send payments in bitcoins to regain access to their computers. Bitcoin has a fuzzy history, but it's a type of currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties.
Here's a brief look at bitcoin.

How bitcoins work?
Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who 'mine' them by lending computing power to verify other users' transactions.

They receive bitcoins in exchange. The coins also can be bought and sold on exchanges with U.S. dollars and other currencies.

How much is it worth?
One bitcoin recently traded for $1,734.65, according to Coinbase, a company that helps users exchange bitcoins. That makes it more valuable than an ounce of gold, which trades at less than $1,230.

The value of bitcoins can swing sharply, though. A year ago, one was worth $457.04, which means that it's nearly quadrupled in the last 12 months. But its price doesn't always go up.

A bitcoin's value plunged by 23 percent against the dollar in just a week this past January. It fell by the same amount again in 10 days during March.

Why are bitcoins popular?
Bitcoins are basically lines of computer code that are digitally signed each time they travel from one owner to the next. Transactions can be made anonymously, making the currency popular with libertarians as well as tech enthusiasts, speculators and criminals.

Is it really anonymous?
Yes, to a point. Transactions and accounts can be traced, but the account owners aren't necessarily known. However, investigators might be able to track down the owners when bitcoins are converted to regular currency.

For now, the three accounts tied to the ransomware attack appear untouched _ and it'll be difficult for perpetrators to cash in anytime soon without getting traced.

How much money?
Security experts say the amount of ransom collected so far appears small relative to the extent of the outbreak. Tom Bossert, President Donald Trump's adviser for homeland security and counterterrorism, says it appears less than $70,000 has been paid in ransoms.

It's possible, though, that there are unknown accounts beyond the three identified.

Who's using bitcoin?
Some businesses have jumped on the bitcoin bandwagon amid a flurry of media coverage. Overstock.com accepts payments in bitcoin, for example. The currency has become popular enough that more than 300,000 daily transactions have been occurring recently, according to bitcoin wallet site blockchain.info. A year ago, activity was closer to 230,000 transactions per day.

Still, its popularity is low compared with cash and cards, and many individuals and businesses won't accept bitcoins for payments.

How are bitcoins kept secure?
The bitcoin network works by harnessing individuals' greed for the collective good. A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction.

The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional bitcoin. As long as miners keep the blockchain secure, counterfeiting shouldn't be an issue.

How bitcoin came to be?
It's a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto. Bitcoin was then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as bitcoin began to attract widespread attention. But proponents say that doesn't matter: The currency obeys its own internal logic.

An Australian entrepreneur last year stepped forward and claimed to be the founder of bitcoin, only to say days later that he did not 'have the courage' to publish proof that he is.

Read more at:
http://economictimes.indiatimes.com
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Income Tax Department launches Operation Clean Money Portal



Government of India 
Ministry of Finance 
Department of Revenue 
Central Board of Direct Taxes 

New Delhi, 16th May, 2017. 

PRESS RELEASE 

Income Tax Department launches Operation Clean Money (स्वच्छ धन अभियान) Portal 

The Honourable Union Minister of Finance, Shri Arun Jaitley officially launched the Portal of Operation Clean Money (https://www.cleanmoney.gov.in) at New Delhi today in the presence of senior officers of the Ministry of Finance, Department of Revenue and the Central Board of Direct Taxes. 
The Operation Clean Money was initiated by the Income Tax Department (ITD) on the 31st January, 2017 with the launch of e-verification of large cash deposits made during 9th November to 30th December 2016. In the first batch, around 18 lakh persons were identified in whose case, cash transactions did not appear in line with the tax payer’s profile. There has been an encouraging response to the online verification process and more than 9.72 lakh taxpayers submitted their response without visiting Income tax office up to 12th May, 2017. These taxpayers have provided response for 13.33 lakh accounts involving cash deposits of around Rs. 2.89 lakh crore. The online responses have been assessed and no further action will be taken in cases of satisfactory explanation. 

The salient features of the portal launched today are: 
• Providing comprehensive information at one place consisting of Step by Step Guides, Frequently asked Questions, User Guides, Quick Reference Guides and Training Toolkits related to verification process and other issues. 
• Enabling Citizen Engagement for creating a tax compliant society where every Indian takes pride in paying taxes. Citizens would be able to support the operation clean money by taking pledge (इमानदारी का उत्सव), contribute by engaging and educating fellow citizens (जन िागीदारी), and share their experiences and provide feedback (सुखद अनुिव). 
• Enabling Transparent Tax Administration by sharing status reports (including sanitized cases and explanation of verification issues) and thematic analysis reports (e.g. taxpayer segment analysis of cash deposit data). 

The ITD on-boarded two specialised data analytics agencies and a business process management agency to augment departmental capability in analyzing large volume of cash deposit data, track the compliance status of taxpayers and reporting entities. 

In Phase II of Operation Clean Money, the high risk cases will be handled by selecting appropriate enforcement action (verification, search, survey, scrutiny). A targeted campaign will be initiated in cases with identified risk issues. The key components of the targeted campaign are: 

Communication of specific issue through digital channels (Email, SMS etc.) 
Providing detailed explanation to create environment of transparency 
Sharing investigation findings for specific segments (e.g. Jewellers, petrol pump, traders, property purchasers etc.) 
Centralised monitoring and gradual escalation of inadequate response cases for enforcement action

With the continuous flow of information from various sources including Statement of Financial Transactions (SFT), the ITD is conducting analysis in conjunction with previously available/analysed data. Such incremental data analysis has already led to identification of new cases for e-verification. Furthermore, ITD has also identified 3.71 lakh new accounts relating to 1.58 lakh taxpayers who made partial declaration of accounts/amounts in their earlier responses. In addition to the earlier 18 lakh cases, 5.68 lakh new cases have been identified for e-verification process. 

The Income Tax Department urges all taxpayers and citizens to actively participate in Operation Clean Money for a common cause of building a proud nation, which runs on the strength of the honest taxpayers. 
(Meenakshi Goswami) 
Commissioner of Income Tax 
(Media & Technical Policy) 
Official Spokesperson, CBDT.
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