The Indian tax and regulatory space is changing at an unprecedented rate. We are witnessing policy announcements, legislative changes, judicial precedents and clarifications almost daily. This has made it challenging for corporate professionals to stay abreast of relevant developments. The aim of the TaxPod series is to keep you updated with key tax and regulatory developments of the past month, in around 5 minutes.
- Government extends Foreign Trade Policy 2015-20 to
30 September 2021
- Finance Act 2021 enacted
- Group turnover threshold for applicability of country-by-country report eased
Hello and welcome to this month’s edition of the TaxPod from Grant Thornton Bharat. We bring you the latest tax developments that took place in the last month.
Let’s begin with the key direct tax developments.
The Finance Bill, 2021 received President’s assent on 28 March 2021. To address the concerns raised by the stakeholders over the proposed Bill, the Finance Act, 2021 amended several provisions proposed in the Finance Bill. One such important amendment is with respect to meaning of the term ‘liable to tax’. It has now been clarified that ‘liable to tax’ would cover cases where there is ‘income tax liability’ on such person under the law of a country and will include a person who has been subsequently exempted from such income tax liability.
In order to provide relief to taxpayers during these uncertain times, the government has further extended certain timelines. Intimation and linking of Aadhaar number with PAN has been extended to 30 June 2021 from 31 March 2021.
In addition, the last date for issuance of reassessment notice, passing of consequential order for direction issued by the Dispute Resolution Panel and processing of statements of equalisation levy has been extended to 30 April 2021 from 31 March 2021.
As a relief to taxpayers , the government has deferred tax audit reporting relating to General Anti-Avoidance Rules (i.e. GAAR) and GST till 31 March 2022. Thus, for the purpose of tax audits conducted for the financial year 2021-22, these disclosure requirements would not be applicable.
While we are on the subject of GAAR, an important development this month is that the government has now approved the composition of Approving Panel. GAAR provisions were made effective from Financial year 2017-18 (i.e. Assessment Year 2018-19). Under these provisions , reference is required to be made to the Approving Panel in certain circumstances. However, till now the composition of the Approving Panel had not been formally announced.
On the international tax front, the Committee of Experts on International Cooperation in Tax Matters of the United Nations (UN) has voted to include a new Article 12B on automated digital services (ADS) to the 2021 UN Model Tax Convention. The Committee also released proposed text of Article 12B together with the Commentary on the same. The text of Article 12B will be put for approval before the Committee in its 22nd session scheduled to be held later in the month.
On the transfer pricing front, the government issued a notification amending the threshold for applicability of country-by-country report (CbCR) and certain rules relating to the master file. The threshold of consolidated group revenue for applicability of CbCR regulations has now been increased to INR 6,400 crore from INR 5,500 crore. Further, where the multinational group has constituent entities resident or non-resident in India, the designation can be done for the compliance of master file regulations in India. This amendment is a welcome move as it will enable the MNE group to designate a single constituent entity for the master file compliance in India thereby reducing duplication of efforts.
Moving on to the key indirect tax development of the month.
Based on the recommendations of the GST Council, the Central Board of Indirect Taxes and Customs (the CBIC) had earlier waived penalty payable for businesses with turnover exceeding INR 500 crore on non-implementation of dynamic quick response (QR) code till 31 March 2021. The CBIC has now further waived the penalty for non-compliance of provisions of dynamic QR code in B2C invoices till 30 June 2021 subject to the condition that said person complies with the said provisions effective from 1 July 2021. This is a welcome move by the Government and will provide sufficient time to the businesses to comply with the requirements.
In view of the unprecedented situation arising out of COVID-19, the government has extended the existing Foreign Trade Policy 2015-2020 up to 30 September 2021. Similar extension has also been made in the related procedures by extending validity of handbook of procedures up to 30 September 2021. Earlier the policy was extended till 31 March 2021 and a further extension of 6 months is a welcome move by government and shall provide required continuity of benefits under various export promotion schemes.
For detailed analysis of last month’s GST related developments, download our monthly GST compendium from our website www.grantthornton.in.
That’s all for this time.
We will see you next month.