1st- 15th September 2016
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Here are the highlights of our newsletter from preceding fortnight.
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GST Council to start journey this month

Signalling the urgency to roll out the goods and services tax (GST) by the April 1, 2017 deadline, the Union Cabinet on Monday gave its nod to the constitution of the GST Council. The council would be responsible for deciding on rates and preparing a model Bill for implementation of the new tax regime. It is scheduled to meet for the first time on September 23 and 24, as the government expects to resolve all contentious issues in the next two months. The urgency with which the government is dealing with the issue can be gauged from the fact though the Constitution amendment Bill had given 60 days for the constitution of the council after it became an Act, it has already go the nod. President Pranab Mukherjee gave his assent to the Bill last Thursday. On Monday, the Cabinet also approved setting up of a secretariat in New Delhi to facilitate the work of the GST Council. The secretariat will be manned by officers taken on deputation from both central and state governments, an official statement said. The GST Council will be chaired by the Union finance minister and comprise the minister of state for finance in charge of revenue and state finance ministers or any other ministers nominated by the states. It has a tough task ahead: To resolve three vexed issues — rates, dual control of the central and state officials over assesses and geographical exemptions.
Tax relief for first 36 start-ups in Chhattisgarh
The Chhattisgarh government has offered a major tax relief to the first 36 start-ups in the state. These units would get all state taxes reimbursed for three years under the Start-up Chhattisgarh campaign which Chief Minister Raman Singh formally launched here on Tuesday. The tax relief would be a major incentive to attract investment in the state. The number was probably taken out from the state’s name, which denotes 36 forts (Chhattisgarh in Hindi). Under a slew of sops incorporated in the policy, start-ups would get a subsidy of 75 per cent on term loans up to Rs 70 lakh for six years, fixed capital subsidy of 35-40 per cent up to Rs 3.5 crore, electricity duty exemption for 10 years, stamp duty exemption for land purchase or lease, besides assistance in preparing project report, quality certifications, technical patent costs.
Implementation of GST to attract more FDI
Implementation of Goods & Service Tax (GST) will lead to increased tax compliance and attract more foreign direct investments across sectors due to tax transparency and ease of doing business, says a survey.
According to a survey of corporate India by Feedback Business Consulting Services, which covered 67 companies from various sectors, GST rollout will be positive for the economy.
Around 72 per cent respondents felt investments will rise across sectors and a significant portion of this will come in the form of FDI especially in heavy engineering and automotive sectors.
Some of the other major benefits of GST implementation include, reduced logistics cost, supply chain efficiency, reduction in costs for tax & regulatory compliance, better penetration of markets and export effectiveness.
However, companies are concerned about the timing of implementation of GST and fixing of rate at which tax will be charged, the survey said.

Narendra Modi government may back 18-19% GST standard rate

As the Centre and states kick off consultations to decide the crucial rate for the goods and services tax (GST), the Modi government is all set to back a pocket-friendly rate, amid indications that a standard rate of 18-19% might receive the government's backing.
On Monday, the Cabinet cleared the establishment of the GST council, the panel headed by the Union finance minister with all state FMs as its members, setting the stage for nuts and bolts issues to be thrashed out with the government setting a two-month window for the exercise. States such as Kerala have been vocal in suggesting the levy should be upwards of 20% to ensure that state revenue collections are not impacted by the GST rollout from April.
Petroleum products likely to be brought under GST regime
Petroleum products could be taxed under the proposed goods and services tax (GST). If it would happen, this move will reduce the imperfections in the new levy and also narrow the inflationary impact of the tax.
A proposal favouring imposition of a modest tax on these products is being examined and is expected to be taken up by the newly constituted GST Council where the government will try and convince states of its merit. The idea is to have some minimal tax of about 2-3 per cent so that seamless flow of credit is not broken and cascading is removed.
States have been opposed to a change in tax regime for petroleum goods, an easy way of quickly mopping up revenues if needed. But now thinking has veered around to having some minimal tax from the beginning as it could help in bringing down the overall tax rate and allow the industry to get credit.
Extension of credit period of sales to AE deemed as international transaction under transfer pricing
IT/ILT: Where transaction was otherwise capable of generating income but because related parties decided not to charge or pay to each other, basic character and nature of transaction would not change, thus, transaction of extending credit period to AE was to be regarded as an international transaction even if it did not give rise to any income
IT/ILT: Extending credit period for realization of sales to AE was a closely linked transaction with transaction of providing services to AE and, therefore, could not be treated as an individual and separate transaction of advance or loan for determination of ALP
Due date of filing return extended to Oct. 17, 2016 to remove conflict with IDS due date
The last date of making declarations under the Income Declaration Scheme 2016 is 30th September, 2016 which coincides with the last date of filing Income-tax returns by the tax payers whose accounts are audited and who are required to furnish the returns of income for AY 2016-17 by 30th September, 2016 as per provisions of section 139(1) of Income tax Act, 1961.
In order to remove inconvenience and to facilitate ease of compliance, the Central Board of Direct Taxes extends the due date for furnishing such returns of Income from 30th September to 17th October, 2016.
This extension would also apply for filing tax audit reports, as clarified by CBDT later.
Neeraj Bhagat & Company is a team of distinguished chartered accountant, corporate financial advisors and tax consultants in India. Our firm of chartered accountants represents a coalition of specialized skills that is geared to offer sound financial solutions and advices. The organization is a congregation of professionally qualified and experienced persons who are committed to add value and optimize the benefits accruing to clients.

Neeraj Bhagat & Co.
New Delhi, Gurgaon, Mumbai 

Neeraj Bhagat & Co., S-13, St. Soldier Tower, Vikas Puri, New Delhi, 110018 India

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Neeraj Bhagat & Co. · S-13, St. Soldier Tower · G-Block Commercial Centre, Vikas Puri · New Delhi 110018 · India