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 due dates of various direct tax compliances
- Key updates from the 43rd and 44th GST Council meeting
- Ministry of Corporate Affairs issues clarification on offsetting of excess CSR spent
Hello and welcome to this month’s edition of the TaxPod from Grant Thornton Bharat. We bring you the latest tax and regulatory developments that took place in the last month.
Let's begin with the key direct tax developments.
The key development this month has been extension of due dates for various tax compliances.
The due date for filing tax return for Assessment Year 2021-22 has been extended from 31 October 2021 to 30 November 2021 in case of a company or a person whose accounts are required to be audited or a partner of a firm whose accounts are required to be audited. Correspondingly, where requirement of transfer pricing audit is applicable, the due date has been extended to 31 December 2021 from 30 November 2021. For other taxpayers, the due date has been extended by 2 months i.e. from 31 July 2021 to 30 September 2021. Similarly, the due date for filing Tax audit report and Accountants Report in Form 3CEB has also been extended by 1 month to 31 October and 30 November 2021 respectively. The extensions notified well in advance will provide much needed respite to the taxpayers as well as give sufficient time to auditors to plan their work, given the current uncertainty around the COVID-19 situation.
Moving on, as you would recall, the Finance Act 2021 made certain amendments in provisions relating to taxation of a slump sale transaction. It was provided that in case of slump sale, the consideration i.e. the transaction value shall be computed on the basis of the fair market value (FMV) of the capital assets as on the date of transfer. The manner of computing FMV was however not prescribed. On 24 May 2021, the government has notified rules providing the method for computing FMV of capital assets in such cases. Taxpayers are however now debating the date of applicability of these rules.
On the regulatory front, the Ministry of Corporate Affairs (MCA) has issued clarification on offsetting of excess expenditure on Corporate Social Responsibility (CSR). To give a background, on 30 March 2020, MCA appealed to top 1,000 companies to contribute generously towards PM CARES Fund. It was stated that any excess contribution (i.e. contribution made over and above the minimum prescribed CSR amount) made for Financial Year 2019-20 can later be offset against the CSR obligation arising in subsequent years. In this regard, the MCA has now clarified that in order to claim offset of such excess contribution against CSR requirement for FY 2020-21, the company needs to ensure that any unspent CSR amount for any preceding FYs has been factored in. Further, the chief financial officer and the statutory auditor of the company should certify that the contribution was made on 31 March 2020. The company needs to disclose details of such contribution separately in annual report on CSR and in board report for FY 2020-21.
On the indirect tax front, various tax relief measures have been recommended by the GST Council in its 43rd meeting. The measures include
- exemption from IGST on import of various medical goods such as medical oxygen, oxygen concentrators, diagnostic markers test kit etc. up to 31 August 2021,
- amnesty scheme regarding late fees for pending returns,
- trade facilitation measures,
- simplification of return filing process, etc.
Pursuant to these recommendations, the Central Board of Indirect Taxes and Customs (CBIC) has given effect to/ or has notified most of these changes vide various notifications. This is a welcome move by the government and will provide sufficient time to the businesses to meet the compliance obligations and ensure that no hardship is caused to taxpayers in these trying times.
Moving on, the 44th GST Council meeting held on 12 June 2021 has recommended exemption / reduction in tax rates on specified medicines, oxygen, oxygen generation equipment, related medical devices, testing kits and machines and other COVID related relief material till 30 September 2021. The reduction in tax rates on medical essentials used in COVID 19 relief and management is a move in the right direction. It is anticipated that the situation will again be reviewed in the month of September and if required, the rate cut may be extended for a further period.
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.