Where can I invest sale proceeds from property to save capital gains tax?

If the residential property has been held for more than 24 months, your entire capital gain may be exempt subject to condtions.

Query: I live in Delhi, have two flats and a share in a residential property. This property is now being put up for sale.

Where can I invest the sale proceeds from this shared property to save capital gains tax?

Ans: If the residential property has been held for less than 24 months, you will be liable to pay short-term capital gains tax at the income tax slab rate applicable to you.

If the residential property has been held for more than 24 months, your entire capital gain will be exempt, if it is utilised for purchasing a house in India within two years from the sale of the shared residential property or for constructing a house in India within three years from the date of sale.

Alternatively, you can invest your long-term capital gains in certain bonds—issued by National Highway Authority of India, Rural Electrification Corporation, Indian Railway Finance Corporation and Power Finance Corporation. You can invest a maximum of Rs 50 lakh in these bonds and investment should be made within six months from the date of sale. These bonds have a lock-in period of five years.

Please note that if only a part of capital gains is utilised either for purchase/construction of house, or for investments into bonds, or both, then you will be liable to pay LTCG on the balance amount.

Query: I am a postgraduate medical student. I will be receiving a stipend of Rs 55,000 per month for three years. Will I be liable to pay tax?

Ans: Scholarships granted to students to meet their cost of education are exempt from tax, according to Section 10(16) of the Income-Tax Act. If the stipend received by you is not in the form of a scholarship, you will be liable to pay tax on it. Such stipend income should be reported under the head ‘salary’, if there is an employer-employee relationship, and as professional income if there’s no such relationship.

Goods Transport Agency under GST

Meaning:- GTA means any person who provides services in relation to transportation of goods by road and issue consignment note (builty) is a GTA.

Services by way of transportation of goods by road except the services of:-

-GTA

-COURIER

are exempt from GST vide ( E/N 12/2017 CT (R) dated 28/6/2017). So, it is clear that services by way of transportation of goods by road by GTA is taxable in GST.

Now there is another exemption to GTA’s which is if GTA provide services of transport in goods carriage of the following goods namely

1. Agriculture produce

2. Goods , where consideration charged for transportation of goods on a consignment transported in a single carriage does not exceed Rs. 1500/-

3. Goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs 750/-

4. Milk, salt, and food grain including flour, pulses and rice.

5. Organic manure

6. Newspaper or magazine registered with the registrar of newspaper

7. Relief material meant for victims of natural or man-made disaster, calamities, accidents or mishap or

8. Defence or military equipments

Further, if Goods Transport Agency under GST provides services by way of transportation of goods to any unregistered person than the services of GTA are exempt vide E/N/25/2017 CT (R) dated 28/6/2017.

So, the services of GTA will be taxable if it provides to the following person i.e.,

1) Any factory registered under or governed by factories act 1948 or,

2) Any society registered under the society registration act , 1860 or under any other law for the time being in force in any part of India

3) Any co-operative society established by or under any law for time being in force, or

4) Any body corporate established, by or under any law for time being in force, or

5) Any partnership firm whether registered or not under any law including association of person

6) Any casual taxable person registered under the CGST Act or the IGST Act or the SGST Act or the UTGST Act.

Rate of Tax for Goods Transport Agency under GST

The Government has prescribed two rate of tax for GTA i.e.

(a) 5% (In case of Reverse Charge) – The rate of 5 percent is subject to the condition that service providers have not taken input tax credit (ITC) for the tax charged on the goods or services used in supplying the service.

(b) 12% (In case of Forward Charge)

Person liable to pay tax under GTA

The GTA has the option to pay tax under Forward Charge @ 12% or under Reverse Charge @ 5%.

If GTA opts to pay tax under Forward Charge then it is eligible to take the ITC, but if it opts to pay tax under Reverse Charge then it is not eligible to take the ITC.

The option to pay tax under either of the above stated mechanism will be opted at the beginning of the year and once the option exercise will remain applicable for whole of the year.

GTA under Reverse Charge Mechanism (RCM)

If GTA provide services in relation to transportation of goods to the following person located in taxable territory then there is an option to pay tax under RCM if recipient of such service is liable to pay freight.

1) Any factory registered under or governed by factories act 1948 or,

2) Any society registered under the society registration act , 1860 or under any other law for the time being in force in any part of India

3) Any co-operative society established by or under any law for time being in force, or

4) Any person registered under the CGST Act or the IGST Act or the SGST Act or the UTGST Act. Or,

5) Any body corporate established, by or under any law for time being in force, or

6) Any partnership firm whether registered or not under any law including association of person

7) Any casual taxable person registered under the CGST Act or the IGST Act or the SGST Act or the UTGST Act.

Ways to save tax other than Section 80C

As the date 31st March comes closer tax assessees try to find different ways to save their hard-earned money from being taxed (of course in a Positive manner) and that’s why here  I am  for explaining various ways through which an assessee can save his/her tax lawfully.

Now whenever we talk about tax savings, we only think about LICs or Home loans or NSCs or FDs etc . and all these options come under Section 80C (quite popular) and that is why most of the assessees try to invest in these options only and limit their savings on investment upto Rs. 150000/- only.

But we need to think beyond section 80C, so that there might be an additional tax saving which might have been missed by many of us in earlier tax periods.

So here is the list of Investment options other than Section 80C which can help us save tax:

1. Section 80D: Popularly known as deduction for Mediclaim.

So as per this section an individual/HUF can insure his/her health both physically and financially.

As far as financial concerns, an individual/HUF can claim a deduction of Rs.25000/- for self, spouse and dependent children.

And additionally, Rs. 30000 for their parents too (if senior citizen; otherwise Rs.25000/-)

Note: The deduction for senior citizens has been increased to Rs.50000/- as announced in Budget 2018 (from FY 2018-19).

Note: payment should be made by any mode other than cash.

2. Section 80G: Popularly known as the donation deduction

It provided tax deduction if one has donated any amount to any NGO (Registered u/s 80G),

Or charitable trust or any Prime minister yojna etc.

There is a list mentioned on Income tax website.

Note: Payment should be made by any mode other than cash

Maximum deduction available would be 50% or 100% of the amount donated as per the case.

Please mention PAN of the Donee while claiming deduction.

3. Section 80GG: Popularly known as deduction for Rent paid

Usually people get HRA from their employers and get it deducted while filing ITRs. But in some cases when HRA is not a part of  the salary and rent is being paid for house then this deduction comes as a boon and one can easily claim a deduction here (some conditions need to be fulfilled)

Deduction shall be least of the following-

5000/- per month;25% of the total income (some exclusions are there)Actual rent paid less 10% of the total income (some exclusions are there)

4. NPS Scheme: This scheme offers you additional tax deduction for Rs.50000/- other than Section 80C.

5. Section 80E: Deduction for interest paid on Educational loan – Best part is that there is no maximum limit. This deduction is available only for an individual.

Note: No Tax benefit is allowed for the principal repayment. (Maximum deduction period is 8 years)

6. Section 80EE: This is available to an individual for the amount paid as interest on loan taken for the purchase of a residential property. The maximum deduction that can be claimed under this section is Rs 50,000 per annum.

There are a few conditions one has to fulfil to avail this deduction (eg. Loan period April 2016 to March 2017, loan amount less than Rs. 35 lakhs, house value less than Rs. 50 Lakhs, should be the only house property in assessee’s name).

7. Section 80TTA: This section is for deduction on Interest earned on savings a/c. The maximum deduction is upto Rs. 10000/-. But this is not meant for interest earned on Fixed deposits.

Penalty U/s. 271AAA cannot be levies if No search has taken place at assessee’s premises

Facts of the case, in brief, are that the assessee is a company and filed its return of income on 26th March, 2013 declaring total income of Rs.2,12,72,940/-. A search and seizure action u/s 132 of the I.T. Act was carried out at the business premises of M/s. Aggarwal Associates and Jainco Group of cases and their relatives on 19.10.2011.

DCIT Vs Jainco Developers (P) Ltd. (ITAT Delhi)

A perusal of the assessment order shows that no search had taken place in the case of the assessee on 19th October, 2011 and the assessment was completed by issuing notice u/s 153C of the I.T Act. We, therefore, find merit in the arguments of the ld. counsel for the assessee that the provision of section 271AAA are not applicable to the assessee since the said provision as applicable to cases where search has been conducted u/s 132 of the I.T. Act, 1961. We find the Assessing Officer in the instant case has recorded his satisfaction for initiation of penalty u/s 271AAA and thereafter levied penalty u/s 271AAA. We find in the assessment order, the A.O has categorically mentioned in Para 3 of the order that the assessee company has declared the amounts surrendered as miscellaneous income under the head income from other sources. A perusal of the assessment order shows that the assessee has surrendered the income, explained the manner in which it was earned and has paid the taxes due thereon. Therefore, the assessee has fulfilled all the conditions laid down in Section 271AAA for non-levy of penalty under the said provisions. Even otherwise also, it is an admitted fact that no search has taken place in the premises of the assessee and, therefore, provisions of Section 271AAA are not at all applicable

Expense on improving the quality of existing products are revenue expenditure

CIT Vs Arvind Products Ltd. (Gujarat High Court)

Assessee who was engaged in manufacturing textile products, had expended the amount in question for product development undertaken by a sister concern of the assessee on its behalf. The research work did not involve development of a new product or even a new technique or technology to manufacture existing product more efficiently. He is aimed at improving the quality of the existing products of the assessee. Essentially thus, the expenditure was for the assessee’s existing business and was for the purpose of improving the quality of the existing products and such expenditure should be treated as revenue expenditure.

How is life insurance money taxed?

 1. Proceeds received by the nominee on the death of the insured is tax free in the hands of the nominee.

2. But, if a policy is a Keyman insurance policy then the proceeds are not tax free.

3. For a life insurance policy issued between 1 April 2003 and 31 March 2012 if the premium payable in any year exceeds 20% of the actual sum assured, then the policy proceeds would be taxable for the insured at the marginal rate of taxation.

4. For life insurance policies issued on or after 1 April 2012 if the premium payable exceeds 10% of the sum assured, the policy proceeds would be taxable at the marginal rate of taxation.

5. In case of severe disability or disease, as specified by the Income Tax Act, and if his/her policy was issued on or after 1 April 2013, then the limit of 10% will be increased to 15% .

5 legal ways of Tax Planning to save on taxes

1. Save Tax U/s 80C, Section 80CCC, Section 80CCD of the Income Tax Act

To encourage the habit of saving, and to direct the savings of taxpayers into lawful channels, the Central Government permits certain investment- linked deductions, provided the amount is invested in instruments as specified in Section 80C, Section 80CCC & Section 80CCD of the Income Tax Act.

The maximum collective deduction allowed under Section 80C, Section 80CCC & Section 80CCD is Rs. 1,50,000.

The most common investment instruments covered under Section 80C, Section 80CCC & Section 80CCD are:

Public Provident Fund Accounts5 Year Tax Saving Fixed DepositPension Plans Contribution to Employee Provident FundLife Insurance PolicyNational Savings Certificate (NSC)Equity Oriented Mutual Fund

Note that an individual can claim an additional deduction of Rs. 50,000 U/s 80CCD by investing in the National Pension Scheme (NPS).

2. Reduce Income tax via Home Loan

If an individual has taken a Home Loan, then he/she is entitled to claim the deduction for repayment of the principal amount (Deduction of the Principal amount under section 80C), as well as the interest of the home loan (Deduction of the Interest amount under section 24). The maximum deduction allowed under section 80C is Rs. 1,50,000 and under section 24 is Rs. 2,00,000

3. Save Income Tax U/s 80D of the Income Tax Act

Medical/health insurance works as a shield and protects a person and his family from any financial crisis during a medical emergency.  It’s the insurance company which bears the cost of treatment, and ensures that the policy holders can avail the best medical assistance. Based on the nature and type of medical insurance policy, in addition to hospitalization charges, the policy may also cover ambulance charges, domiciliary expense, pre and post hospitalization expenses, etc.

The Income Tax Act permits an individual to save tax through deductions if the taxpayer has paid a premium for insuring his/her own health or the health of his/her family members (parents, dependent children or spouse).

4. Tax Saving with House Rent paid

If the individual is staying in a rented house and is receiving House Rent Allowance (HRA)from his employer, he/ she can claim deduction U/s 10(13A) of the Income Tax Act. The least of the following will be considered as deduction from the individual’s salary:

Actual HRA received from the employerPayment of actual rent in excess of 10% of basic salary50% of the basic salary (if the individual is staying in a metro city) or 40% of the basic salary (if the individual is staying in a non-metro city).

However, if the individual is a non-salaried person and does not receive HRA, or does not own a residential property, he/ she can still get the deduction of house rent paid during the year from his/ her taxable income U/s 80GG of the Income Tax Act.

The least of the following will be considered as deduction from the individual’s Gross Taxable Income:

Rs. 60,000 per annumRent paid less 10 percent of Adjusted total income.25 percent of total income for the year.

5. Tax Saving through Education Loan under section 80E of the Income Tax Act

Under section 80E of the Income Tax Act, an individual can claim tax deduction on an education loan (for higher studies),if the loan is for himself/ herself, his/ her children, spouse or even for a student of whom he/she is the legal guardian.

However, only repayment of Interest on the Education Loan is allowed as deduction. That means no deduction on the repayment of the principal amount of loan is allowed. However, the good thing is that there is no maximum limit to claim deduction U/s 80E of the Act for the interest repayment of education loan. The deduction U/s 80E for the education loan is available to an Individual assessee and not to a Hindu Undivided Family (HUF).

Deduction U/s. 36(1)(vii) for Bad debts for income offered to tax during earlier year cannot be disallowed

The very fact that balances were shown under sundry debts itself went to prove that same had emanated out of sales of assessee and hence, income relatable thereto in the form of sales and services had been duly offered to tax in the earlier years in accordance with section 36(2) and therefore, disallowance made towards bad debts was not justified.

Indo Nabin Projects Ltd. (Formerly Indo Power Projects Ltd.) Vs DCIT (ITAT Kolkata)

The assessee stated that M/s Andrew Yule & Co. Ltd., Central Government Undertaking had closed their project division. M/s Gridco is a State Government Undertaking, Government of Orissa. The assessee further stated that despite the efforts taken by the assessee to recover this sundry debtor dues from these three parties, the assessee could not recover the same. Accordingly, the said trade debts were duly written off in the books of accounts of the assessee during the year under consideration by duly crediting the balance outstanding to the concerned parties’ account (sundry debtors’ account).

We find lot of force in the argument of the Ld. AR that these balances were reflected under the head sundry debtors in the balance sheet of the assessee and from the very fact that the same are shown under sundry debtors itself goes to prove that they had emanated out of sales of the assessee and hence, the income relatable thereon in the form of sales and services had been duly offered to tax in the earlier years in accordance with Section 36(2) of the Act.

Respectfully following the decision of the Hon’ble Supreme Court in the case of TRF Limited reported in 323 ITR 397 (SC) and in view of the fact that the assessee had duly written off this trade debts by crediting the concerned sundry debtors accounts in its books of accounts, we direct the Ld. AO to delete the disallowance made towards bad debts. In the sum of Rs. 8,86,029/- accordingly ground no. 2 raised by the assessee is allowed.

Gain from Transfer of Agricultural Land cannot be taxed despite absence of agricultural operations on such land

Where the land is shown in revenue record as agricultural land and no permission was taken for conversion of land, it is immaterial whether any agricultural income is shown in the return or not, the gains from sale are exempt from taxation.

Shri Kallepu Sharath Chander Vs ACIT (ITAT Hyderabad)

The assessee, in the revised return filed in response to section 148 of the Act, has claimed the land as agricultural land. The AO has also accepted that as per the revenue records, these lands are agricultural lands but the only reason for not accepting the said contention is that the assessee has not carried on any agricultural operations. The Hon’ble Bombay High Court in the case of CIT vs. Smt. Debbie Alemao and 2.Joaquim Alemao, reported in (2011) 331 ITR 59 (Bom.) has held that where the land is shown in revenue record as agricultural land and no permission was taken for conversion of land, it is immaterial whether any agricultural income is shown in the return or not, the gains from sale are exempt from taxation. Therefore, the reason given by the AO for not accepting the assessee’s contention is not sustainable. In view of the same, I am inclined to accept the contention of the assessee and hold that the land sold by the assessee being agricultural land, no capital gain is taxable on the profit from sale of such land.

MAT Provisions U/s. Section 115JB not applicable to sick company

B.V. Reddy Transports Pvt. Ltd. Vs Asst. (ITAT Hyderabad)

There is no dispute with the fact that the company has negative networth and has become sick under the repealed Act- Sick Industrial Companies (Special Provisions) Act, 1985. Issuance of certificate u/s. 17 of the SICA does not arise as the Board stand dissolved consequent to repeal of the Act. So, the insistence of AO and the Ld.CIT(A) for a certificate under that Act is not proper. Since the provisions of Section 115JB have not been amended, to that extent the repealed SICA Act is applicable so it has to be applied. Therefore, under these circumstances, it is to be considered that assessee is covered by Section 17 of SICA and therefore, the company is exempt from the provisions of Section 115JB, being a sick company.

There is merit in assessee’s contention but that becomes academic only as there are contradicting views on this subject and we need not go into that issue for the simple reason that assessee being a sick company, provisions of Section 115JB are not applicable

28th GST Council Meeting Date announced

28th GST Council meeting to be covened through Video Conferencing on 19th July 2018 (Thursday).

Some of the important issues include GSTN to be converted to fully Government Entity , Annual GSTR 9 return, AAR Centralisation, Simplification of GST Returns Filing, The Inclusion of Fuels Under GST and Minimum Number of GST Slab Rate.

Section 234F -Fee (Penalty) for delay in filing Income-tax return

A new section 234F has been inserted in Income Tax Act, 1961 with effect from Assessment Year 2018-19 (Financial Year 2017-18).

Under this section, fee (penalty) is levied if the Income-tax return is not filed within due date. Earlier penalty for delay in filing of return was levied at the discretion of Assessing Officer. But now, the same is payable before filing of Income-tax return.

 

The due date of filing Income Tax returns for Financial Year 2017-18 (Assessment Year 2018-19) is 31/07/2018 for salaried taxpayers.

The fee (penalty) will be as follows:

Total Income	Return filed	Fee (Penalty)
Exceeds Rs. 5 Lakh	On or before 31st December of Assessment Year	Rs. 5,000/-
	In any other case	Rs. 10,000/-
Upto Rs. 5 Lakh	After due date	Rs. 1,000/-

Examples:

1.      Mr. A, having total income of Rs. 6 lakh, filed his Income-tax return for Assessment Year 2018-19 (Financial Year 2017-18) on 25/07/2018. What will be the fee (penalty) under section 234F?

Since the Income-tax return is filed within due date (31/07/2018), no fee (penalty) will be levied.

2.      Mr. B, having total income of Rs. 7 lakh, filed his Income-tax return for Assessment Year 2018-19 (Financial Year 2017-18) on 10/11/2018. What will be the fee (penalty) under section 234F?

Since the Income-tax return is filed after due date (31/07/2018), but on or before 31/12/2018, fee (penalty) will be Rs. 5,000/-

In the above situation, if total income of the Assessee does not exceed Rs. 5 Lakh, the fee (penalty) will be Rs. 1,000/-.

3.      Mr. C, having total income of Rs. 5.5 lakh, filed his Income-tax return for Assessment Year 2018-19 (Financial Year 2017-18) on 07/02/2019. What will be the fee (penalty) under section 234F?

Since the Income-tax return is filed after due date (31/07/2018) and after 31/12/2018, fee (penalty) will be Rs. 10,000/-

In the above situation, if total income of the Assessee does not exceed Rs. 5 Lakh, the fee (penalty) will be Rs. 1,000/-.

Equalization levy

Applicability:-

Equalisation Levy is a direct tax, which is withheld at the time of payment by the service recipient. The two conditions to be met to be liable to equalisation levy:

• The payment should be made to a non-resident service provider;
• The annual payment made to one service provider exceeds Rs. 1,00,000 in one financial year.

Services Covered Under Equalisation Levy:-

Currently, not all services are covered under the ambit of equalisation Levy. The following services covered:

• Online advertisement;
• Any provision for digital advertising space or facilities/ service for the purpose of online advertisement;

Rate of Tax:-

Currently the applicable rate of tax is 6% of the gross consideration to be paid.

What If a Company Fails To Deduct This Tax? :-

The Budget has proposed that any Indian business owner or company that fails to deduct this tax or equalization levy or doesn’t deposit it with the government, then the company will not be allowed to consider the expenses in calculating taxable profits. This will increase the taxable income, thereby hiking the company’s tax liability.

The Impact Of Equalization Levy On The Industry :-

The services at which this tax, also gaining popularity and dubbed as Google Tax, is levied include online advertising or providing digital advertising space with the primary aim of levying tax on the income generated by internet  giants from Indian advertisers. The equalization levy is imposed on the payment of the advertisers and has introduced India e-commerce industry to a new kind of tax.

It will affect the business of e- commerce giants which do not have permanent establishments in India. Internet giants like Facebook and online start – ups which receive payments from Indian advertisers will also be largely affected. The tax has come into effect from 1st June 2016 along with Equalization levy rules, 2016 notified by Central Board of Direct taxes

CBDT notifies Capital Gains Bond by IRFCL for Section 54EC exemption

Central Government notifies Indian Railway Finance Corporation Limited 54EC Capital Gains Bond issued by Indian Railway Finance Corporation Limited (IRFCL) vide Notification No. 27/2018-Income Tax for the purpose of exemption under section 54EC of Income Tax Act, 1961.

Notification No. 28/2018-Income Tax:-

The Central Government hereby specifies the “Indian Railway Finance Corporation Limited 54EC Capital Gains Bond” issued by Indian Railway Finance Corporation Limited for the purpose of the said clause.

Provided that the benefit under the said proviso shall be admissible in the case of transfer of such bonds by endorsement or delivery, only if the transferee informs Indian Railway Finance Corporation Limited by registered post within a period of sixty days of such transfer.

Can a retired person claim the Rs 40,000 standard deduction?

Any taxpayer, who receives pension from his former employer, can claim a deduction of Rs 40,000 or the amount of pension, whichever is less. However, there is a big catch!

Earlier pensioners were not able to enjoy any allowance on account of transport and medical expenses, but after this provision they will also get the benefit of this deduction.

You must be aware that starting from FY18-19, every salaried person is entitled to claim a ‘standard deduction’ of Rs 40,000, which was last abolished in the Finance Act 2005. However, some people were not sure whether pensioners are also eligible for claiming this deduction. Keeping their concerns in view, the Central Board of Direct Taxes (CBDT) has now clarified that any taxpayer, who receives pension from his former employer, can claim a deduction of Rs 40,000 or the amount of pension, whichever is less, u/s 16 of the Income Tax Act.

As per CBDT, the pension received by a taxpayer is taxable under the head ‘Salaries’. The Sec 16 of the I-T Act, 1961 has now been amended by the Finance Act 2018 to provide that a taxpayer having income chargeable under the head ‘Salaries’ will be allowed a deduction of Rs 40,000, or the amount of salary, whichever is less, for computing his taxable income. Accordingly, any taxpayer who is in receipt of pension will be entitled to claim this deduction, or the amount of pension, whichever is less.

Q : - Are family members of pensioners also allowed to avail Standard Deduction?However, according to tax experts, while pensioners who are receiving      pension themselves are eligible to avail standard deduction, their family members who are receiving pension as legal heirs are not eligible for the same.

Earlier pensioners were not able to enjoy any allowance on account of transport and medical expenses, but after this provision they will also get the benefit of this deduction
However, in case an employee passes away, then after his death the pension is received by his family members. Pension received by dependent family members of the retired individual is known as family pension and is considered as ‘income from other sources’. “For family pension, a standard deduction u/s 57(iia) is available under which an amount of Rs 15,000 or 1/3rd of the uncommuted pension received, whichever is less, shall be exempt. Spouse, children below the age of 25 years, unmarried daughter and dependent parents in certain cases shall come under the definition of dependent family members


Query: My husband has purchased a flat in my name. He has taken a housing loan to finance the purchase. Will he be able to avail of the income tax benefits? 

Ans : For claiming home loan tax benefits on the interest and the principal, the person has to be a joint owner in the property as well as the home loan co-borrower. In your case, it seems that your husband is not the co-owner of the property, so he will not be able to claim the income tax benefits. 

Query: I made capital gains of about Rs 1 crore from the sale of property in the financial year 2017-18. The same year, I invested Rs 50 lakh in infrastructure bonds to save capital gains tax. Can I invest the remaining Rs 50 lakh in infrastructure bonds in 2018-19 as well to save tax? 

Ans : Given that you have already exhausted the limit of Rs 50 lakh in 2017-18, you will not be able to save tax on the balance Rs 50 lakh by investing in infra bonds in 2018-19. According to Section 54EC of the Income-Tax Act, capital gains on the sale of a long-term capital asset will not be taxable if the investment is made in specified bonds within six months from the date of sale. But this investment cannot exceed Rs 50 lakh in aggregate in the year in which the property is sold and the subsequent year.

Query: I am retired and draw pension from the EPFO, my former employer—through an LIC pension unit— and LIC’s Jeevan Suraksha policy. Will this income be taxable? Can I claim the Rs 40,000 standard deduction? 

Ans : The pension amount received during the year from all of these funds shall be taxable in your hands. However, the sum received from the EPFO and the LIC pension unit shall be taxable under the head ‘salary’ and the sum received from Jeevan Surakhsa policy of LIC shall be taxable under the head ‘income from other sources’. From 2018-19, you can claim the standard deduction of Rs 40,000 for the pension received from EPFO and your employer. 

BLOCKED CREDITS Section 17(5) of CGST Act - Cases Where Input Tax Credit under GST Cannot Be Availed

ITC of tax paid on almost every inputs and input services used for supply of taxable goods or services or both is allowed under GST except a small list of items provided u/s 17(5). The negative list covers mainly items of personal consumption, inputs use of which results into formation  of an immovable property (Except plant and machinery), telecommunication towers, pipelines laid outside the factory premises, etc. and taxes paid as a result of detection of evasion of taxes. The detailed list is given hereunder :-

• Motor vehicles and conveyances, EXCEPT WHEN USED
• For transportation of goods
• For making the following taxable supplies:
• further supply of such vehicles of conveyances; or
• Transportation of passengers; or
• Imparting training on driving, flying, navigating such vehicles or conveyances.

A car dealer is allowed ITC on cars purchased for resale; a cab service is allowed ITC on cars purchased for use as cabs; a driving school is allowed ITC on cars purchased for use in teaching driving.

• Food abd beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery EXCEPT WHEN
• A inward supply of these is used for making an outward taxable supply of the same category or as an element of a taxable composite or mixed supply.

A caterer for a wedding gets the sweet dish course supplied by a specialist in desserts. He allowed ITC of the tax paid by him to the specialist.

• Membership of a club, health and fitness centre

• Rent-a-cab, life insurance and health insurance, EXCEPT WHERE
• The government has made it obligatory for an employer to provide any of these services to its employees; or
• Inward supply of these services is used for making an outward taxable supply of the same category or as an element of a taxable composite or mixed supply.

• Travel benefits to employees on vacation such as ITC or home travel concession

• Works contract srvices for construction of an immovable property  EXCEPT WHEN
• It is input service for further supply of works contract services
• Immovable property is plant machinery

• Inward supplies received by a taxable person for consumption of an immovable property (other than plant and mahinery) on his own account even when such supplies are used in the course or furtherance of business

A company buys material ans hires a contractor to construct an office building to house the plant supervisory staff. The input tax credit on such goods and services is not allowed as credit.

• Inward supplies on which tax has been paid under the COMPOSITION SCHEME

• Inward supplies received by a NON RESIDENT taxable person except goods imported by him

• Goods and/or services used for PERSONAL CONSUMPTION

• Goods that are lost, stolen. destryed, written off, or disposed of way of gift or free samples

• Tax paid under sections 74, 129 and 130. (These sections prescrived the provisions relation to tax paid as a result of evasion of taxes, or upon detention of goods or conveyances in transit, or toward redemption of confiscated goods/conveyances. )

Intra -state E-way Bill: 7 things to keep in mind from June 3

On April 1, 2018, the e-way bill system for the inter-state movement of goods was rolled-out across the nation. In parallel, it was decided that intra-state e-way bill too shall be rolled out in a phased manner from April 15th once the system had sufficiently stabilised, with roughly four to five states coming on board every week 

Karnataka was the first to join the bandwagon, as it adopted the intra-state e-way bill system from April 1 itself. A total of 22 states have now gone live as well - Andhra Pradesh, Arunachal Pradesh, Bihar, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Meghalaya, Nagaland, Sikkim, Telengana, Tripura, Uttarakhand, Uttar Pradesh, Puducherry, Assam and Rajasthan - with Lakshwadeep and Chandigarh being the latest entrants on May 25, and Maharashtra following closely on May 31, and Punjab and Goa from June 1.

If official records are to be considered, the entire implementation of the system and the generation of e-way bills nationwide has been successful. Till the May 13, which is a period of almost 45 days, more than 4.15 crore e-way bills were successfully generated, which included more than 1 crore e-way bills for intra-state movement of goods. Both inter as well as intra-state movement of goods will become mandatory from June 3, 2018 - which implies that businesses across the country will need to  factor in the same, while planning for their respective consignments. 

Here are 7 quick things you can keep in mind as a business, to prepare yourself for the time ahead: 
i. You can generate the e-way bill using GSTIN from http://ewaybillgst.gov.in 

ii. E-way bill will be required when the value of taxable consignment, along with the tax value, is more than Rs 50,000 

iii. If you have sent material for Job Work then either you or the Job Worker can generate the e-way bill 

iv. As a supplier, you can authorize the transporter, e-commerce operator or the courier agency to fill Part A of the e-way bill 

v. If the distance between your primary place of business and that of the transporter is less than 50 KMs, only Part A of the e-way bill is required to be filled, and Part B is not required to be filled 

vi. Once the e-way bill is generated, the recipient of goods can confirm or deny the receipt of goods before the actual delivery or 72 hours, whichever is earlier

vii. In cases where the goods are being transported by railways, aeroplane or ship, the e-way bill can only be generated by the supplier or a recipient, and not by the transporter. However, in such cases, an e-way bill can be generated even after the goods shipment has started 

Cases when E-Way bill is Not Required:-

In the following cases it is not necessary to generate e-Way Bill:

• The mode of transport is non-motor vehicle

• Goods transported from Customs port, airport, air cargo complex or land customs station to Inland Container Depot (ICD) or Container Freight Station (CFS) for clearance by Customs.

• Goods transported under Customs supervision or under customs seal

• Goods transported under Customs Bond from ICD to Customs port or from one custom station to another.

• Transit cargo transported to or from Nepal or Bhutan

• Movement of goods caused by defence formation under Ministry of defence as a consignor or consignee

• Empty Cargo containers are being transported

• Consignor transporting goods to or from between place of business and a weighbridge for weighment at a distance of 20 kms, accompanied by a Delivery challan.

• Goods being transported by rail where the Consignor of goods is the Central Government, State Governments or a local authority.

• Goods specifed as exempt from E-Way bill requirements in the respective State/Union territory GST Rules.

• Transport of certain specified goods- Includes the list of exempt supply of goods, Annexure to Rule 138(14), goods treated as no supply as per Schedule III, Certain schedule to Central tax Rate notifications.

ALL ABOUT E-WAY BILL

1. What is an E-Way Bill?

E-Way Bill is an electronic way bill for movement of goods which can be generated on the e-Way Bill Portal. Transport of goods of more than Rs. 50,000 (Single Invoice/bill/delivery challan) in value in a vehicle cannot be made by a registered person without an e-way bill.

Alternatively, Eway bill can also be generated or cancelled through SMS, Android App and by Site-to-Site Integration(through API).

When an e-way bill is generated a unique e-way bill number (EBN) is allocated and is available to the supplier, recipient, and the transporter.

2.When Should E-Way Bill be issued?

eWay bill will be generated when there is a movement of goods in a vehicle/ conveyance of value more than Rs. 50,000( either each Invoice or in (aggregate of all Invoices in a vehicle/ Conveyance)# )  –

• In relation to a ‘supply’
• For reasons other than a ‘supply’ ( say a return)
• Due to inward ‘supply’ from an unregistered person

For this purpose, a supply may be either of the following:

• A supply made for a consideration (payment) in the course of business
• A supply made for a consideration (payment) which may not be in the course of business
• A supply without consideration (without payment)In simpler terms,  the term ‘supply’ usually means a:

1. Sale – sale of goods and payment made
2. Transfer – branch transfers for instance
3. Barter/Exchange – where the payment is by goods instead of in money

Therefore, eWay Bills must be generated on the common portal for all these types of movements.

For certain specified Goods, the eway bill needs to be generated mandatorily even if the Value of the consignment of Goods is less than Rs. 50,000:

1. Inter-State movement of Goods by the Principal to the Job-worker by Principal/ registered Job-worker***,
2. Inter-State Transport of Handicraft goods by a dealer exempted from GST registration

3. Who should Generate an E-Way Bill?

• Registered Person – Eway bill must be generated when there is a movement of goods of more than Rs 50,000 in value to or from a Registered Person. A Registered person or the transporter may choose to generate and carry eway bill even if the value of goods is less than Rs 50,000.
• Unregistered Persons – Unregistered persons are also required to generate e-Way Bill. However, where a supply is made by an unregistered person to a registered person, the receiver will have to ensure all the compliances are met as if they were the supplier. 
• Transporter – Transporters carrying goods by road, air, rail, etc. also need to generate e-Way Bill if the supplier has not generated an e-Way Bill.