CBIC extends deadline for filing GST Annual Returns

 CBIC extends deadline for filing GST Annual Returns

The Central Board of Indirect Taxes and Customs ( CBIC ) has extended the filing of GST Annual Returns ( GSTR-9 ) for the Financial Year 2019-2020 till February 28th, 2021.

Earlier, the due date was December 31. There have been demands to extend the date for two reasons: first, the pandemic, and second, the due date for annual returns for FY19-20 is December 31.

GSTR-9 is an annual return to be filed yearly by taxpayers registered under GST. It consists of details regarding the outward and inward supplies made/received during the relevant previous year under different tax heads i.e. CGST, SGST & IGST and HSN codes. Basically, it is a consolidation of all the monthly/quarterly returns (GSTR-1, GSTR-2A, GSTR-3B) filed in that year. Though complex, this return helps in extensive reconciliation of data for 100% transparent disclosures. The late fees for not filing the GSTR 9 within the due date is Rs 100 per day, per act. That means late fees of Rs 100 under CGST & Rs 100 under SGST will be applicable in case of delay. Thus, the total liability is Rs 200 per day of default. This is subject to a maximum of 0.25% of the taxpayer’s turnover in the relevant state or union territory. However, there is no late fee on IGST yet.

Budget 2020: Key Takeaways of Indirect Tax Proposals

In a Union Budget 2020 presented today, the Union Finance Minister Smt. Nirmala Sitharaman has proposed the various Indirect Tax Proposals.
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GST:

1. Cash reward system envisaged incentivizing customers to seek invoices.
2. Simplified return with features like SMS based filing for nil return and improved input tax credit (ITC) flow to be implemented from 1st April 2020 as a pilot run.
3. Dynamic QR-code capturing GST parameters proposed for consumer invoices.
4. Electronic invoices to capture critical information in a centralized system to be implemented in a phased manner.
5. Aadhaar based verification of taxpayers being introduced to weed out a dummy or non-existent units.
6. GST rate structure being deliberated to address inverted duty structure.

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Customs Duties:

1. Customs duty raised on footwear to 35% from 25% and on furniture goods to 25% from 20%.
2. Basic customs duty on imports of newsprint and light-weight coated paper reduced from 10% to 5%.
3. Customs duty rates revised on electric vehicles and parts of mobiles.
4. 5% health cess to be imposed on the imports of medical devices, except those exempt from BCD.
5. Lower customs duty on certain inputs and raw materials like a fuse, chemicals, and plastics.
6. Higher customs duty on certain goods like auto-parts, chemicals, etc. which are also being made domestically.
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Trade Policy Measures

1. Customs Act is amended to enable proper checks of imports under FTAs.
2. Rules of Origin requirements to be reviewed for certain sensitive items.
3. Provisions relating to safeguarding duties to be strengthened to enable regulating such a surge in imports in a systematic way of indirect tax proposals.
4. Provisions for checking to dump of goods and imports of subsidized goods being strengthened.
5. Suggestions for reviews of exemptions from customs duty to be crowd-sourced.
6. Excise duty proposed to be raised on Cigarettes and other tobacco products, no change made in the duty rates of bidis.
7. Anti-dumping duty on PTA abolished to benefit the textile sector.

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Unprecedented Milestones and Achievements of Indian Economy

1. India now the fifth largest economy in the world.
2. 4% average growth clocked during 2014-19 with inflation averaging around 4.5%.
3. 271 million people raised out of poverty during the 2006-16.
4. India‟s Foreign Direct Investment (FDI) elevated to US$ 284 billion during 2014-19 from US$ 190 billion during 2009-14.
5. Central Government debt reduced to 48.7% of GDP (March 2019) from 52.2% (March 2014).
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   Two cross-cutting developments: Proliferation of technologies (Analytics, Machine Learning, robotics, Bioinformatics, and Artificial Intelligence).

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1. 1. BUDGET SPEECH
   2. FINANCE BILL 2020
   3. MEMORANDUM
   4. PPT ON BUDGET
   5. HIGHLIGHTS-BUDGET 2020
   6. PPT ON BUDGET 2020

GST Invoices: Govt. proposes Dynamic QR-Code

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In a Union Budget 2020 presented today has proposed the Dynamic QR Code for Consumer GST Invoices.
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A simplified GST return will be implemented from the 1st April, 2020. While presenting the Union Budget 2020-21 in Parliament today, the Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman said that this is under pilot run.
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It will make return filing simple with features like SMS based filing for nil return, return pre-filling, improved input tax credit flow and overall simplification. The Finance Minister said that the refund process has been simplified and has been made fully automated with no human interface.
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Smt Sitharaman said that several measures have been taken for improving compliance and Aadhaar based verification of taxpayers is being introduced. This will help in weeding out a dummy or non-existent units, she added. The Union Budget has proposed Dynamic QR-code for consumer invoices. The GST parameters will be captured when payment for purchases is made through the QR-code in GST Invoices. A system of cash reward is envisaged to incentivise customers to seek invoice, the Finance Minister said. Invoice and input tax credit matching is being done wherein returns having a mismatch of more than 10% or above a threshold are identified and pursued.
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The electronic invoice is another innovation wherein critical information shall be captured electronically in a centralized system. It will be implemented in a phased manner starting from this month itself on an optional basis. It will facilitate compliance and return filing, the Finance Minister said.
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To Read the full text of the THE FINANCE BILL, 2020

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Budget 2020 proposes MSMEs Turnover Threshold for Audit Increased to Rs 5 Crore from 1Cr

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In order to reduce the compliance burden on small retailers, traders, shop keepers who comprise the Medium, Small and Micro Enterprise (MSMEs) sector, the Union Budget proposed to raise by five times the turnover threshold for audit from the existing Rs. 1 crore to Rs. 5 crores. While presenting the Union Budget 2020-21 in Parliament today, the Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman said that in order to boost less cash economy, the increased limit shall apply only to those businesses which carry out less than 5% of their business transactions in cash. Currently, businesses having a turnover of more than Rs 1 crore are required to get their books of accounts audited by an accountant.
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In order to give a boost to the start-up ecosystem, the Union Budget has proposed to ease the burden of taxation on the employees by deferring the tax payment on ESOPs by five years or till they leave the company or when they sell their shares, whichever is earlier.
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The Finance Minister said that Start-ups, MSMEs have emerged as engines of growth for the Indian economy. Over the past year, the Government has taken several measures to handhold them and support their growth. During their formative years, Start-ups generally use Employee Stock Option Plan (ESOP) to attract and retain highly talented employees. ESOP is a significant component of compensation for these employees. Currently, ESOPs are taxable as perquisites at the time of exercise. This leads to a cash-flow problem for the employees who do not sell the shares immediately and continue to hold the same for the long-term.
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Further, an eligible Start-up having turnover up to Rs 25 crores is allowed the deduction of 100% of its profits for three consecutive assessment years out of seven years if the total turnover does not exceed Rs 25 crores. In order to extend this benefit to larger start-ups, the Budget 2020 has proposed to extend the turnover limit from the existing Rs 25 crores to Rs 100 crores. Moreover considering the fact that in the initial years, a start-up may not have adequate profit to avail of this deduction, the Budget 2020 proposes to extend the period of eligibility for the claim of deduction from the existing 7 years to 10 years.

Income Tax Slabs Changed, Rates Cut for earnings till Rs 15 Lakh in Optional Scheme

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In a Union Budget 2020 presented today, the Finance Minister Nirmala Sitharaman has announced the new changes in Income Tax Slabs.
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In order to provide significant relief to the individual taxpayers and to simplify the Income-Tax law, the Union Budget proposes to bring a new and simplified personal income tax regime wherein income tax rates will be significantly reduced for the individual taxpayers who forgo certain deductions and exemptions.
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While presenting the Union Budget 2020-21 in Parliament today, the Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman said, “The new tax regime shall be optional for the taxpayers.” She further said that an individual who is currently availing more deductions and exemptions under the Income Tax Act may choose to avail them and continue to pay tax in the old regime. The New personal Income tax regime proposes the following Income Tax Slabs:
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In the new tax regime, the substantial tax benefit will accrue to a taxpayer depending upon exemptions and deductions claimed by him. For example, a person earning Rs 15 lakh in a year and not availing any deductions etc. will pay only Rs, 1,95,000 as compared to Rs, 2,73,000 in the old regime. Thus his tax burden shall be reduced by 78,000 in the new regime. He would still be a gainer in the new regime even if he was taking a deduction of Rs 1.5 lakh under various sections of Chapter VI –A of the Income Tax Act under the old regime. The new tax regime will be optional for the taxpayers.
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As per the Memorandum explaining the provision in the Finance Bill, the option shall be exercised for every previous year where the individual or the HUF has no business income and in other cases, the option once exercised for a previous year shall be valid for that previous year and all subsequent years. The option shall become invalid for a previous year or previous years as the case may be if the individual or HUF fails to satisfy the conditions and other provisions of the Act shall apply.
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The new personal income tax rates will entail estimated revenue forgone of Rs 40,000 crore per year. Smt Sitharaman said, “We have also initiated measures to prefill the income tax return so that an individual who opts for the new regime would need no assistance from an expert to file his return and pay income tax.”
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The Finance Minister said that in order to simplify the income tax system, she has reviewed all the exemptions and deductions incorporated over the past several decades.” In the Budget, around 70 of the existing exemptions and deductions of different nature (more than 100) have been proposed to be removed. Remaining exemptions and deductions will be reviewed and rationalised in the coming years with a view to further simplifying the tax system and lowering the tax rate.

Key Highlights of Budget 2020

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In a two-hours  forty Minutes Budget 2020 speech highlights, the Union Finance Minister Nirmala Seetharaman has made some significant proposals for tax matters.
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Some of the Budget Highlights are below.

1. Income Tax Slab: 10 per cent for 5 to 7.5 lakh, 15 per cent for 7.5 lakh to 10 lakh, 20 per cent for 10 lakh to 12.5 lakh, 25 per cent for 12.5 lakh to 15 lakh and 30 per cent for above 15 Lakh.
2. Dividend Distribution Tax is removed and dividends are taxable.
3. 100% Tax Exemption for Foreign Sovereign wealth Fund Investments in India.
4. Tax on Cooperative societies proposed to be reduced to 22 per cent plus surcharge and cess, as against 30 per cent at present
5. 15% concessional rate of corporate tax extended to Power Sector
6. Exempts co-operative societies from Alternate Minimum tax
7. New proposed tax slabs that will be voluntarily for taxpayers but subject to not claiming any deductions.
8. Tax Audit threshold limit increased Rs. 5 cr from 1cr.
9. Section 50C and 45CA limit extended to 10% from 5%.
10. Income Tax Act to be amended to facilitate e-appeal
11. Section 80G -Donations allowed as a deduction will be pre-filled in ITR forms now onwards.
12. Additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans to March 2021.
13. ‘Vivad se Vishwas’ scheme for direct taxpayers whose appeals are pending at various forums.-
    • No Dispute but Trust Scheme
    • Direct Tax Dispute Resolution
    • payment of all taxes will lead to waiver of penalty and interest
    • applicable for all pending appeals at all levels
14. E-Invoice will be implemented in a phased manner
15. Income Tax Faceless Appeals to be introduced
16. Import duty hiked on inputs used by footwear and furniture MSMEs
17. 60 lakh more taxpayers joined the GST tax base in the last two years.
18. 40 Crores Income Tax Returns has been filed.
19. Proceeds on Taxes from Medical devices will be used in funding hospital development.
20. Tax Holiday to developers of affordable housing extended by 1 year.
21. Govt to set up investment clearance cell to entrepreneurs.
22. Scheme for reversion of duties & taxes on exported products to be launched this year
23. A Taxpayer’s charter will be institutionalized.
24. Changes in Companies Act – Criminal liabilities to be substituted by Civil liabilities.
25. Insurance cover for a depositor will be raised from 1 lakh to 5 lakh per depositor.
26. The robust mechanism in place to monitor the health of banks, depositors’ money is absolutely safe.
27. Turnover limit for exemption for Start Ups now 100 Cr.
28. Strengthen the role of PFRDAI; an amendment to be carried out in Pension Fund in PFRDAI.
29. Faceless Appeals on lines of Faceless Assessments

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1. BUDGET SPEECH
2. FINANCE BILL 2020
3. MEMORANDUM
4. PPT ON BUDGET

CBIC extends due date of filing GSTR-9 and GSTR-9C

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The Central Board of Indirect Taxes and Customs ( CBIC ) has extended the Due Date for furnishing GST Annual Return and Reconciliation Statement (GSTR-9 / 9A and GSTR-9C) for FY 2017-18.
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The CBIC said that, Considering the difficulties being faced by taxpayers in filing GSTR-9 and GSTR-9C for FY 2017-18 it has been decided to extend the due dates in a staggered manner for different groups of States to 3rd, 5th and 7th February 2020 as under.
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Group 1: Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Puducherry, Telangana, Andhra Pradesh, Other Territory – 3rd February 2020
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Group 2: Jammu and Kashmir, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Gujarat- 5th February 2020.
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Group 3: Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Andaman & Nicobar Islands, Jharkhand, Odisha, Chhattisgarh, Dadra and Nagar Haveli and Daman and Diu, Lakshadweep, Madhya Pradesh, Uttar Pradesh- 7th February 2020.
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GSTR-9 is an annual return to be filed yearly by taxpayers registered under GST. It consists of details regarding the outward and inward supplies made/received during the relevant previous year under different tax heads i.e. CGST, SGST & IGST and HSN codes. Basically, it is a consolidation of all the monthly/quarterly returns (GSTR-1, GSTR-2A, GSTR-3B) filed in that year. Though complex, this return helps in extensive reconciliation of data for 100% transparent disclosures.
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The late fees for not filing the GSTR 9 within the due date is Rs 100 per day, per act. That means late fees of Rs 100 under CGST & Rs 100 under SGST will be applicable in case of delay. Thus, the total liability is Rs 200 per day of default. This is subject to a maximum of 0.25% of the taxpayer’s turnover in the relevant state or union territory. However, there is no late fee on IGST yet.

Salaries are not subject to GST, Media Report alleging Tax Authorities want to impose GST on Salaries is Factually Incorrect: CBIC

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The Central Board of Indirect Taxes & Customs (CBIC) today clarified that salaries are not subject to GST and no GST has been demanded on salaries paid to CEOs or employees.
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The CBIC said that the media report in this regard alleging that tax authorities want to impose GST on salaries paid to employees is factually incorrect and misrepresents tax authorities.
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The Board emphasised the GST law position which clearly states under Section 7(2) read with Schedule III of the Central Goods and Services Act, 2017 (CGST Act) that the salaried services by an employee to the employer shall be treated neither as a supply of goods nor as a supply of services. So, salaries as such cannot be subject to GST. CBIC said that in this regard no notice has been issued to any companies demanding GST on salaries whatsoever.
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The CBIC further clarified that it has already been made amply clear vide its press release dated 10′ July, 2017 that the services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST (neither supply of goods nor supply of services).
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The CBIC also said that the GST charged on the prices/charges by any supplier of goods or services from his consumers does comprise all costs including the cost of raw material, capital goods, input services and employee costs, etc. But this does not mean that salaries paid to the employees by the employer are being taxed under GST.
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It must also be made clear that offices of an organisation in different States are regarded as distinct persons under Section 25 of CGST Act. Hence, what is taxable under GST is the supply of goods and services by the head office to its branch office/s and vice versa. Any tax charged on such supplies is available to the recipient as an input tax credit. This is not any additional cost to the organisation. Also, it is a worldwide practice under GST laws.

CBDT extends due date for filing of Income Tax Returns / Tax Audit Reports in Union Territory of Jammu and Kashmir and Ladakh

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The Central Board of Direct Taxes ( CBDT ) has extended due date for filing of Income Tax Returns / Tax Audit Reports to 30th November, 2019 in respect of Union Territory of Jammu and Kashmir and Union Territory of Ladakh.
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The Notification issued by CBDT said that, “On consideration of reports of disturbances in internet facility in certain areas of Jammu and Kashmir, the Central Board of Direct Taxes (CBDT) has extended the ‘due date’ for filing Income Tax Returns / Tax Audit Reports to 30th November, 2019 in respect of all categories of Income Tax Assessees in the Union Territory of Jammu and Kashmir and Union Territory of Ladakh who were/are required to file the Income Tax Returns / Tax Audit Reports by the due date specified under Section 139 (1) of the Act read with order of CBDT under Section 119 of the Act.”
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The CBDT also clarified that, “ITRs filed by the certain categories of Income Tax assesses who were required to file ITRs by 31.08.2019, but have filed ITRs after 31.08.2019 till the date of issuance of this order shall be deemed to have been filed within the due date specified under Section 139 (1) of the Act read with CBDT’s order”.
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To Read the full text of the Order
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CA Students protest against ICAI’s Evaluation Methods: ICAI issues Clarification on Exam Evaluation

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The Institute of Chartered Accountants of India (ICAI) has made an announcement with respect to Evaluation of answer books of CA exams on September 21, 2019. Thereafter, a webinar was conducted on September 22, 2019, wherein the procedure and processes followed in the examination system were explained and all the misgivings about the examination process were cleared.
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1. Digital evaluation: As communicated in January 2019 Chartered Accountant Student newsletter, continuing further from the pilot e evaluation for the first group of Intermediate Nov 2018 exams; all papers of Intermediate and Foundation level exams in November 2019/May 2020 will be put through the digital evaluation mode bringing in following benefits

• Doing away with stages of physical handling of answer books
• Avoiding variations in marks awarded by examiners.
• Eliminating scope of any totalling errors
• Continuous review of performance of the Examiners on real time basis;
• Generation of analytical reports enabling quality control checks;
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2. Central evaluation:Further the Central Evaluation is being carried out in several papers of CA exams, w.e.f November 2018 wherein examiners evaluate answer books under the supervision of Head Examiner/Associate Head Examiners.
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3. Machine-based evaluation: Effective May, 2019 exams, objective type questions for 30 marks have been introduced in select papers of Intermediate and Final Exams. Further, the Institute has decided to introduce OMR based evaluation for MCQ’s of Elective Papers 6A to 6F of final New course with effect from November 2019 which are machine processed thus avoiding subjectivity.
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4.Stepwise marking: Provision regarding stepwise marking is being enforced whereby in case the stepwise marks are not awarded; it will be deemed as the unevaluated answer and stepwise marks will be awarded during the course of re-verification of marks
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5.Mandatory on-line test for empanelment of examiners: All applicants shortlisted for empanelment as examiners are required to qualify an on-line test in the subject of their choice before inclusion of their names in the Panel of Examiners. It has further been decided that all existing examiners would also be required to undergo an online test in their respective subjects, once in 3 years.
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Currently, the Regulation 39(4) dealing with the subject matter provides as under:-
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(4)        (i)  Information as to whether a candidate’s answers in any particular paper or papers of any examination have been examined and marked shall be supplied to the candidate on his submitting within a month of the declaration of the result of the said examination, an application, accompanied by a fee as may be fixed by the Council which shall not exceed rupees five hundred in any case.]
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(ii)  The fee shall be only for verifying whether the candidate’s answers in any particular paper or papers have been examined and marked, and not for the re-examination of the answers.
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(iii) The marks obtained by a candidate in individual questions or in sections of a paper shall not be supplied.
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(iv) If as a result of such verification, it is discovered that there has been either an omission to examine or mark any answer or answers or there has been a mistake in the totalling of the marks, the fee for verification shall be refunded in full to the candidate.
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The above Chartered Accountants Regulations allow correction of marks awarded in case of :

• No marks awarded to any answer or part of it.
• Totalling errors in step-wise marks awarded for an answer
• Wrong carry forward or it’s part of marks awarded to answer on the cover page of the answer books. Beyond this, the Regulation does permit any subjectivity in checking of answer books.

The representatives were explained about the afore-stated provisions of Chartered Accountants Regulations 39(4) of the Chartered Accountants Regulations, 1988.
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However, they were insistent on the demand for allowing re-evaluation of the answer books.  They were informed that due process will be followed for consideration of their demand. They were also requested to call off the agitation and students be advised to concentrate on their studies and preparation for the forthcoming examination. In spite of the same; the representatives mentioned that they would continue with this agitation till the time the matter is sorted out.
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All the students are advised not to be carried away by such issues. The Institute is seized of their problems and will be considered and taken up at the appropriate forum by following due process.

GST Council Recommends reduced GST Rate on Services

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The GST Council in the 37th meeting held on 20th September, 2019 at Goa took following decisions relating to changes in GST rates, ITC eligibility criteria, exemptions and clarifications on connected issues.

• (A) EXEMPTIONS / CHANGES IN GST RATES / ITC ELIGIBILITY CRITERIA:

Rate reduction sector wise:
Hospitality and tourism:

• To reduce the rate of GST on hotel accommodation service as below: -

Transaction Value per Unit (Rs) per day	GST
Rs 1000 and less	Nil
Rs 1001 to Rs 7500	12%
Rs 7501 and more	18%

• To reduce rate of GST on outdoor catering services other than in premises having daily tariff of unit of accommodation of Rs 7501 from present 18% with ITC to 5% without ITC. The rate shall be mandatory for all kinds of catering. Catering in premises with daily tariff of unit of accommodation is Rs 7501 and above shall remain at 18% with ITC.

Job work service:

• To reduce rate of GST from 5% to 1.5% on supply of job work services in relation to diamonds.
  
• To reduce rate of GST from 18%to 12% on supply of machine job work such as in engineering industry, except supply of job work in relation to bus body building which would remain at 18%.

Exemption sector wise: Warehousing:

• To exempt prospectivelyservices by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea.
  

Transportation:

• To increase the validity of conditional exemption of GST on export freight by air or sea by another year, i.e. till 30.09.2020.

Insurance:

• To exempt “BANGLA SHASYA BIMA” (BSB) crop insurance scheme of West Bengal Government.
• To exempt services of life insurance business provided or agreed to be provided by the Central Armed Paramilitary Forces (under Ministry of Home Affairs) Group Insurance Funds to their members under the respective Group Insurance Schemes of these Central Armed Paramilitary forces.
  

Export promotion:

• To exempt services provided by an intermediary to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory.
  
• To issue a notification under Section 13(13) of IGST Act notifying the place of supply of specified R&Dservices (such as Integrated discovery and development, Evaluation of the efficacy of new chemical/ biological entities in animal models of disease,Evaluation of biological activity of novel chemical/ biological entities in in-vitro assays,Drug metabolism and pharmacokinetics of new chemical entities,Safety Assessment/ Toxicology,Stability Studies,Bio Equivalence and Bio Availability Studies, Clinical trials,Bio analytical studies) provided by Indian pharma companies to foreign service recipients, as the place of effective use and enjoyment of a service i.e. location of the service recipient.
  
• To clarify that the place of supply of chip design software R&Dservices provided by Indian companies to foreign clients by using sample test kits in India is the location of the service recipient and section 13(3)(a) of IGST Act, 2017 is not applicable for determining the place of supply in such cases.

Miscellaneous

• To allow the registered authors an option to pay GST on royalty charged from publishers under forward charge and observe regular GST compliance.
  
• To notify grant of liquor licence by State Governments against payment of license fee as a “no supply” to remove implementational ambiguity on the subject.
  
• To exempt services related to FIFA Under-17 Women's World Cup 2020 similar to existing exemption given to FIFA U17 World Cup 2017.
  
  
   
  • (B) RATIONALIZATION/ TRADE FACILITATION MEASURES:
    
•  To allow payment of GSTon securities lending service under reverse charge mechanism (RCM) at the merit rate of 18% and to clarify that GST on securities lending service for period prior to RCM period shall be paid on forward charge basis. IGST shall be payable on supply of these services and in cases where CGST/SGST/UTGST have been paid, such taxpayers will not be required to pay tax again.
  
• To allow RCM to suppliers paying GST @ 5% on renting of vehicles, from registered person other than body corporate (LLP, proprietorship) when services provided to body corporate entities.
  
  
  • (C) CLARIFICATIONS:
    
•  To clarify the scope of the entry ‘services of exploration, mining or drilling of petroleum crude or natural gas or both”.
  
• To clarify taxability of Passenger Service Fee (PSF) and User Development Fee (UDF) levied by airport operators.

Note: It is proposed to issue notifications giving effect to these recommendations of the Council on 1^st October, 2019.

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37th GST Council Meeting: Major Recommendations

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The 37th GST Council met in Goa today under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Chief Minister of Goa Shri Pramod Sawant, Finance Ministers of States & UTs and seniors officers of the Ministry of Finance.
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The GST Council, in its meeting, recommended the following Law & Procedure related changes :

1. Relaxation in filing of annual returns for MSMEs for FY 2017-18 and FY 2018-19 as under:
   • waiver of the requirement of filing FORM GSTR-9A for Composition Taxpayers for the said tax periods; and
   • filing of FORM GSTR-9 for those taxpayers who (are required to file the said return but) have aggregate turnover up to Rs. 2 crores made optional for the said tax periods.

2. A Committee of Officers to be constituted to examine the simplification of Forms for Annual Return and reconciliation statement.
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3. Extension of last date for filing of appeals against orders of Appellate Authority before the GST Appellate Tribunal as the Appellate Tribunals are yet not functional.
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4. In order to nudge taxpayers to timely file their statement of outward supplies, imposition of restrictions on availment of input tax credit by the recipients in cases where details of outward supplies are not furnished by the suppliers in the statement under section 37 of the CGST Act, 2017.
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5. New return system now to be introduced from April, 2020 (earlier proposed from October, 2019), in order to give ample opportunity to taxpayers as well as the system to adapt and accordingly specifying the due date for furnishing of return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 for the period October, 2019 - March, 2020.
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6. Issuance of circulars for uniformity in application of law across all jurisdictions:
   -procedure to claim refund in FORM GST RFD-01A subsequent to favourable order in appeal or any other forum;
   -eligibility to file a refund application in FORM GST RFD-01A for a period and category under which a NIL refund application has already been filed; and
   -clarification regarding  supply  of  Information Technology  enabled  Services  (ITeS services) (in supersession of Circular No. 107/26/2019-GST dated 18.07.2019) being made on own account or as intermediary.
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7. Rescinding of Circular No.105/24/2019-GST dated 28.06.2019, ab-initio, which was issued in respect of post-sales discount.
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8. Suitable amendments in CGST Act, UTGST Act, and the corresponding SGST Acts in view of creation of UTs of Jammu & Kashmir and Ladakh.
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9. Integrated refund system with disbursal by single authority to be introduced from 24^th September, 2019.
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10. In principle decision to link Aadhar with registration of taxpayers under GST and examine the possibility of making Aadhar mandatory for claiming refunds.
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11. In order to tackle the menace of fake invoices and fraudulent refunds, in principle decision to prescribe reasonable restrictions on passing of credit by risky taxpayers including risky new taxpayers.
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GST Rate on Goods as Recommended by The GST Council in Its 37th Meeting

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The 37th GST Council met in Goa today under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Chief Minister of Goa Shri Pramod Sawant, Finance Ministers of States & UTs and seniors officers of the Ministry of Finance.
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The council took the following decisions in respect to rates relating to goods.

• GST rates reduction, –
  -18% to 12% on parts of Slide Fasteners
  -18% to 5% on Marine Fuel 0.5% (FO)
  -12% to 5% on Wet Grinders(consisting stone as a grinder)
  -5% to Nil on:-
  -Dried tamarind
  -Plates and cups made up of leaves/ flowers/bark
  -3% to 0.25% on cut and polished semi- precious stones
  -Applicable rate to 5% on specified goods for petroleum operations undertaken under Hydrocarbon Exploration Licensing Policy (HELP)
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• Exemptions from GST/IGST on:-
  -imports of specified defence goods not being manufactured indigenously (upto 2024)
  -supply of goods and services to FIFA and other specified persons for organizing the Under-17 Women’s Football World Cup in India.
  -supply of goods and services to the Food and Agriculture Organisation (FAO) for specified projects in India.
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• GST rates have been recommended to be increased from, –
  -5% to 12% on goods, falling under chapter 86 of tariff like railway wagons, coaches, rolling stock (without refund of accumulated ITC). This is to address the concern of -ITC accumulation with suppliers of these goods.
  -18% to 28% +12% compensation cess on caffeinated Beverages
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• Measures for Export Promotion
  -Exemption from GST/IGST:-
  -at the time of import on Silver/Platinum by specified nominated agencies
  -supply of Silver/Platinum by specified nominated agency to exporters for exports of Jewellery,
  -Inclusion of Diamond India Limited (DIL) in the list of nominated agencies eligible for IGST exemption on imports of Gold/ Silver/Platinum so as to supply at Nil GST to Jewellery exporters.
  -A uniform GST rate of 12% on Polypropylene/Polyethylene Woven and Non- Woven Bags and sacks, whether or not laminated, of a kind used for packing of goods (from present rates of 5%/12%/18%)
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• GST concession in certain cases for specific period: –
  -Exemption to Fishmeal for the period 01.07.17 to 30.09.19. There were doubts as regards taxability offishmeal in view of the interpretational issues. However, any tax collected for this period shall be required to be deposited.
  -12% GST duringthe period 1.07.2017 to 31.12.2018, on pulley, wheels and other parts (falling under Heading 8483) and used as parts of agricultural machinery.
  -Passenger vehicles of engine capacity 1500 cc in case of diesel, 1200 cc in case of petrol and length not exceeding 4000mm designed for carrying upto 9 persons attract compensation cess of 1% for petrol and 3% for a diesel vehicle. Council recommended same compensation cess rate for vehicles having these specifications (length and engine capacity) but designed for carrying more than 10 persons but up to 13 persons. (Presently these vehicles attract compensation cess at the rate of 15%)
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• Other miscellaneous Changes:
  -Aerated drink manufacturers shall be excluded from the composition scheme.
  -Option to pay GST at the rate of 18% on transaction value at the time of disposal of specified goods for petroleum operations (on which concessional GST rate of 5% was paid at the time of original supply) provided that the goods are certified by Director General Hydrocarbon(DGH) as non-serviceable.
  -Restriction on refund of compensation cess on tobacco products (in case of inverted duty structure)
  -Prescribing modalities for allowing concessions on spare parts imported temporarily by foreign airlines for the repair of their aircraft, while in India in transit in terms of the Chicago Convention on Civil Aviation.
  -Certain other changes of technical nature for the sake of clarity in the application of notification.
  -Clarifications as regards applicability of GST rate in respect of certain goods recommended by GST Council which inter-alia includes:
  -Mere heating ofleguminous vegetables (gram/lentil) for removing moisture, or to soften and puff it or removing the skin, and not subjecting to any other processing or addition of any other ingredients (salt, oil etc.) would be classified under HS code 0713.
  -All “mechanical sprayers” falling under HS Code 8424 would attract 12% GST.
  -Parts like Solar Evacuation tubes for solar power based devices like solar water heater, solar steam, generation systems, would be eligible to 5% GST rate.
  -Exclusive parts and accessories suitable for use solely or principally with a medical device (falling under headings 9018, 9019, 9021 or 9022) would fall in respective headings and attract GST at the concessional rate of 12%.
  -Almond milk is classifiable under HS code 22029990 and attracts GST rate of 18%.
  -Imported stores for Navy would be entitled to exemption from IGST

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The rate changes shall be made effective with effect from 1st October, 2019.

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Income Tax Return filing Date Extended

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The Central Board of Direct Taxes (CBDT) has extended the due date for filing income tax returns to 31st August 2018 from this July 31st.
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As the due date has been coming closer, the Board had received several requests from the tax practitioners body and the Institute of Chartered Accountants of India (ICAI) requesting a due date extension due to several reasons.
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As per reports, over 1.46 crore income tax returns have been filed so far, of which 90.8 lakh have been filed by individuals with total income up to Rs 50 lakh.
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As per data released by the department, a total of over 7.94 lakh tax returns were alone filed on July 16, of which over 5.26 lakh was ITR-1 or Sahaj.
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Since there are penal consequences in delay in filing tax returns, the income tax department is under pressure to grant some more time to the taxpayers. Recently, the format of tax returns as well as in the tax deducted at source (TDS) certificates issued by employers and the TDS returns to be filed by employers had been changed recently.
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The tax department usually allows an extension for a few days if the public faces any difficulty in meeting the deadline and a longer extension for assessees in states in case there are exceptional events like a natural calamity.
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To Read the full text of the Order DOWNLOAD Here
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Union Budget proposes 25 % Corporate Tax extended to Companies with Annual Turnover up to Rs. 400 crore

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The Union Budget 2019-20 has proposed to extend the lower rate of 25 % Corporate Tax to all companies with annual turnover up to Rs. 400 crore.  Currently, this rate is only applicable to companies having annual turnover up to Rs. 250 crore. Presenting the General Budget 2019-20 in the Parliament today, the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman said, “This will cover 99.3 percent of the companies. Now only 0.7 percent of companies will remain outside this rate”.
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The Budget also proposes Simplification and Ease of Living. Noting that India’s Ease of Doing Business ranking under the category of ‘paying taxes’ showed a significant jump from 172 in 2017 to 121 in the 2019, the Finance Minister said above measures will leverage technology to make compliance easier for the taxpayers.
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The Budget also proposes to simplify the tax law to reduce genuine hardships to taxpayers which include enhancing threshold of tax for launching prosecution for non-filing of returns from Rs. 3,000 to Rs. 10,000, for proceeding against a person and exempting appropriate class of persons from the anti-abuse provisions of section 50CA and section 56 of the Income Tax Act.

Budget 2019: Important GST and Indirect Tax Amendments

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Further simplification of the GST processes, increasing Special Additional Excise duty and Road and Infrastructure Cess on petrol and diesel by one rupee each, hike in Customs Duty on Gold and precious metals to 12.5% and imposing nominal basic excise duty on tobacco products and crude are among the salient proposals pertaining to the Indirect Taxes in the Union Budget 2019-20. It also provides for exempting import of certain Defence Equipments from basic customs duty, reducing customs duty on certain raw materials and capital goods, and rationalization of export duty on raw and semi-finished leather.
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GST
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Presenting the Budget in Parliament today, the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman announced that GST processes are being further simplified.  The threshold exemption limit for a supplier of goods is proposed to be enhanced from Rs. 20 lakhs to an amount exceeding Rs. 40 lakhs.
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“Tax payers having annual turnover of less than Rs. 5 Crore shall file quarterly return. Free accounting software for Return preparation has been made available to small businesses. A fully automated GST refund module shall be implemented. Multiple tax ledgers for a tax payer shall be replaced by one”, she said.
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The Budget proposes to move to an electronic invoice system wherein invoice details will be captured in a central system at the time of issuance. “This will eventually be used to prefill the taxpayers’ returns. There will be no need for a separate e-way bill. To be rolled out from January 2020, the electronic invoice system will significantly reduce the compliance burden”, said Smt. Sitharaman.
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The Finance Minister said that the landscape of Indirect Tax has changed significantly with the implementation of GST. Terming it as a “monumental reform”, Smt. Sitharaman said the GST regime has brought together the Centre and the States with the result 17 taxes and 13 cesses became one and multitude of rates instantly became four. “Almost all commodities saw rate reduction. Tens of returns were replaced by one. Taxpayers’ interface with tax departments got reduced. Border checks got eliminated. Goods started moving freely across states, which saved time and energy. The dream of ‘One Nation, One Tax, One Market’ was realized,” she said.
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Complimenting the GST Council, the Finance Minister said the Council, Centre and States proactively worked to resolve the teething problems witnessed during the initial phase of GST. Smt. Sitharaman said that GST rates have been reduced significantly where relief of about Rs. 92,000 crores per year has been given.
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Sabka Vishwas Legacy Dispute Resolution Scheme
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On the issue of huge pending litigations from pre-GST regime, the Minister said that there is a need to unload the baggage and allow business to move on, as more than Rs. 3.75 Lakh Crore is blocked in litigations in Service Tax and Excise. The budget proposes a dispute resolution-cum-amnesty scheme, called “the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019” that will allow quick closure of these litigations. The relief under the scheme varies from 40 percent to 70 percent of the tax dues for cases other than voluntary disclosure cases, depending on the amount of tax dues involved. The scheme also provides relief from payment of interest and penalty. The person discharged under the scheme shall also not be liable for prosecution.
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Customs duty
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On the Customs duty, the Finance Minister said the proposals are driven with the objectives of securing the country’s borders, achieving higher domestic value addition through Make in India, reducing import dependence, protection to MSME sector, promoting clean energy, curbing non-essential imports, and correcting inversions. Describing Defence Modernization and Upgradation as a national priority and of immediate requirement, the budget proposes exemption from the basic Customs duty on import of such defence equipment that are not being manufactured in India.
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Make in India
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Describing Make in India as a cherished goal, the Finance Minister proposed increase in basic Custom duty on certain items so as to provide domestic industry a level playing field. These items include PVC, cashew kernels, Vinyl flooring, tiles, metal fittings, mountings for furniture, auto parts, certain kinds of synthetic rubbers, marble slabs, optical fibre cable, CCTV camera, IP camera, digital and network video recorders. She also proposed to withdraw exemption from custom duty on certain electronic items which are now being manufactured in India. To encourage domestic publishing and printing industry, 5% custom duty will be imposed on imported books.
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To further promote domestic manufacturing, the budget proposes customs duty reductions on certain raw materials and capital goods. These include certain inputs of CRGO sheets, amorphous alloy ribbon, ethylene di-chloride, propylene oxide, cobalt matte, naphtha, wool fibres, inputs for manufacture of artificial kidney and disposable sterilised dialyser, and fuels for nuclear power plants. The Finance Minister announced exemption on certain parts of electric vehicles to further incentivize e-mobility.
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Duty & Cess on Petrol & Diesel
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The Budget proposes to increase Special Additional Excise duty and Road and Infrastructure cess each by one rupee a litre on petrol and diesel.  “Crude prices have softened from their highs. This gives me a room to review excise duty and cess on petrol,” the Finance Minister said.
Smt. Sitharaman also announced increase in custom duty on gold and other precious metals from 10% to 12.5%.
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The Budget also proposes rationalization of export duty on raw and semi-finished leather to provide relief to the sector.
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Duty on Tobacco products & Crude
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Smt. Sitharaman said that tobacco products and crude attract National Calamity and Contingent duty which in certain cases is being contested on the ground that there is no basic excise duty on these items. To address this issue, the Budget proposes to impose a nominal basic excise duty on tobacco products and crude.
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The Finance Minister proposed a few amendments to the Customs Act. She said, “Recent trends reveal that certain bogus entities are resorting to unfair practices to avail undue concessions and export incentives.”  She announced that misuse of duty free scrips and drawback facility involving more than 50 Lakh rupees will be a cognizable and non-bailable offence.

Union Budget 2019- Live Blog

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Direct tax collection increased by 78%; Tax collection rose from 6.38 lakh crore rupees in 2013-14 to 11.37 lakh crore rupees in 2018 #BudgetScan #Budget2019
12:56 PM - Jul 5, 2019
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#Budget2019 #BudgetScan: Total Deduction of 3.5 lakhs on Loan for Affordable Houses

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12:51 PM - 5 Jul 2019

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#Budget2019 #BudgetScan: deduction for Purchase of Affordable Houses

12:48 PM - 5 Jul 2019

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#BudgetScan #Budget2019: Government has already moved GST council to lower the GST rate on electric vehicles(EV) from 12% to 5%.

12:47 PM - 5 Jul 2019

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#BudgetScan #Budget2019; Proposes ease of Angel Tax for Startups

 12:47 PM - 5 Jul 2019

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#Budget2019 #BudgetScan: 2.5 Lakhs Deduction from Income Tax for Interest on Loans taken for purachse of EVs

12:44 PM - 5 Jul 2019

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#Budget2019 #BudgetScan: Additional income Tax deduction on Interest taken for purchase of Electronic Vehicles

12:43 PM - 5 Jul 2019

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#Budget2019 #BudgetScan: Lower Rate of 25% to all companies having Turnover of 400 Crores

12:41 PM - 5 Jul 2019

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#Budget2019 #BudgetScan: 78% increase in Direct Tax Revenue.

12:39 PM - 5 Jul 2019

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#Budget2019 #BudgetScan: FM Thanks Taxpayers

12:36 PM - 5 Jul 2019

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#Budget2019 #BudgetScan: RBI to Regulate Housing Finance Companies

12:28 PM - 5 Jul 2019

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#BudgetScan #Budget2019: 4 lakh Crore recovered through IBC

12:22 PM - 5 Jul 2019

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#Budget2019 #BudgetScan: Govt. proposes to start a TV channel exclusively for startups. Funding and Tax planning, venture capital etc would be the focus of the channel.

12:19 PM - 5 Jul 2019

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#budgetScan #Budget2019: Aadhaar Cards to be issued for NRIs

12:17 PM - 5 Jul 2019

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#Budget2019 #BudgetScan: To provide Non-resident Indians (NRIs) seamless access to Indian equities, NRI portfolio investment route to be merged with foreign portfolio investment route

12:01 PM - 5 Jul 2019

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#BudgetScan #Budget2019: Government is working with the states in removing the barriers on the way of Uday scheme.

11:59 AM - 5 Jul 2019

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#Budget2019 #BudgetScan: Propose waste management plan for every village: FM

11:57 AM - 5 Jul 2019

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#Budget2019 #BudgetScan: FM emphasis on Zero budget farming model to double farmers income

 11:51 AM - 5 Jul 2019

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#Budget2019 #BudgetScan: Annual Global Investors' Meet to be organized in India, using National Investment and Infrastructure Fund(NIIF) as the anchor to get key sets of global players to come and invest in India

 11:47 AM - 5 Jul 2019

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#BudgetScan #Budget2019: Ease of Doing Business to be extended to Farmers also

11:45 AM - 5 Jul 2019

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#Budget2019 #BudgetScan: It's right time to consider increasing minimum public shareholding in the listed companies, I have asked SEBI to consider raising the current threshold of 25% to 35%: FM

11:42 AM - 5 Jul 2019

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#BudgetScan #Budget2019: User friendliness of trading platforms for corporate bonds will be reviewed, including issues arising out of capping of International Securities Identification Number

11:39 AM - 5 Jul 2019

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#Budget2019 #BudgetScan: Finance Minister Sitharaman proposes raising minimum public holding to 35%.

11:34 AM - 5 Jul 2019

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#BudgetScan #Budget2019: Pension Benefits for Retail Traders

11:31 AM - 5 Jul 2019

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#BudgetScan #Budget2019: to invite FDI in Aviation and Media

11:31 AM - 5 Jul 2019

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#BudgetScan #Budget2019: 100% Foreign Investment in Insurance Intermediaries

11:30 AM - 5 Jul 2019

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#BudgetScan #Budget2019: Existing KYC forms for FPIs to be rationalized

 11:29 AM - 5 Jul 2019

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#BudgetScan #Budget2019: Govt to extend Pension benefits for Traders

 11:28 AM - Jul 5, 2019

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#BudgetScan #Budget2019: Social Stock exchange to be introduced under SEBI

11:27 AM - Jul 5, 2019

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#BudgetScan #Budget2019: Threshold of Public Investment in Private Listed Companies to be raised to 35% from current 25%.

 11:27 AM - Jul 5, 2019

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#BudgetScan #Budget2019: Model Tenancy Laws to be shared with States

 11:25 AM - Jul 5, 2019

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#BudgetScan #Budget2019: 300 crore Loan granted to GST registered MSMEs in 2019

11:24 AM - Jul 5, 2019

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#BudgetScan #Budget2019: GST registered MSMEs got Loans in 59 Minutes through Portal

11:23 AM - Jul 5, 2019

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#BudgetScan #Budget2019: 50 Lakh Crore Investment in railways till 2030

11:22 AM - Jul 5, 2019

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#Budget2019 #BudgetScan: The Indian economy will grow to become a $3 trillion economy in the current year itself. It is now the sixth largest in the world. 5 years ago it was at the 11th position. 

11:18 AM - Jul 5, 2019

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#BudgetScan #Budget2019: Electronic Vehicles to be incentivised, says FM

11:17 AM - Jul 5, 2019

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#BudgetScan #Budget2019: More focus on Air and Water Travels

11:13 AM - Jul 5, 2019

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#BudgetScan #Budget2019: Mudra Loans changed the Lives of Common Man, says FM

11:10 AM - Jul 5, 2019

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#BudgetScan #Budget2019: More investment needed in Infrastructure, Digital economy etc: FM

11:09 AM - Jul 5, 2019

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#BudgetScan #Budget2019: Reforms to be made in Indirect taxation, Bankruptcy Law: FM

11:08 AM - Jul 5, 2019

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#BudgetScan #Budget2019: Indian Economy is 6th Largest in World

11:08 AM - Jul 5, 2019

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#BudgetScan #Budget2019: To encourage MSMEs, Startups, says FM

11:07 AM - Jul 5, 2019

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#BudgetScan #Budget2019: To encourage MSMEs, Startups, says FM

11:07 AM - Jul 5, 2019

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#BudgetScan #Budget2019: Govet's Goal is to cut Red Tapes, Ease Business, says FM

11:06 AM - Jul 5, 2019 

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#Budget2019 #BudgetScan: FM #NirmalaSitharaman presents her first maiden #budget.

11:02 AM - Jul 5, 2019 

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Union cabinet approves #Budget2019 . #BudgetScan

10:58 AM - Jul 5, 2019

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#BudgetScan : Finance Minister Nirmala Sitharaman and MoS Finance Anurag Thakur arrive at the Parliament. #Budget2019 @nsitharaman @ianuragthakur

10:28 AM - Jul 5, 2019

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Copies of #Budget2019 have been brought to the Parliament. Finance Minister Nirmala Sitharaman will present the Budget in Lok Sabha at 11 AM today.#BudgetScan

10:30 AM - Jul 5, 2019 

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Union Cabinet meeting begins in Parliament. #Budget2019 #BudgetScan

10:49 AM - Jul 5, 2019

COMMON MAN’S EXPECTATIONS FROM THE FINANCE MINISTER

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The budget will be presented on 5th July by the first full time woman finance minister. Below are some of the expectation of common tax payers from her.

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Changes in the tax rates 

The finance minister should retain the initial income tax slab of 5% for income between 2.50 lakhs to 5 lakhs. However as the next tax slab for income between Rs. 5 lakhs to 10 lakhs which is very steep 20% after the initial slab of 5%, I request the finance minister to reduce this  present tax slab of 20% to 10% to make it progressive and smooth.  The finance minister should shift the tax slab of 20% to the tax payers with income between 10 lakhs to 25 lakhs. Since for 99% of the companies, the tax rate is 25%, the government should reduce the maximum marginal rate from present 30% to 25% and tax the income beyond 25 lakhs @ 25%.

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As per the Laffer’s  Curve  higher the rate of tax a government levies, lower is the aggregate tax collection. The slab rates suggested above will in help the government generate more revenue the long run as people are willing to pay tax levied at such nominal rates as long as it does not affect their standard of living.

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Marginal relief for individual tax payer with slightly higher income over 5 lakhs

Individual tax payers who are resident of India are entitled to claim a rebate of upto Rs. 12,500/- provided their total taxable income does not exceed the threshold limit of Rs. 5 lakhs. However once the income crosses the magic number of 5 lakhs, their tax liability suddenly increases by 12,500/- even if their incremental income over Rs. 5 lakhs is less than 12,500/- Such people are worse off just because their income is slightly higher than 5 lakhs.

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Presently all the tax payers who have to pay a surcharge if their income exceeds Rs. 50 lakhs have the benefit of marginal relief as provided in the respective Finance Act though the same is not part of the Income Tax Act. As per the marginal relief provisions as contained in Finance Acts, the incremental tax liability, due to levy of surcharge, in no circumstances shall exceed the incremental income over the threshold limit of surcharge of Rs. 50 lakhs.

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Presently, there is no such provision for providing marginal relief to the tax payers whose income exceeds Rs. 5 lakhs by just few hundreds. This provision of marginal relief if introduce in the Section 87A will check the tendency of taxpayers to manipulate their income level in case it just happens to be marginally higher than the threshold limit of 5 lakhs to avoid payment of such higher tax than the incremental income.

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Relief to the home buyers

As per the tax laws any person who has taken a home loan for acquiring a house for self occupation is allowed to claim interest only upto Rs. 2 lakhs irrespective of the amount of interest paid. Any excess interest paid is not eligible for any tax benefits. Presently a person is allowed to have two self owned properties as self occupied but the interest claimis restricted to Rs. 2 lakhs for both the properties taken together which is not correct. A person should be allowed to claim proportionately higher interest in case he has more than one self occupied house property. However if the property is let out, you can claim full interest subject, however, to restrictions on your eligibility to claim set off of loss under this head which is restricted to Rs. 2 lakhs against other incomes. In my opinion the provisions should be the other way round. The person who buys the house for his own occupation should be allowed to claim full deduction of interest and the person who tries to play tax arbitrage by taking a home loan should be allowed limit amount of interest to discourage such abuse of the tax laws.

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Presently a tax payer is allowed to set off only upto Rs. 2 lakhs any loss computed under the head “Income from House Property” arising due to claim of interest on home loan or money borrowed for the purpose of purchase/construction/repair/renovation of  a house. In my opinion this limit of just insufficient looking at the amount of interest to be paid on home loan taken to buy properties specially in urban area. This limit should at least be raised to Rs. 5 lakhs.

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Since. only loss upto 2 lakhs is allowed to be set off against income of the current year, any loss beyond Rs. 2 lakhs under the house property head for the year is required to be carried forward for set off against income under the same head for eight subsequent years. Since home  loan is a long term product and the probability of a home buyer with home loan having a positive income under the head is negligible for these eight subsequent year unless he prepays the home loan,  I would suggest that the Finance Minister should rationalise this carry forward provision and make it eligible for carry forward for unlimited period so as to grant the intended benefit.

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Hope some of the suggestions are accepted by the finance minister.