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Taxation & Accounting

Category: Service Tax (page 1 of 394)

RoSCTL Scheme

RoSCTL Scheme

The Director-General of Foreign Trade (DGFT) has announced Rebate of State and Central Levies and Taxes (RoSCTL) scheme to improve the exports especially the textiles which will be expanded to other sectors as well. The GOI has come up with the revised guidelines with easy compliance like the ANF-4R Form (Aayat Niryat Form) where the procedures to avail the scheme is streamlined. This article will explain RoSCTL scheme in detail.

Background

The Ministry of Commerce introduced the RoSCTL scheme on 7th March 2019 for better compliance with WTO guidelines, and the old RoSL (Rebate of State Levies) scheme was discontinued. The RoSCTL Scheme is currently applicable only for exporters of apparel and made-ups where the exporters will be reimbursed the State Taxes and Levies, Central Taxes and Levies in the form of duty credit scrips issued by the DGFT, for all exports made on or after 1st April 2019. For exports done before 6th March 2019 and for exports done between 6th March 2019 and 31st March 2019, the Department of Revenue will give different rebates based on old RoSL scheme.

Updated Procedure

The latest notification has made some changes in the procedures to apply for RoSCTL scheme and other Ad-hoc Incentives under RoSCTL. There is also a minor change made in the Recovery Mechanism regarding a refund of the excess claim.

Changes Made

Exporters can apply for Additional Ad-hoc Incentives under the RoSCTL Scheme that are also declared in Gazette Notification periodically. While applying online, it is necessary to make separate online applications for:

  • Exports with Let export date between 7th March 2019 and 31st December 2019
  • Exports with Let export date on or after 1st January 2020

Changes in the DGFT processing of online applications are provided below:

Old System New System
Not Available For every shipping bill applied which is between 7th March 2019 and 31st December 2019, the DGFT online system will electronically populate the entitlement including the Ad-hoc incentives given additionally and reduce the MEIS (Merchandise Exports from India Scheme) where it has been granted already.
After system-based approval, scrips will be issued by RAs but no EDI Shipping Bill details will be cross-verified. RAs will scrutinize 2% of applications under a new Risk Management System on a weekly basis. The applications to be reviewed will be randomly generated by the DGFT online system.
The Scrip will be delivered by hand or by post, as per the option selected by the applicant online. Once the system approves the final entitlement, the RAs will issue the scrips in paperless mode (electronically)

The application needs to be filed within one year of the Let Export Date.

The Scheme is valid for exports made up to 31st March 2020 only.

30th June 2020 is the last date for filing of the application for Duty Credit Scrips for shipping bills with LEO dates between 7th March 2019 and 31st December 2019. For shipping bills with LEO date on or after 1st January 2020, the deadline for filing is one year from the date of LEO.

The Scheme is also valid for all textile exports made on or after 1st January 2020.

Changes in the Recovery Mechanism is as follows:

Old System New System
Not applicable The eligible amount issued is adjusted for MEIS or otherwise when checking if recovery needs to be made.

Procedure to apply for RoSCTL

The following are the procedures detailed in the latest notification to apply for RoSCTL by the exporter:

  • File an online application in the DGFT website http://dgft.gov.in using revised ANF-4R form.
  • Link the relevant shipping bills online (maximum of 50 shipping bills in a single application)
    • Note: The exporter should make separate online applications for:

      • Exports with Let export date between 7th March 2019 and 31st December 2019
      • Exports with Let export date on or after 1st January 2020
    • For Split Scrips facility, provisions detailed in para 3.09 of HBP shall apply.
    • Jurisdictional RA (Regional Authority) to be chosen as per para 3.06 (b) of HBP; but the restriction or limitation of maintaining the same RA for all applications in the Financial Year as per para 3.06 (a) of HBP has been removed.
    • Choose the Port of Registration for RoSCTL Scrips. This is different for shipments made from EDI (Electronic Data Interchange) ports and non-EDI ports. Please note:
      • Shipments from EDI Ports and Non-EDI Ports need to be in separate applications.
      • For EDI enabled ports: The applicant can choose the port of registration from any one of the ports from where export is made.
      • For exports from non-EDI port: Separate application shall be filed for each non-EDI port the port of registration. The port shall be the relevant non-EDI port of exports.
    • For every shipping bill applied, that is between 7th March 2019 and 31st December 2019, the DGFT online system will electronically populate the entitlement. This entitlement will include the Ad-hoc incentives given additionally and reduce the MEIS (Merchandise Exports from India Scheme) where it has been granted already.
    • Once the system approves the final entitlement, the RAs will issue the scrips electronically (paper less mode)
    • Registration of Duty credit scrip has to be done at the port mentioned on the scrip, before duty credit can be used. After registration at the EDI port, scrip can be used at any EDI port for import and at any manual port under Telegraphic Release Advise (TRA) procedure.
    • In case port of registration is a manual port (non-EDI), TRA is required for imports at any other port.
    • Duty Credit Scrips are valid for 2 years (24 months) from the date they are issued. They should be valid on the date when debit of duty is made.
    • 30th June 2020 is the last date for filing of application for Duty Credit Scrips for shipping bills with LEO dates between 7th March 2019 and 31st December. For shipping bills with LEO date on or after 1st January 2020, the deadline for filing will be 12 months or 1 year from the date of LEO. No provision for Late Cut under RoSCTL.

Except exporters who are in the Denied Entity List of the DGFT, all other exporters can claim under RoSCTL.

Recovery Mechanism

The following are the conditions laid down under the Recovery Mechanism:

  • For Post Issue Scrutiny and Recovery purpose, every exporter has to maintain a record of shipping bills and all export-related documents for three years, from the date the Scrip was issued.
  • In cases where more than the eligible amount has been issued and is noted by the RA, the exporter will have to refund the excess claim with interest as per para 3.19 of FTP (Foreign Trade Policy) . If the exporter fails to refund or does not respond to the message from the RA even after 1 month (30 days), then action can be initiated by the RA as per FT (D&R Act), 1992 and Rules.

Revised ANF 4R Form

Changes made to ANF 4R Form are provided in the below table:

 Area Old Form New Form
Guidelines for Applicants NA

Instructed to read the declarations in ANF 4R.

Informed that separate applications need to made based on Let Export date for different periods as mentioned above in this article.

Informed that Auto Calculation of entitlement with adjustments for MEIS will be done.

Declarations/Undertaking NA

New declaration agreeing to suitable adjustments made for MEIS benefits already taken.

New Undertaking to refund the undue or excess RoSCTL amount in cash with interest.

Input Fields No Change

Details of ANF 4R Form

Part A

Here, the Applicant Details need to be provided, like IEC (Importer Exporter Code) number, Name, Address, Telephone number, and Email ID.

Part B

Here, the Application Details need to be provided like Export Licensing Year, Date of Filing and Port of Export for the application.

  • Shipping bill details – The details of one shipping bill at a time should be fed. The online repository will have a list of eligible shipping bills. For EDI shipping bills, there is no need to enter details.
  • Specify the number of Split certificates required.
  • Port of Registration (should be one of the ports from which exports has taken place)
  • After entering all the details, Declaration or Undertaking box should be ticked and Digital Signature to be submitted digitally.

Adjustment for MEIS based excess claim

For exports with Let export date between 7th March 2019 and 31st December 2019 that are related to apparel and made-ups, the excess claims that were paid to exporters under the MEIS will be adjusted against RoSCTL and the recoveries will be made where due. The latest notifications can be accessed below:

 

rosctl-latest-amendment

 

rosctl-gazette

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Companies (Issue of Global Depository Receipts) Rules

Companies (Issue of Global Depository Receipts) Rules-2020

The Central Government has amended the Companies (Issue of Global Depository Receipts) Rules, 2014 in a new notification dated 13th February 2020. The new amended rules will now be called Companies (Issue of Global Depository Receipts) Amendment Rules 2020. This article will explain the amendments made in the companies rules .

Global Depository Receipt

A depository receipt is a foreign currency-denominated instrument. It is listed on international exchange and is issued by a foreign depository to a domestic custodian. As per Section 2(44) of the Companies Act, 2013, Global Depository Receipt (‘GDR’) means any instrument in the form of a depository receipt, created by a foreign depository outside India and authorised by a company making an issue of such depository receipts. Basically, it gives Indian companies increased access to foreign funds through the GDRs because it helps in raising funds in foreign currencies that are listed and traded in foreign exchanges .

How are GDRs issued?

GDRs are issued in three steps:

  1. Indian companies issue their equity shares (in Indian currency) to an overseas depository bank, through a domestic custodian bank.
  2. The domestic custodian bank then acts as the agent of overseas depository bank and keeps the equity shares in its custody.
  3. The overseas depository bank then issues GDRs (in foreign currency) against the equity shares to the overseas investors.

Features of GDRs

With reference to Para 7 of the Depository Scheme, 2014, issued by the Department of Economic Affairs:

  1. The foreign depository is entitled to exercise voting rights, associated with the permissible securities.
  2. The shares of a company that underlying the depository receipts will form part of the public shareholding of the company under the Securities Contracts (Regulations) Rules 1957 and such depository receipts are listed on an international exchange.
  3. For cases other than those mentioned under sub-paragraph 2, shares of the company underlying depository receipts should not be included in the total shareholding and in the public shareholding while computing the public shareholding of the company.
  4. A holder of depository receipts that are issued based on equity shares of a company shall have the same duties as if it is the holder of the underlying equity shares.

Latest Amendment

The current notification has announced minor amendments and insertions in the old rule. The main additional specifications are:

  • The depository receipts may be issued as a public or private offering or any other manner that is legal and can be traded in the trading platform of that country’s jurisdiction.
  • Remittance of proceeds of depository receipts may be made to an International Financial Services Centre Banking Unit and funds should be utilised as per RBI instructions.

Please access below the latest amendment for more details:

Companies-(Issue-of-Global-Depository-Receipts)-Amendment-Rules-2020

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Breach of Contract

Breach of Contract

A breach of contract occurs when one of the parties of the contract do not abide by the terms of the contract. The breach in a contract happens even when there is a failure in the performance of the contract. But such breach of contract comes with some remedies which provide the aggrieved party for the damages. This article deals with the breach of a contract, its types and the remedies for breach of contract.

Types of Breach of Contract

The breach of contract is of two types. The following are its types:

Anticipatory

Anticipation by one of the parties is the anticipatory breach. The breach will occur either expressly or through conduct. The party will intimate eventually that he or she is going to commit a breach. The aggrieved party will not have sufficient in the loss if there is compensation and if he waits for the actual breach.

Illustration: In the Hochster v. De La Tour, it was decided that if there is a rejection of the contract before the performance, then claim for the damages can be made. In accordance with that, De la Tour agrees to employ Hochster as their for 3 months. De La Tour appoints Hochster in April to start work from June. But De La Tour withdraws the appointment by May. Hochster sues them. De La Tour argues that Hochster is under the terms or obligation, stating that he should be ready to perform until the 3 months is due. But Lord Campbell CJ dismisses the argument and awards Hochster with the damages.

Actual

The refusal to abide by the contract is an actual breach. If one of the party withdraws to perform before the due date or if he performs incompletely, then he commits a breach.

Illustration: Poussard was to perform opera in the London run for 3 months. The producers found a substitute when she was ill. The producers refuse to take her back when she returned. The court was with the producers as it discovered their defence justifiably. The court did not award her with the damages. The contract claims that she must perform from the first day. Failure to oblige by the contract made the producers reject her contract.

Remedies for the Breach of Contract

Suit for Rescission

if one party breaches the contract, then the other party need not oblige to the contract. The contract stands cancelled if the aggrieved party cancels it. The aggrieved party can file for the damages. Generally, the suit for the damages accompanies the cancellation of the contract by the aggrieved party. This suit is for obtaining the damages of the breach.

Suit for Injunction

A restraint order from the court is an injunction . The court has the power to restrain a person from doing a certain act. If the defendant does something that he should not perform, then the aggrieved party can file a suit for injunction. This shall be temporary or permanent.

Suit for Specific Performance

A remedy which is given by the court to both parties to perform according to the contract. This is one of the most common suits. The aggrieved party will not receive adequate relief of the monetary compensation.

Suit for Quantum Meruit

Quantum Meruit for contracts means the reasonable value of services. If a person hires someone and the contract is incomplete or un-performable, then the employer can sue the defendant for the services and the value of improvements made. The law states that the employer has to pay the employee an amount that he deserves for his services. If the employee is under an express contract for a specific amount, then he cannot abandon the contract and suit for the Quantum Meruit.

Suit for Damages

General Damages or Ordinary Damages: The damages that come naturally through a breach. The aggrieved party must prove the damages and also the amount of the damages in the suit.

Liquidated Damages and Penalty: Some contract addresses the issue of breaching its consequences and also its penalty. If such a contract breaks then the party causing the breach should pay the stipulated amount mentioned in the contract to the other party. The amount is reasonable compensation, and it should not exceed the amount given in the contract. The parties should not have obstacles to make provisions of the liquidated damages .

Special Damages: The aggrieved party must prove the special loses to claim the special damages.

Exemplary or Vindictive Damages: This claim is for the mental suffering or emotional suffering, such suffering can also be due to the breach. Generally, the court takes care of such damages.

Nominal Damages: A remedy is provided for the breach, which was not there in the actual. It gives a small remedy, and it is more technical than the actual.

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Income Tax 5th Amendment Rules 2020

Income Tax 5th Amendment Rules 2020

The Central Board of Direct Taxes has issued a notification dated 13th February 2020 called IT 5th amendment rules 2020 with rules to further amend the Income Tax Rules 1962. This new rule has come into force from 13th February after it is published in the Official Gazette.

Gist of IT 5th Amendment Rules 2020: A new rule has been inserted that will make the PAN (Permanent Account Number) of an individual inoperative in case the Aadhaar Number of the person is not provided or intimated by 31st March 2020. But if the person informs the Aadhaar Number after 31st March 2020, the PAN will become operative again from the day of intimation of the Aadhaar Number.

Section 139AA

Section 139AA of Income Tax Rules 1962, provides for mandatory quoting of Aadhaar Number or Enrolment ID of the Aadhaar application form, for filing of return of income and for making an application for allotment of PAN with effect from 1st July 2017. Section 139AA(1) After 1st July 2017, every person who can get an Aadhaar Number needs to quote their Aadhaar Number :

  • in the application form for allotment of PAN
  • in the returns filed for income tax purposes

In case the person does not have the Aadhaar Number as yet, the 28-digit Enrolment ID of the Aadhaar application form issued to him should be quoted in the application for PAN or in the return of income filed by him. Section 139AA(2) Every person who has a PAN as on 1st July 2017, and who is eligible to obtain the Aadhaar Number, needs to intimate his Aadhaar Number to the authority in a manner stipulated. Failure to intimate the Aadhaar Number will make the PAN allotted to the person invalid and the other provisions of this Act will be applicable as if the person had not applied for allotment of PAN.

5th Amendment Rules 2020

A new rule 114AAA to be inserted after rule 114AA in Income Tax Rules, 1962.

The following are the details:

  • A person with PAN as on 1st July 2017 needs to intimate his Aadhaar Number under sub-section (2) of Section 139AA, and if he has failed to intimate the Aadhaar number by 31st March 2020, the PAN of such person shall become inoperative with immediate effect after 31st March 2020.
  • For such cases where the PAN becomes inoperative the person is liable for all the consequences under the Act for not quoting the PAN.
  • If the person whose PAN has become inoperative intimates his Aadhaar Number under sub-section (2) of Section 139AA after 31st March 2020, his PAN shall become operative again from the date of intimation of the Aadhaar Number.
  • The procedure for verifying the operational status of PAN under sub-rule (1) and sub-rule (2) needs to be provided by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).

The Gazette notification can be accessed below:

IT-5th-Amendment-Rules-2020

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Project Exports Promotion Council of India (PEPC)

Project Exports Promotion Council of India (PEPC)

To promote the export of projects from India, the Ministry of Commerce; the Government of India established the Project Exports Promotion Council of India (PEPC). The Council, which is headquartered at New Delhi undertakes the export promotion initiatives and provides mandatory technical information, guidance and support to Indian Civil and Engineering construction including the process engineering contractors and consultants. By promoting technology transfer principally in sophisticated technology fields the council will encourage Indian firms to jointly bid for mega projects. The current article provides a brief understanding of Project Exports Promotion Council of India (PEPC)

Know more about the Shellac Export Promotion Council

PEPC Services

Project Exports Promotion Council of India provides support to Indian Civil and Engineering (EPC) construction including process engineering contractors and consultants to set up overseas projects in any of the following modules of engineering service:

  • Civil Construction (Structures/Infrastructure)Turnkey
  • Process and Engineering Consultancy Services
  • Project Construction Items (Excluding Steel and Cement)

Products Covered under PEPC

The products covered under the Project Exports Promotion Council of India (PEPC) are explained in detail below:

  • Construction engineering products
  • Construction equipment and accessories
  • Builders’ Hardware (Doors & Windows)
  • Sanitary and allied products
  • Electrical, Electro-mechanical and building automation systems
  • Building components construction material (marble, granite, tiles)
  • Glass and Glazing systems and Architectural products
  • Wood/Timber products
  • Engineering plastic-based systems
  • Construction Equipment and Accessories

PEPC Membership Benefits

The registered trader of PEPC can get the following benefits offered by the council.

  • The PEPC regularly collects, collates and disseminates technical and other information pertaining to overseas markets and new project possibilities worldwide to member companies through a monthly magazine: GPO (Global Project Opportunities)
  • The PEPC provides joint ventures, technical collaborations and strategic alliances to its members
  • The council is disseminating market information, trends and policy implications
  • The PEPC is publishing information on technical, commercial and technological developments pertaining to project exports sectors
  • PEPC member can participate in major international fairs and specialized trade shows across the globe, the council also organizing buyer-seller meets in India and abroad besides B2B meets in focus countries
  • The Project EPC is offering technical, marketing and export assistance to Indian exporters
  • The council conducts fairs, seminars, and lectures for exchange of information, knowledge, ideas, and strategies
  • The council is serving as a focal point between the industry members and government while focusing on the overall growth and development of the Indian project exports
  • As mentioned above, the PEPC is coordinating the promotion of technical and economic cooperation between Indian project exporters and foreign companies
  • The council has formed the Screening Committee to permit capable companies to undertake projects overseas.

PEPC Membership Registration

The applicants who wish to become a member of PEPC have to follow the guidelines explained here:

Membership Categories

The eligibility criteria for PEPC Membership are listed as follows:

  • Merchant Exporter
  • Manufacturer Exporter
  • Project exporters
  • Civil and Engineering construction
  • Process and engineering consultancy services
  • Project construction items (Construction Engineering Products/Construction Equipments & Accessories/Other Project Goods excluding steel and cement)

Documents Required

The following documents are required for PEPC Membership Registration:

For Merchant Exporter

  • A self-certified copy of the Import-Export Code number issued by the licensing authority concerned
  • Self Certified copy of annual turnover during the foregoing year
  • Documents in support of the mainline of i.e. Articles of Association etc.
  • Solvency Certificate from the banker
  • Particulars of PEPC members proposing and seconding membership of the company duly signed and stamped

For Manufacturing Exporter

If  the application is for registration as a Manufacturer, the applicant should also submit the following documents:

  • A certified true copy of the registration as Manufacturer granted by the State Directorate of Industries with whom the applicant is registered as an SSI unit
  • In case an applicant is a Non-SSI unit, a certified true copy of the product code or factory code allotment letter, issued by the DGTD/SIA, New Delhi
  • Certificate from Excise department indicating the production figures and excise duty paid documents may be acceptable to the PEPC for membership registration

Membership Fee Details

The requisite fee for the PEPC Membership Registration is tabulated here:

 

 

Membership fee

 

 

Construction / Turnkey Engineering Projects Consultancy and Engineering services Project Construction Items
The annual turnover for the preceding financial year

Amount

 

The annual turnover for the preceding financial year

Amount

 

The annual turnover for the preceding financial year

Amount

 

Up to  Rs.25 crores

Rs.50,000

 

Up to  Rs.5 crores Rs.20,000 Up to Rs.50 Lakhs Rs.7,500
Above Rs.25 crores Rs.75,000 Up to  Rs.10 crores Rs.30,000 Up to Rs.1 Crore Rs.10,000
Above Rs.250 crores Rs.1,00,000 Up to  Rs.25 crores Rs.50,000 Above Rs.1 crore Rs.15,000
Above Rs.500 crores  Rs.1,25,000 Above Rs.25 crores Rs.75,000 Above Rs.10 crore Rs.25,000
Above Rs.250 crores Rs.1,00,000 Above Rs.20 crore  Rs.30,000
Above Rs.500 crores Rs.1,25,000 Above Rs.25 crore  Rs.35,000

Admission fee 

(one time)

(For New Members)

Equivalent to one year’s membership fee as applicable Equivalent to one year’s membership fee as applicable

 

Rs.5,000

Web Promotion Charges Rs.5,000 Rs.3,000 Rs.1,000
GST As applicable

Note: Annual subscription fee applicable from Financial Year (April to March) based on the annual turnover of the company for the preceding financial year

Application Procedure for RCMC of PROJECT EPC

To become a member and to procure RCMC of PROJECT EPC, the applicant needs to furnish the Membership Application Form duly completed. The application form is enclosed here for reference:

Membership cum rcmc application (1)

Fee Payment

The membership registration payment should be made in Demand Draft, Cheque in favour of PROJECT EPC. The particulars of bank details are as under:

Name of  the Council PROJECT EXPORTS PROMOTION COUNCIL OF INDIA
Name & address of the Bank

IDBI Bank Ltd., Surya Kiran Building

19, K.G. Marg,

New Delhi-110001

Bank Account number S/B A/c. No.0132013027100
IFSC Code IBKL0000011
MICR Code 110259001
Permanent Account Number (PAN) AAATP8323M
GST Number 07AAATP8323M1Z7

The completed PEPC membership application form along with the supporting documents and requisite fee needs to be sent to the regional office of Project Exports Promotion Council of India for verification.

Get RCMC

RCMC will be issued from the Regional Office of Project Exports Promotion Council Of India situated at New Delhi.

Note: Clearance for the approved list will be given as per the PEPC Screening Committee Guidelines after submission of the Screening Committee Application. The Screening Committee is a statutory committee set up by the Government to appraise and approve the project exporters in terms of the technical, financial or managerial competence against pre-set norms to permit capable companies to undertake projects overseas.

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Income Tax 4th Amendment Rules

Income Tax 4th Amendment Rules

The CBDT(Central Board of Direct Taxes) has released a notification on 12th February 2020 called the Income-tax (4th Amendment) Rules, 2020. The CBDT has introduced Forms 10-IC and 10-ID to opt for reduced tax rates as declared under Section 115BAA and Section 115BAB  respectively for domestic companies.

Background

With the introduction of Section 115BAA  of the Income Tax Act, 1961, domestic companies now have an option to pay tax at flat 22% effective 1st April 2020. With the introduction of Section 115BAB of the Income Tax Act, 1961, new domestic manufacturing companies will have an option to pay tax at a flat 15% effective 1st April 2020 provided they satisfy some conditions.

Income Tax (4th Amendment) Rules 2020

The Income Tax (4th Amendment) Rules 2020 shall come into effect on April 1 2020. There are two new rules inserted after rule 21AD:

Rule 21AE: This rule introduces the Form 10-IC to opt for the new taxation under subsection (5) of Section 115BAA. This is applicable for any previous year relevant to the assessment year beginning on or after the 1st April 2020. This new Form 10-IC can only be submitted electronically duly authorised/verified with a digital signature or with an electronic verification code.

The procedure for filing for Form 10-IC, details on how to generate verification code, and the policies around security, archiving and retrieval need to be put in place by the Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems).

Rule 21AF: This rule introduces the Form 10-ID to opt for the new taxation under subsection (7) of Section 115BAB. This is applicable for any previous year relevant to the assessment year beginning on or after the 1st April 2020. This new Form 10-ID can only be submitted electronically duly authorised/verified with a digital signature or with an electronic verification code.

The procedure for filing for Form 10-ID, details on how to generate verification code, and the policies around security, archiving and retrieval need to be put in place by the Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems).

Principal Rules Appendix II: Forms 10-IC and 10-1D to be inserted after Form 10-IB .

Form 10-IC

Here are the details of Form 10-IC as given in the official notification which needs to be filled:

Addressed to the Assessing Officer, the companies need to furnish the name of Principal Officer in the company who is exercising the option under sub-section (5) of Section 115BAA on behalf of the company (name, address, PAN, etc. to be filled), and specify the previous years. If the company has any units in the International Financial Services Centre (referred to in sub-section (1A) of Section 80 LA), then details of the units need to be provided. If option under sub-section (4) of Section 115BA has been exercised in Form 10-IB by the company, then it has to be declared withdrawn and also specify the previous years.

Form 10-ID

Here are the details of Form 10-ID as given in the official notification which needs to be filled:

Addressed to the Assessing Officer, the companies need to furnish the name of Principal Officer in the company who is exercising the option under sub-section (7) of Section 115BAB on behalf of the company (name, address, PAN, date of commencement of manufacturing, etc to be filled), and specify the previous years.

The notification along with Form 10-IC and Form 10-ID can be accessed below:

Income-Tax-4th-Amendment-rules

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Discharge of Contract

Discharge of Contract

The discharge of the contract takes place when the obligations of the contract between the parties of the contract come to an end. This also ends the legal validity of the contract. The discharge of the contract is also referred to as the termination of the contract. The best way to discharge a contract is by going in accordance with the terms of the contract until the end of the contract. In addition to that, a contract can be discharged by six other ways, which are discussed in this article.

By Performance

Performance regards to the completion of the deal in accordance with the terms of the contract. To have a closure of the deal, both parties must live up to the end of their bargain. The contract remains open until the parties perform correctly under the contract. The performance can be either actual or attempted.

Actual

Both the parties in a contract must perform, or offer to perform, their promises. Unless The Indian Contract Act, 1872 or any other law excuses or dispenses such performance. The representatives of the promisors are bound by the promises in the case where a promisor dies before performance unless the contract denotes a contrary intention. This is the actual performance.

Illustration: A promises to deliver the goods to B on a particular day with a payment of Rs. 1,000. But A dies before such day. So A’s representatives are to deliver the goods to B, in turn, B has to pay Rs. 1,000 to A’s representatives.

Attempted

Attempted performance is a tender or form which the promisors predict and perform in the contract. However, an attempted performance should always be:

  • Unconditional
  • Should be for the complete obligation of the contract
  • Formulate at a proper place and time
  • A proper person or adequate agent for that person must formulate it

Illustration: The person A contracts to deliver to person B at his warehouse, on a certain day, a 100 bales of cotton of a certain quality. To make an offer of performance, person A must take the cotton to B’s warehouse, on that day. The delivered 100 Bales of cotton must be of said quality for person B to be satisfied to contract.

By Mutual Agreement

The parties of the contract need not perform if they come into a mutual agreement. This requires the agreement of substituting with a new contract or altering the existing contract. If the performance misleads from the terms of the agreement, then there would occur a breach of the contract.

Illustration: Consider A owes a certain amount of money to B under a contract. A, B and C agree to the contract that B will henceforth consider C as his debtor and not A as his debtor. The old debt of A and B comes to an end, and a new contract debt from C to B is initiated.

Novation

At times the payment or performance does not coincide with the terms of the agreement. Sometimes the debtor will also go into bankruptcy unless there is a reconstruction of the debt. In such a case, the parties use the novation as it is the only way to pay the funds.

Rescission

It is the cancellation of the contract and unwinding of the transaction. This is to bring the parties of the contract to the position they were before entering the contract.

Alteration

The modification or alteration of the contract with the consent of the parties. The effect of the alteration is the formation of a new contract.

Remission

One of the parties allows the other to delay or extend the time of the performance or allows to remit in part or as a whole. This means the discharge from the due, a release from the penalty, forfeiture or debt, pardon of transgression, relinquishment of a right, claim or obligation.

Waiver

The waiver refers to a voluntary abandonment or surrender of the rights or privilege of the contract. The waiver is generally in the form of writing. An example of it is the disclaimer, which after its acceptance becomes a waiver. Sometimes the action of a person also acts as a waiver. The waiver has different other names. They are releases, exculpatory clauses or a holding of the harmless clauses.

By Lapse of Time

There will be a discharge of the contract if the performance is not completed within the given period. This will likewise lead to the breach of contract. In such a case, the person can file a suit in the court to enforce his rights from the contract. The person can file in the court in regard to The Limitation Act, 1963. If the time period expires as stated in the Act, then there is a discharge of the contract, and the promisee cannot enforce the promisor.

By Operation of Law

The provisions of the law do not allow the performance of the contract. This regards to the changes in the existing laws also. But it does not concern the court order or an agreement. The following are the situations where the law authorises the termination of the contract:

  • Insolvency
  • Death
  • Alterations in the unauthorised materials
  • Merger

Illustration: Michael Jackson had to perform on a world tour. But he was met with an unfortunate death; this made all his contracts void and null.

By Supervening Impossibility

This states the provisions which were possible at the establishment of the contract would become impossible in the course of time. The following are the impossibilities:

Physical: This regards to the destruction of the subject matter.

Practical: It relates to the death of the incapacity of the party.

Legal: The changes in the law cease the existence of the foundation of the contract.

Breach of Contract

If the parties do not abide by the terms of the contract, then there would be a breach of the contract. In addition to that, the breach of contract occurs when the performance of the contract cannot be excused by operation of law, tender, impossibility or mutual consent. It is of two types, namely Anticipatory and Actual. An anticipatory breach occurs through the anticipation of the parties. The parties might prepare for such a breach beforehand. An actual breach occurs where the party commits the breach and refuses to abide by the terms.

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Integration of e-way Bill and Vahan System

Integration of e-way Bill and Vahan System

With the introduction of Goods and Service Tax, an e-way bill system was also implemented. Electronic way bill generation is mandatory for transportation of goods under Goods and Service Tax. Currently, the Government has decided to integrate the e-way bill with the Vahan system. The integration aims to curb the GST evasion and also to improve the countries operational efficiency. The present article highlights the latest integrated of e-way bill and Vahan system as proposed by the Government.

Understanding the Vahan System

Vahan system contains the vehicle database which is being operated and used by the Ministry of Road Transport & Highways. The system is highly flexible and comprehensive that looks after all the activities relating to Vehicle Registration.

e-way Bill and Vahan System Integration

The e-way bill and Vahan system would be integrated in the following manner:

  • The vehicle number mentioned in the e-way bill will be verified with the Vahan system.
  • In case the vehicle number is not available in the Vahan system, the user will get an alert message regarding non-availability of the vehicle number in the Vahan database.
  • Only the vehicle number, which is available in the Vahan database, will be allowed to generate the e-way bill.
  • The vehicle number which is not available in the Vahan system, will not be allowed for the generation of the e-way bill. The user will have to update the Vahan database only after which e-way bill generation would be possible.

Addition of Vehicle Number

As seen above, it is important to add the vehicle number in the Vahan system in order to generate the e-way bill. In case the vehicle number is not added, the user needs to follow the below steps for adding the same:

  1. In order to add the vehicle number, the user needs to visit the respective RTO (Regional Transport Office).
  2. The user needs to take an original Registration Certificate (i.e. RC) of the vehicle and any other relevant document on the basis of which the details would be updated in the Vahan system.

Verification of Vehicle Number in Vahan System

In order to check the existence of the vehicle number in the Vahan system, one needs to follow the below step:

  1. Visit site https://vahan.nic.in/nrservices/faces/user/login.xhtml .
  2. Click on ‘Know Your Vehicle Details’ icon.
  3. Provide the following details:
    1. Vehicle Number and
    2. Verification code.
  4. Click on ‘Search Vehicle’.

If the vehicle number is already added in Vahan system, then on clicking ‘Search Vehicle’, Vehicle details showing in registering authority would be displayed.

Other important points

  • Detailing with the movement of a vehicle having temporary registration:

If the vehicle has the temporary registration number, the user needs to enter the temporary registration details (starting with TR) in the e-way bill.

The user needs to contact the e-way bill helpdesk. The user should submit the grievance, specifying the vehicle number which is appearing the Vahan system but not appearing in the e-way bill portal.

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Generalized System of Preferences (GSP)

Generalized System of Preferences (GSP)

Generalized System of Preferences (GSP) is a preferential trade arrangement extended by developed countries to developing countries. Developed countries give GSPs to imports from India. GSP involves reduced tariffs of eligible products exported by India to the markets of GSP providing countries. GSP promotes sustainable development in India by helping our country to increase and diversify trade with the developed countries. India is one of the major beneficiaries in terms of export volume realized under GSP. In this article, we will look at the Generalized System of Preferences (GSP) in detail.

Know more about Agricultural Export Policy

Objective of GSP

The objective of the Generalized System of Preferences is to provide development support to developing countries by promoting exports into developed countries. The Generalized System of Preferences furnishes opportunities for many of the world’s poorest countries to use trade to grow the economy and climb out of poverty.

Benefits of GSP

The benefits of the Generalized System of Preferences (GSP) for Indian traders are explained in detail below:

  • Indian traders benefit indirectly through the benefit that accrues to the importer by way of reduced tariff or duty-free entry of eligible Indian products
  • Removal of import duty on Indian goods makes it more competitive to the importer – other things being equal.
  • This tariff preference helps the new exporters to penetrate a market and established exporters to increase the market share and to improve upon the profit margins, in the donor country.

Under GSP, there was zero/low concessional tariff on imports from India. The developed countries’ government selects a group of poor countries and a set of products and offers lower-than-normal tariffs than it applies to imports from all other WTO (World Trade Organization) countries.

Difference between GSP and the Usual Trade Law

As per the normal trade arrangement, the World Trade Organization members must give equal preferences to trade partners. There should not be any discrimination between the countries. This trade arrangement under the WTO is known as the Most Favored Nation (MFN) clause. The World Trade Organization allows members to give special and differential treatment for developing countries like zero-tariff imports. This is an exemption for Most Favored Nation.

Countries that Extend GSP Benefits

Generalized System of Preferences (GSP) is extended by the following 29 developed countries. In addition to this, countries like Kyrgyzstan. Lithuania, Kazakhstan, and Ukraine also providing preferential tariff treatment to a few Indian goods.

EU Member States

Australia Republic of Bulgaria Austria Italy
Canada Republic of Hungary Belgium Luxembourg
Czech Republic Republic of Poland Denmark Netherlands
European Union Russian Federation Finland Portugal
Japan Slovakia France Spain
New Zealand Switzerland Germany Sweden
Norway United States of America Greece United Kingdom
 Republic of Belarus Ireland

Products Covered under GSP

The products covered under the GSP are explained in detail below. Products exported from India will be divided into two groups as follows:

  • Wholly obtained products
  • Products with Import Content

Wholly Obtained Products

The wholly obtained products are those which have been entirely manufactured and produced in India. The following products are considered as wholly obtained products:

  • Grown
  • Mineral products extracted from its soil or its sea-bed
  • Vegetable products harvested in India
  • Live animals born and raised in India
  • Products obtained in India from live animals
  • Products obtained from hunting in India
  • Recovery of lead from used motor car batteries
  • Products obtained from fishing conducted in India
  • Products obtained of sea
  • Goods manufactured exclusively from the above-mentioned items
  • Used articles collected in India
  • Scrap and Waste resulting from manufacturing operations conducted in India
  • Products obtained in India exclusively from products specified such as iron sheets and bars produced from Iron ore
  • Cotton fabrics are woven from raw cotton
  • Recovery of metals from metal shavings

Products with Import Content

Products with Import Content means that the goods manufactured wholly or partially from materials, imported from other countries into India.

  • Products with Import Content qualify for the benefit of GSP if the materials of imported or unknown origin are used in the manufacturing of such products. The manufacturing process should have undergone processing in India

Note: The exported goods of the unknown origin will be treated as they were imported. New Zealand accepts products completely produced in India from imported raw materials, irrespective of the source, as wholly obtain.

Rules of Origin for Qualify GSP

The exported goods must fulfil the requirements of the rules of origin laid down by the importing country to get the benefit of the Generalized System of Preferences (GSP). The Rules of origin comprise a set of requirements laid down by the importing country, which must be fulfilled by the Indian product to be eligible for preferential tariff treatment upon import in that country. The three components of rules of origin are listed as follows:

Origin Criteria: The origin criteria determine whether the product can be considered to be originating in the country of export (beneficiary country).

Transport Conditions: The transport conditions specify the mode of transportation from the country of export to the developed country so that the goods in question qualify for preferential tariff treatment upon import in the country of the consignee

Documentary Evidence: The documentary evidence will serve as the proof for products to be granted Generalized System of Preferences benefits at the border of the importing country

In addition to the above-mentioned rules, few Supplementary Rules may have a bearing on the origin of the product under consideration.

Other Rules of GSP

Below mentioned supplementary rules may have a bearing on the origin of the final product to qualify for GSP:

  • Donor Country Content Rule
  • Cumulation
  • The Two Steps Rule
  • Returned Articles
  • Neutral Elements
  • Unit of Consideration

Donor Country Content Rule

According to this rule, if a product was manufactured in India using the raw materials of the donor country (developed country) and exported to the same country, then such products will be considered as the product. Originating in India. The Donor Country Content Rule applies to the following countries:

EU, Japan, New Zealand, Australia, Canada, Norway, Poland, Bulgaria, Czech Republic, Hungary, Russian Federation Switzerland,- Belarus, and Slovakia apply this rule. Switzerland The trader need to provide documentary evidence of the originating status of materials imported from them. Note: Some of the donor countries like EU, Japan, Norway, Poland and

Cumulation Rule

This rule allows a product to be manufactured in India with labour and materials from other beneficiary countries without affecting the originating status.

The Two Steps Rule

According to The Two Steps Rule, when an imported material is transformed in India into another product following the origin rule for this product, and when this product is embodied into still any other product, the whole product is considered originating when the origin of C has to be determined.

Returned Articles

If an originating product exported from India to a country and returned to India, then the product will be to be treated as non-originating unless it can be satisfactorily demonstrated the following:

  • The product returned are the same as the exported product
  • The product returned has not undergone any operation beyond what was necessary to preserve them in good condition in the importing country.

Neutral Elements

The origin of Power, Plant, Equipment, Fuel, Machines or Tools used to produce a product will not be considered while determining the origin of the product for getting the benefit of GSP.

Unit of Consideration

According to this rule, for determining the origin of goods, each article in a consignment will be considered separately.

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Section 206AA – PAN for TDS

Section 206AA – PAN for TDS

As per Section 206AA of IT Act, the furnishing of PAN becomes mandatory for every taxable income and this is applicable for both residents and non-resident Indians. The applicable payments which require PAN are rent, salary, dividends, commission, etc. The TDS will be charged at a higher rate if the PAN is not furnished. The PAN details are expected to quote in the correspondence by both deductee and deductor.

IT Act Section 206AA

The applicability of Section 206AA is amended in the Finance Act 2019 FY 2019-20 and the exact text can be referred below:

“The amendment It is proposed to insert a proviso in sub-section (1) of the said section so as to provide that where the tax is required to be deducted under section 194-O, the provisions of clause (iii) shall apply as if for the words “twenty per cent.â€, the words “five per cent.†had been substituted.”

Hence, the higher level of tax will be applicable as per below:

  • TDS rate as prescribed in the Act
  • Rate of tax applicable for each category if applicable
  • 20% of the income declared

This amendment will be effective from 1st April 2020.

Section 206AA on Section 197

The taxpayer can opt for a lower deduction or nil deduction of tax during the TDS stage by Section 197. For a limited period, Section 197 is applicable through which a certificate will be issued by the Income Tax Department. Till the Section 206AA was introduced, the reduced or nil deduction of tax was possible with Section 197 but the taxpayer still can submit forms as per Section 197 and will not be valid till the taxpayer furnishes PAN to the Income Tax Department.

Form 15H & 15G

Declaration under Section 197 was possible with two forms namely, Form 15H & 15G. Form 15H is applicable for the taxpayers who are above 60 years of age and Form 15G is for the taxpayers who are below 60 years of age. With the introduction of Section 206AA, these forms will not be valid if the PAN is not furnished along.

NRIs

On certain conditions, Section 206AA will not be applicable for non-residents on the below payments:

  • on the interest of long-term bonds under Section 194LC
  • on the payments of interest, royalties, fees for technical services and any capital asset
  • when relevant details of NRIs are furnished to the IT as per below:
    • Name of the taxpayer, email ID, and personal contact number
    • Address of the resident country outside of India
    • Tax certificate from the resident country
    • Tax Identification Number (TIN) of the deductee in the resident country

The Finance Bill 2020 which had the recent amendments can be accessed below – Refer Page no.87 (lower part of right-column)

Finance-Bill-2020

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