Aatmnirbhar Bharat Abhiyan 3.0

New Incentives for Businesses covered in PF to boost Employment

If an establishment has less than 1000 employees, 24% PF (12% Employees share and 12% Employers share) shall be paid by the Government for their *new employees* employed on or after 01.10.2020.

This benefit shall be for a period of two years from the date of employment

If employees are more than 1000, then only 12% Employees share shall be paid by the Government. Employer continues to pay their 12% share

Conditions:

• Scheme is for employees with monthly wages less than Rs.15,000/-

• If establishment has less than 50 employees, minimum 2 new employees be added

• If you have more than 50 employees, you should employ minimum 5 or more new

• New means, First time PF Registration, on or after 01.10.2020

• Also, if any old employee lost or left job between 01.03.2020 to 30.09.2020, then on re-employment after 1.10.20 he shall get the benefit

• Businesses which are not yet covered in PF but do so now shall get the benefit for ALL their employees

• Scheme open till 30.06.2021

• This is huge incentive by the Government to encourage businesses to add new employees and also to establishments not yet registered with EPFO to do so

• Example, if an employee is at 14,999/- then Rs.1800/- (12% employee share) and Rs.1800/- (12% employer share), total Rs.3600/- per month shall be paid by the Government for 2 years

• Total of 3600X24= Rs.86,400

• Both Employer and Employee get benefit of upto Rs.43,200/- each year in 2 years

• It means PF shall not be deducted from new eligible employees

• Ironically, it means that New eligible employees get Rs.1800/- per month more than existing old employees presently drawing less than Rs.15,000/- wages per month, for 2 years

• It also means that Employees who left on or after 01.03.2020 and rejoin after 01.10.2020 shall get this incentive of upto Rs.1800/- pm but if any loyal employee stayed back and continued to work or joined before 01.10.2020 shall not be eligible for this benefit.

•  Nonetheless It is a grand incentive for new businesses that employ 20 or more employees on or before 30th June 2021

• It’s also a grand incentive for existing businesses not yet covered in PF (employees less than 20) or those who have avoided or evaded PF registration. Till now enforcement department of PF would not only recover old PF dues, they would also recover interest and penalty. But now, there’s this huge incentive for such units to get voluntarily covered in PF.

*Example:*

Suppose one is able to adds 20 employees, it will mean benefit of upto Rs.43,200 X 20 X 2= Rs.17,28,000/- in 2 years

And for new employees that one adds till 30.06.2021, each employee shall get additional benefit of Rs.43,200/- per year.

SUMMARY OF GST NOTIFICATIONS ISSUED ON 15.10.2020

1.Notification no 74, 75 and 76 

Due dates of filing of GSTR-1 and GSTR-3B for the period October, 2020 to March,2021 have been notified vide Notification No. 74/2020 – Central Tax , Notification No. 75/2020 – Central Tax and Notification No. 76/2020 – Central Tax, all dated 15-10-2020.

GSTR 1 

For quarterly tax payers 

From Oct 20 to Dec 20- 13th Jan 2021

From Jan 21 to Mar 21- 13th April 2021

For monthly dealers - 11th of next month

GSTR 3B

For turnover above 5 crores- 20th of next month 

For turnover upto 5 crores - 22nd and 24th of next month as per the States /UT categories 

2. Notification no 77 

The Central Government vide Notification No. 77/2020 – Central Tax dated 15-10-2020 has amended Notification No. 47/2019 – Central Tax, dated 09-10-2019 whereby the benefit of optional filing of annual return for registered persons whose aggregate turnover in a financial year does not exceed Rs 2 crore, has been extended for FY 2019-20 as well.

This means that such taxpayers are not required to furnish annual return for 2019-20 and they can choose to not to file such return. However, if they want they can definitely file the same.

3. Notification no 78

Notification No. 78/2020- Central Tax dated 15-10-2020 has been issued by the Central Government wherein changes have been made in the Notification No 12/2017- Central tax dated 28-6-2017 with effect from 1st April, 2021.

Turnover upto 5 crores - 4 digits

Turnover above 5 crores - 6 digits 

The Govt has reserved the power to notify upto 8 digits. 

HSN codes of 8 digits are mandatory only in case of export and imports of goods.

A registered person having aggregate turnover up to Rs 5 Cr in the previous FY may not mention the number of digits of HSN Code in a tax invoice issued by him under the said rules in respect of supplies made to unregistered persons. i.e. B2C supplies. Currently no distinction between B2B and B2C supplies exists for purpose of disclosure of HSN/ SAC Codes.

4. Notification no 79

The Central Government vide Notification No. 79/2020–Central Tax dated 15-10-2020 has made some amendments to CGST Rules, 2017 out of which one of the amendment is in proviso to Rules 80(3) of the CGST Rules,2017.

Thus from above substitution of proviso to Rule 80(3), the tax payers with turnover upto Rs 5 crore will continue to be exempt from requirement of GST Audit under Section 35(5) of the CGST Act,2017 for turnover upto 5 crores for the financial year 2019-20 also apart from 2018-19.

Procedure for filing GSTR 1 and GSTR 3B through SMSs 

Amendments in 

GSTR 2A

GSTR 5

GSTR 5A

GSTR 9

GSTR 9C

RFD 01 

ASMT 16

DRC 01

DRC 02

DRC 07

DRC 08

DRC 09

DRC 24

DRC 25

CA ROHIT KAPOOR

+91 9899218725 

connectwithcarohitkapoor@gmail.com

Recommendations of the 42nd GST Council Meeting- 5th Oct 2020

1) Compensation Cess to be extended beyond the transition period of five years i.e. beyond June, 2022

2) To enhance Ease of Doing Business and improve the compliance experience, the Council has approved the future roadmap for return filing under GST to simplify return filing and further reduce the taxpayer’s compliance burden in this regard significantly

3) Council recommended/decided the following today to simplify return filing:

i) Due date of furnishing quarterly GSTR-1 by quarterly taxpayers to be revised to 13th of the month succeeding the quarter w.e.f. 01.1.2021

ii) Roadmap for auto-generation of GSTR-3B from GSTR-1s by Auto-population of liability from own GSTR-1 w.e.f. 01.01.2021 and Auto-population of input tax credit from suppliers’ GSTR-1s through the 

newly developed facility in FORM GSTR-2B for monthly filers w.e.f. 01.01.2021 and for quarterly filers w.e.f. 01.04.2021.

iii) In order to ensure auto population of ITC and liability in GSTR 3B as detailed above, FORM GSTR 1 would be mandatorily required to be filed before FORM GSTR3B w.e.f. 01.04.2021.

iv) The present GSTR-1/3B return filing system to be extended till 31.03.2021 and the GST laws to be amended to make the GSTR-1/3B return filing system as the default return filing system

4)  For Small taxpayers having aggregate annual turnover < Rs. 5 cr., the Council’s earlier recommendation of allowing filing of returns on a quarterly basis with monthly payments by such taxpayers to be implemented w.e.f. 01.01.2021

5) Revised Requirement of declaring HSN for goods and SAC for services in invoices and in FORM GSTR-1 w.e.f. 01.04.2021 as under:

a. HSN/SAC at 6 digits for supplies of both goods and services for taxpayers with aggregate annual turnover above Rs. 5 crores;

b. HSN/SAC at 4 digits for B2B supplies of both goods and services for taxpayers with aggregate annual turnover upto Rs. 5 crores;

c.  Government to have power to notify 8 digit HSN on notified class of supplies by all taxpayers. 

 6) Various amendments in the CGST Rules and FORMS have been recommended which includes provision for furnishing of Nil FORM CMP-08 through SMS

7) Refund to be paid/disbursed in a validated bank account linked with the PAN &Aadhaar of the registrant w.e.f. 01.01.2021. 

FAQ’S ON SEC 206C (1H)- A TABULAR PRESENTATION

 

 FAQ’S ON SEC 206C (1H)- A TABULAR PRESENTATION

S.NO	FAQ	Answer
1.	Who is Liable??	Tax is required to be collected by a person carrying on business whose total sales, gross receipts or turnover exceeds Rs. 10 crores in the financial year immediately preceding the financial year of sale. Author Notes: Sale includes sale of goods as well as revenue from services to decide about who is liable.
2.	From whom tax shall be collected?	Tax is required to collected from a buyer if following conditions are satisfied: a) There is Sale of Goods b) Seller receives amount of consideration for sale of goods exceeding Rs. 50 lakhs during any previous year Author Notes: Sec 206C(1H) is applicable only on sale of goods and thus not applicable on Service Providers. Consideration includes advances received for the sale of Goods. Exports and Imports have been exempted from the applicability of this section. Further no TCS liability if tax is deducted or collected under any other provision of Act.
3.	Timing of Collection of TCS?	Tax should be collected at the time of receipt of amount from the buyer if the value of sale consideration received in a previous year exceeds Rs. 50 lakhs Author Notes: Lot of Doubts have been raised on this issue. Please note only the amount of consideration received after 01.10.2020 would attract TCS liability. Amount of consideration could be advance also. Another point that merits consideration is that amount received prior to 30.09.2020 would also be considered for threshold of Rs. 50 lakhs although TCS would be collected only from the amount received after 01.10.2020   Ex: Amount received during FY 20-21 is Rs. 1 crore although Rs. 55 lakhs were received prior to 30.09.2020. Now although Rs. 45 lakhs are received post 01.10.2020 but still TCS liability would be on Rs. 45 Lakhs
4.	What is the Definition of Goods?	Sale of Goods Act, 1930 is a specific statute which deals with the ‘sale of goods’ whereas the CGST Act, 2017 deals with tax on ‘supply of goods’. Thus, the definition of term ‘goods’ can be referred to from the Sale of Goods Act, 1930 for the purpose of Section 206C(1H). Author Notes: It should be noted that Goods include only movable property. Consequently, the TCS shall not be collected from the sale of immovable property by a developer.
5.	Whether Transactions in securities through RSE is liable to TCS	The CBDT has clarified that provisions of this section shall not be applicable in relation to transactions in securities (and commodities) which are traded through recognised stock exchanges
6.	TCS on Motor vehicle?	There is a specific provision in Section 206C(1F) for the collection of tax on the sale of a motor vehicle. Under this provision, the tax shall be collected from every buyer who pays any amount as consideration for the purchase of motor vehicle of value exceeding Rs. 10 lakhs Vide Circular No. 22/2016, dated 8-6-2016, the CBDT has clarified that the provisions of Section 206C(1F) will not apply on sale of motor vehicles by manufacturers to dealers/distributors. Author Notes: B2C would attract Sec 206(1F) where value of MV exceed Rs. 10 Lakhs and 206C( 1H) would apply to B2B transaction
7.	TCS on Transaction in electricity?	Electricity is a GOOD as per Judicial Precedents. CBDT has clarified that TCS is required to be collected where electricity is purchased directly from electricity generation companies and not through power exchanges.
8.	TCS on sale of Software	The Supreme Court in its landmark decision of Tata Consultancy Services v. State of A.P [2004] 141 Taxman 132 (SC) held that Canned software (off the shelf computer software) are 'goods' and as such assessable to sales tax. If the sale of software has been treated as a sale of goods then the seller shall be liable to collect TCS subject to the fulfilment of other conditions of this provision.
9.	TCS on sale of Jewellery?	Yes, if other conditions are also fulfilled
10.	TCS on resale of Goods?	Business connection has to be seen i.e. if person re-selling falls within definition of sellers, then he will be liable to collect.
11.	Additional out of pocket expense to be included?	If they form part of the sales invoice then TCS would be collected as it forms part of sales consideration. If separate invoice is issued then not liable.
12.	Rate of TCS?	The tax shall be collected by the seller of goods at the rate of 0.1% of the sale consideration exceeding Rs. 50 lakhs if the buyer has furnished his PAN or Aadhaar, otherwise, the tax shall be collected at the rate of 1%. Author Notes: TCS for the specified receipts have been reduced by 25% for the period from 14-05-2020 to 31-03-2021 vide The Taxation and Other Laws (Relaxation and Amendment of certain provisions) Act, 2020. Hence, the rate of TCS on sale of goods shall be 0.075% till 31-03-2021
13.	Whether TCS on value including GST?	Author Notes: It has been mentioned that TCS is on receipt basis and receipt would be inclusive of GST and thus TCS is required to be collected on the sale consideration inclusive of GST
14.	TCS on inter branch transfers?	The condition of sale is not fulfilled in the context of branch transfer. Therefore, the provisions of this section shall not apply in the case of branch transfers.
15.	If buyer has multiple units?	If different units of buyer are under the same PAN or Aadhaar number, the amount received from all such units shall be aggregated to compute the limit of Rs. 50 Lakhs.

I Have tried to cover up all Important FAQs on 206C(1H)  in this write up and views on author notes even if contrary are welcome

Author: CA Rohit Kapoor
Email: connectwithcarohitkapoor@gmail.com 
Twitter: https://twitter.com/whorohitkapoor
Mobile: +91 9899218725                                       

TCS on sale of Goods- Section 206C(1H) w.e.f. from 01.10.2020 : Overview with Illustrations

To widen and deepen the scope of early collection of revenue to the Government, Finance Bill, 2020 brought in levy of TCS (0.1% or 1% in case PAN/Aadhaar not provided by Buyer) on sale of goods for which sales consideration. Sub section 1H has been inserted in Section 206C by Finance Act, 2020 for collection of TCS by the seller on sale of ANY GOODS. This means it is not applicable to any specified goods but to all goods.

Please note that TCS Rate is been reduced to 0.075% for the period from 01.10.2020 to 31.03.2021 due to the COVID-19 pandemic

WHO HAS TO COLLECT??

TCS to be collected by seller. Seller means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Rs.10 crore during the financial year immediately preceding the financial year in which the sale of goods is carried out, not being a person as the Central Govt. may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein

WHOM TO COLLECT TCS FROM??

TCS to be collected from such buyers to whom value or aggregate value of goods sold exceeds fifty lakh rupees in a previous year.

Note 1: For the purpose of calculating threshold of Rs. 10 crores total sales, gross receipts or turnover from the business is to be taken into consideration i.e. sale of goods and services both shall be considered for calculating threshold of Rs.10 crores.

Note 2: For the purpose of calculating threshold of Rs. 50 Lakhs only sale of goods is to be taken into consideration.

TIME OF COLLECTION OF TCS??

TCS is to be collected at the time of actual receipt of consideration by the seller.

Note 3: In my personal opinion TCS should be collected in the 'sales invoice' itself so as to enable buyer to know about the applicability of levy. Merely charging TCS in sales invoice does not trigger liability for payment. TCS liability is to be discharged only when the sales consideration for sales effected on or after 01-10-2020 is received.

EXCLUSION- WHEN TCS IS NOT APPLICABLE??

1) TCS provisions are not applicable on Export of Goods.

2) TCS provisions are not applicable where buyer is CG, SG, Local authority, Embassy, Commission or Consulate etc

3) TCS provisions are not applicable on sale of goods which are already covered under other sub-sections of S.206C viz. Liquor / Scrap sales, Motor Vehicles etc.

4) TCS provisions are not applicable where buyer is required to deduct TDS on such purchases

Applicability of Provisions in Transitional period:

Before moving towards the illustrations, let us understand the Application of the provision during the transitional period

Sl. No	Date of completion of sale	Date of receipt of sale consideration	Remarks
1	Before 1.10.2020	Before 1.10.2020	No TCS is to be collected since section 206C(1H) is made applicable from 1st October, 2020
2	On or after 1.10.2020	On or after 1.10.2020	TCS to be collected at prescribed rate subject to threshold limit
3	Before 1.10.2020	On or after 1.10.2020	Since sales were carried out in the period when provisions of section 206C(1H) were not applicable, therefore, this sub-section shall not get triggered on receipt of amount from debtors standing in books as on 30.9.2020
4	On or after 1.10.2020	Before 1.10.2020	Advance payments cannot be considered as ‘consideration for sale of any goods. Advance payments are payments received against ‘agreement to sell’ only. Section 206C(1H) will get triggered when such advance shall be appropriated against sale after completion of sale. Therefore, in this case TCS will be collected by the seller.

 

Illustrations: For better understanding let us take a look on the following illustrative

Seller: Rohit Manufacturing Pvt Ltd. (Assume T/o exceeds 10Cr in PY 19-20 and 100% Sale is on Cash Basis i.e no Credit Sale. Further receipts are on FIFO Basis)

Buyer: Kiara Automobile Pvt Ltd.: Assume PAN has been provided to Seller

S.NO	Sales up to 30-09-2020	Sales after 01-10-2020	Sales consid-eration received up to 30-09-2020	Sales consid-eration received on or after 01-10-2020	Whether TCS is appli-cable for FY 2020- 2021? (YES / NO)	Sales consid-eration (exce-eding INR 50,00,000) on which TCS is payable	TCS Liability @ 0.075% / 0.75%	Remarks
1	18 Lac	72 Lac	15 Lac	65 Lac	Yes	27 Lac	2,025	Rs. 300000 receipt post received post 30.09.2020 pertaining to period prior to 30.09.2020 will not attract TCS
2.	52 Lac	45 Lac	52 Lac	45 Lac	Yes	45 Lac	3,375	Limit of INR 50 Lakhs already exceeded prior to 30-09-2020. Hence, each sales consideration received for sales made after 01-10-2020 is liable for TCS.
3.	58 Lac	56 Lac	3 Lac	51 Lac	No	-	-	Receipts are from outstanding as on 30-09-2020 and consideration not received for sales effected after 01-10-2020 hence, TCS is not payable.