Taxation of Income Earned from Selling Shares: A Complete Guide for 2024

Stock Finance Business Banking Forex Money Concept

Selling shares can generate significant income for investors. But how is the income from share trading taxed in India? What are the different types of taxes and tax rates applicable?

This comprehensive guide will explain everything you need to know about taxation of income earned from selling shares in India.

Introduction

Share trading has become extremely popular in India. With high returns possible, more and more individuals are investing in shares of publicly listed companies.

However, many shareholders have doubts about how the income earned from share trading is taxed. Based on the period of holding, shares are classified as short-term or long-term capital assets. The income is taxable under the head ‘Capital Gains’.

This article will provide a deep dive into taxation of short-term and long-term capital gains from sale of listed shares. It covers recent changes after Budget 2018, grandfathering clause, setting off capital losses, and more. Read on to gain clarity on share trading taxation in India.

What are Capital Gains?

Any profit or gain that arises from the sale of a ‘Capital Asset’ is taxable under the head ‘Capital Gains’. For taxation purpose, capital assets are classified into short-term and long-term based on the holding period of shares.

  • Short-Term Capital Asset – Shares held for 12 months or less.
  • Long-Term Capital Asset – Shares held for more than 12 months.

Accordingly, capital gains are categorized as:

  • Short-Term Capital Gains (STCG) – Profit from shares held up to 12 months.
  • Long-Term Capital Gains (LTCG) – Profit from shares held for more than 12 months.

The tax rates and rules for STCG and LTCG are quite different. Let’s understand them in detail:

Short-Term Capital Gains Tax

If you sell shares within 12 months of purchase, any profit is considered Short-Term Capital Gains (STCG). For example:

  • Shares of ABC Ltd purchased on 12th Feb 2023
  • Sold on 3rd Jan 2024
  • Holding period = Less than 12 months
  • Hence any profit is considered STCG

According to Income Tax laws, STCG arising from sale of listed equity shares is taxable at 15%. This rate is irrespective of your income tax slab.

For computing STCG, you can deduct expenses incurred wholly and exclusively for the transfer, such as brokerage fees or demat charges.

The calculation of STCG is:

STCG = Sale Value – Purchase Value – Expenses

Let’s take an example:

  • Purchase Price: ₹120 per share
  • Sale Price: ₹200 per share
  • No. of Shares: 500
  • Brokerage at 0.1% of Sale Value = ₹200
  • STCG = (500 x 200) – (500 x 120) – 200 = ₹90,000

Here, the STCG will be ₹90,000 and tax payable will be 15% of this gain, which is ₹13,500.

This STCG will be added to your Total Income for the financial year and taxed as per your applicable tax slab rate.

Now that you understand taxation of STCG, let’s move on to LTCG taxation.

Long-Term Capital Gains Tax

When listed shares are sold after being held for more than 12 months, the resulting profit is called Long-Term Capital Gains (LTCG).

Taxation of LTCG has undergone a significant change after Budget 2018.

Up to 31st Jan 2018 – LTCG from equity shares were completely exempt from tax.

From 1st April 2018 – LTCG exceeding ₹1 Lakh in a financial year is taxable at 10%.

This means any LTCG made till 31st Jan 2018 is tax-free. For gains after this date, only the amount above ₹1 Lakh is taxed at 10%.

Let’s take an example to understand this better:

  • Shares purchased on 1st Nov 2017
  • Sold on 1st May 2019
  • LTCG = ₹1,20,000

Tax Calculation:

  • LTCG made till 31 Jan 2018 = Tax Free
  • LTCG after 31 Jan 2018 = ₹1,20,000
  • Less: Exemption of ₹1 Lakh
  • Taxable LTCG = ₹20,000
  • Tax on this at 10% = ₹2,000

Therefore, on your ₹1,20,000 LTCG, only ₹2,000 is payable as LTCG tax.

This change in LTCG tax has been made prospectively from 1st April 2018. The gains made up to 31st Jan 2018 are protected by the grandfathering clause, which we will cover next.

Grandfathering Clause for LTCG

The grandfathering clause is a transitional provision to ensure gains made up to 31st Jan 2018 are exempted from LTCG tax.

Under this clause, the cost of acquisition of shares acquired before Feb 1, 2018 is taken as the higher of:

  • Actual purchase price OR
  • Fair market value (FMV) as on 31st Jan 2018

Let’s understand this with an example:

  • Shares purchased on 1st July 2017 at ₹150
  • FMV on 31st Jan 2018 = ₹200
  • Sold on 1st April 2019 for ₹250

As per grandfathering clause, the cost of acquisition is taken as the higher of:

  • Actual purchase value = ₹150
  • FMV as on 31st Jan 2018 = ₹200

Therefore, the cost of acquisition is ₹200.

LTCG will be – Sale value minus cost of acquisition = ₹250 – ₹200 = ₹50

So LTCG of ₹50 will be exempt from tax under grandfathering clause.

Set Off and Carry Forward of Losses from Shares

Many investors also incur losses from share trading. Here is how these capital losses can be set off against capital gains:

Short-Term Capital Loss (STCL)

  • Can be set off against any capital gains – STCG or LTCG
  • Remaining loss can be carried forward for 8 assessment years
  • Allowed only if return is filed on time

Long-Term Capital Loss (LTCL)

  • Can be set off only against LTCG
  • Not allowed to be set off against STCG
  • Remaining loss can be carried forward for 8 assessment years
  • Allowed only if return is filed on time

Therefore, by filing your tax returns on time, you can reduce your tax liability through prudent set off of capital losses.

Securities Transaction Tax (STT)

Securities Transaction Tax (STT) is levied on purchase or sale of securities listed on Indian stock exchanges.

Current STT rates are:

  • 0.1% on purchase or sale value of shares
  • 0.001% on sale of futures
  • 0.017% on sale of options
  • 0.125% on sale of equity funds

The tax implications discussed in this article are applicable if STT is paid on the transaction.

Sale of Shares – Business Income vs Capital Gains

Gains from shares are typically taxed under the head ‘Capital Gains’.

However, in case of high volume trading like day trading, the income may be construed as ‘Business Income’.

  • For day traders or high volume traders, gains are taxed as business income. These are added to total income and taxed as per slab.
  • For general investors, gains are considered capital gains and eligible for beneficial rates.

In case of any dispute, CBDT has clarified that the taxpayer can decide the income head and pay taxes accordingly. This stand has to be maintained consistently.

Tax on Sale of Unlisted Shares

The taxation rules differ slightly for unlisted shares:

  • Income from sale of unlisted shares is considered capital gains. This is irrespective of holding period.
  • Unlisted shares do not attract securities transaction tax (STT).
  • To provide uniformity, CBDT has specified that income from unlisted shares will be taxed as capital gains.

Frequently Asked Questions

Q: What is grandfathering clause in LTCG?

A: The grandfathering clause exempts LTCG made up to 31st Jan 2018 from tax. The cost of acquisition is taken as higher of actual purchase price or FMV as on 31 Jan 2018.

Q: Can I adjust capital loss against business income?

A: No, capital loss can be set off only against capital gains. It cannot be set off against normal business income.

Q: Is STT applicable on sale of shares?

A: Yes, Securities Transaction Tax (STT) is payable on purchase or sale of listed shares on stock exchanges.

Q: How is intraday trading taxed?

A: For day traders or active traders, gains are considered speculative business income. These are added to total income and taxed as per slab rates.

Q: Are dividends from shares taxable?

A: No, dividends received from domestic companies are exempt from tax in the hands of the investor.

Conclusion

Taxation of capital gains from shares depends on:

  • Holding period – short-term vs long-term
  • Time of sale – before or after 31st Jan 2018
  • Applicability of STT
  • Grandfathering clause

Day traders may have to pay tax on share trading as business income. By prudently adjusting capital losses, you can reduce your tax incidence.

I hope this comprehensive guide on taxation of share trading income helps you understand the applicable rules fully. The team at Filingwala can also help you file capital gains tax on stocks correctly.

Filingwala.com is an accounting services company that provides various legal and compliance services like company registration, trademark registration, tax filing, accounting and more. Their expert CAs and lawyers can assist you in correctly computing capital gains tax and filing returns.

GSTR-9 Annual Return: A Comprehensive Guide to Due Date, Applicability, Turnover Limit, Format, Eligibility & Rules in 2024

Filing the annual GST return in Form GSTR-9 is crucial for reconciliation of the entire year’s transactions. This comprehensive guide will help you understand everything about GSTR-9 including due date, applicability, turnover limit, format, eligibility criteria and rules.

Introduction

The annual return in GSTR-9 requires taxpayers to consolidate their monthly/quarterly GST returns and sales/purchase registers into a single report.

Though complex, filing GSTR-9 is critical for extensive reconciliation of the year’s data to ensure 100% transparent disclosures. Any discrepancies in your books and returns can also be easily identified in your GSTR-9.

This comprehensive guide will clarify all your queries regarding GSTR-9 filing to help you meet the compliance requirement smoothly.

What is GSTR-9?

GSTR-9 is an annual return that every GST registered taxpayer must file by 31st December of the following financial year. The only exceptions are composition taxpayers and certain other specified categories like ISD, TDS deductor etc.

The annual return is divided into 6 parts and 19 sections capturing extensive information about your business’s outward and inward supplies, taxes paid, demands, refunds, ITC, HSN-wise summary of goods/services and more for the whole financial year.

Who Needs to File GSTR-9?

All normal taxpayers with GST registration have to mandatorily file GSTR-9, except:

  • Taxpayers under composition scheme (GSTR-9A)
  • Casual taxable persons
  • Input service distributors
  • Non-resident taxable persons
  • Persons deducting TDS under section 51
  • Persons collecting TCS under section 52

So every other GST registered person has to file GSTR-9. Even if your registration has been cancelled during the financial year, you still need to file the annual return if you were registered for even a single day.

GSTR-9 Turnover Limit

There is no turnover threshold for exemption from GSTR-9 under GST law. However, to reduce compliance burden on small businesses, the government has made the annual return optional for taxpayers with turnover up to Rs 2 crore.

So if your aggregate annual turnover is below Rs 2 crore, you can still voluntarily file GSTR-9 but it is not mandatory.

Due Date for Filing GSTR-9

The due date for filing GSTR-9 for a financial year is 31st December of the next financial year.

For instance, the due date for filing annual return for FY 2022-23 is 31st December 2023.

You must file GSTR-9 on or before the due date to avoid late fees under GST. Delayed filing beyond the due date will attract late fees up to a specified limit based on your turnover.

Details Required in GSTR-9

The annual return Form GSTR-9 is categorized into 6 main parts with 19 sections capturing extensive information:

Part I: Basic details of the taxpayer

Part II: Details of outward and inward supplies declared during the financial year

Part III: Details of ITC for the financial year

Part IV: Details of tax paid as declared in returns filed during the financial year

Part V: Particulars of the transactions for the previous FY declared in returns of April to September of current FY

Part VI: Other details

Let’s understand the key details that a taxpayer needs to fill in each part of GSTR-9:

  1. Basic Details (Part I)

This section captures your taxpayer details like GSTIN, legal name, financial year, GST registration status, state name.

  1. Outward and Inward Supplies (Part II)
  • Annual value and tax liability thereon of supplies made, exported and supplies on which tax is to be paid on reverse charge basis during the year
  • IGST, CGST, SGST split for various types of supplies
  • Supplies made to consumers and unregistered persons on which tax is paid under RCM
  • Sub-classified summary of supplies that are exempt, nil rated, non-GST and no supply (Schedule III)
  • HSN code wise summary of outward supplies
  • Inward supplies attracting reverse charge during the FY
  • Inward supplies from registered suppliers, composition taxpayers and unregistered suppliers
  • Import of goods and services
  1. Input Tax Credit (Part III)
  • Total ITC available, reversed, reclaimed and net ITC available and utilised during the year
  • ITC reversal as per rule 37, 39, 42 & 43 of the CGST Rules
  • ITC of IGST, CGST and SGST classified as inputs, input services and capital goods
  1. Tax Payment (Part IV)
  • Total tax liability, ITC utilised and tax paid in cash for the year
  • Interest, late fees, penalty paid during the year
  • Refund claimed, sanctioned and rejected with details
  1. Previous FY Transactions (Part V)
  • Supplies, ITC and tax liability declared in previous year but declared in current year
  • Tax liability under RCM on supplies received in previous year but declared in current year
  1. Other Details (Part VI)
  • Consolidated statement of advances paid, adjusted, tax payable on those adjustments and details of refund claimed on advances
  • Any other details the taxpayer wants to disclose

Consequences of Not Filing GSTR-9 on Time

Delay in filing GSTR-9 beyond the due date of 31st December will attract late fee, based on your turnover, under Section 47 of CGST Act. The late fees applicable for FY 2022-23 onwards are:

Annual TurnoverLate Fee Amount (Per Day)
Up to Rs 5 croreRs 50 under CGST + Rs 50 under SGST = Rs 100
Over Rs 5 crore and up to Rs 20 croreRs 100 under CGST + Rs 100 under SGST = Rs 200
Above Rs 20 croreRs 200 under CGST + Rs 200 under SGST = Rs 400

The maximum late fee payable is also capped at a specified percentage of the taxpayer’s turnover – 0.04% of turnover in state/UT for taxpayers with turnover up to Rs 20 crore and 0.5% of turnover for those above Rs 20 crore turnover.

Apart from late fees, failing to file GSTR-9 even after a notice can also lead to levy of penalty under section 125 of CGST Act. The penalty can be up to 25% of tax payable.

How to File Error-Free GSTR-9?

Follow these tips for accurate GSTR-9 filing:

  • Download auto-populated GSTR-9 json and reconcile the data with your monthly returns and books
  • Ensure GSTR-1 and GSTR-3B of the whole year are filed before filing GSTR-9
  • Match GSTR-2A inward supplies with purchase register
  • Identify and report any data mismatches in Part V of GSTR-9
  • Ensure HSN-wise summary of goods and services matches with monthly records
  • Double check nil return months to avoid discrepancies
  • Reconcile ITC availed with Form GSTR-2A to report ineligible ITC under Part III
  • Cross-tally interest, late fees, taxes paid with GSTR-3B before filing Part IV
  • Disclose any tax liability under reverse charge in the year of payment if not reported before
  • Seek professional help to avoid omissions and minimize reconciliation errors

Using a comprehensive GST software solution like filingwala.com can help automate reconciliation and simplify GSTR-9 filing. Their user-friendly dashboards allow quick import and matching of all your GST returns and purchase data to generate an audit-ready GSTR-9 within minutes.

Frequently Asked Questions

Q. Is GSTR-9 mandatory if turnover is below Rs 2 crore?

A. No, GSTR-9 is optional for taxpayers with turnover up to Rs 2 crore. However, it is advisable to file for better compliance.

Q. Can I revise GSTR-9 after filing?

A. No, after filing, GSTR-9 cannot be revised. You need to disclose any errors/omissions in next year’s annual return.

Q. Should I file nil GSTR-9 if I have filed nil returns?

A. Yes, even if you have filed nil returns, a NIL GSTR-9 has to be filed for the financial year.

Q. Can I file GSTR-9 directly on the GSTN portal?

A. Yes, GSTR-9 has to be filed online on the GST portal. However, filing through a GST software like filingwala.com makes the entire process quicker and simpler.

Q. Can I edit auto-drafted GSTR-9 json before filing?

A. Yes, you can edit, add or modify the auto-populated figures as required before filing your GSTR-9.

Conclusion

I hope this detailed guide helps you gain clarity on all aspects of GSTR-9 filing, right from due date, applicability, format to reconciliation checks needed.

Using a reliable GST software solution like filingwala.com to accurately import and match your GST data can significantly smoothen your GSTR-9 filing experience. Their automated tools help you identify and fix discrepancies upfront, minimizing errors and future disputes.

So leverage technology and expert help this year to breeze through your annual GST compliance with ease. File a clean GSTR-9 on time and avoid penalties due to non-compliance.

Form 26AS: The Complete Guide to Download and Understand Your Tax Credit Statement

Young financier reading documents and discussing financial data with colleague

An in-depth look at what Form 26AS is, what information it contains, how to download it, and how it can help you file taxes correctly.

Form 26AS, also known as the Tax Credit Statement, is a vital document every Indian taxpayer needs to be familiar with. It contains extensive information about the taxes deducted and collected on your behalf, along with details of the income tax refunds you have received.

With comprehensive facts about your tax payments and liabilities, Form 26AS serves as an important tool to file income tax returns accurately.

This comprehensive guide will provide you with everything you need to know about Form 26AS – right from what it is, what details it consists of, how to download it from TRACES portal or net banking, to how you can leverage it for quick and error-free tax filing.



What is Form 26AS?

Form 26AS, known as the Tax Credit Statement, is an annual consolidated tax statement issued under Rule 31AB of the Income Tax Rules, 1962.

It is generated every quarter and displays all the tax credits under your Permanent Account Number (PAN).

The credits include:

  • Tax Deducted at Source (TDS)
  • Tax Collected at Source (TCS)
  • Advance tax, self-assessment tax payments
  • Regular assessment tax deposits

Additionally, Form 26AS provides information about:

  • Income tax refunds
  • High-value financial transactions
  • TDS defaults
  • Pending demands
  • Completed assessment proceedings

Essentially, Form 26AS gives you a consolidated view of all the taxes paid, collected and deducted on your income during the financial year.

The government has recently expanded the scope of Form 26AS to promote voluntary compliance and transparency.

The new 26AS now includes details of:

  • Foreign remittances
  • Purchase of mutual funds
  • Purchase of bonds, debentures
  • Off-market transfer of shares
  • Buyer’s PAN in sale of immovable property
  • Breakup of salary income
  • TDS proceedings

Armed with detailed information on specified financial transactions, taxpayers can ensure accurate tax compliance and reporting.

Information Available on Form 26AS

Form 26AS contains different sections providing extensive information related to your taxes. Here is a quick look at key details available:

SectionInformation Available
Part A: TDS on paymentsTDS deducted on income such as salary, interest, commission, rent, professional fees. Along with deductor’s TAN and amount.
Part A1: TDS on 15G/15HDetails of income where no TDS deducted due to Form 15G/15H submission.
Part A2: TDS on property/contractTDS deducted u/s 194IA on immovable property sale.  TDS on rent u/s 194IB.  TDS to resident contractors/professionals u/s 194M.
Part B: TCSDetails of Tax Collected at Source by seller of specified goods.
Part C: Advance/Self-Assessment TaxDetails of advance tax, self-assessment tax paid. Challan details.
Part D: RefundIncome tax refunds issued. Assessment year, date, amount and interest on refund.
Part E: Specified TransactionsDetails of high-value financial transactions. Purchase of mutual funds, bonds, shares etc.
Part F: TDS on property purchaseTDS deducted u/s 194IA, 194IB, 194M by buyer/tenant/payer.
Part G: TDS DefaultsDetails of TDS defaults during the financial year.
Part H: GST TurnoverGST turnover details as per GSTR-3B.

This comprehensive view allows you to ensure all taxes deducted on your income are duly credited to the Income Tax Department.

Structure and Parts of Form 26AS

Now let’s understand the various sections of Form 26AS in detail:

Part A: TDS on Payments

This section provides extensive information about tax deduction on different types of incomes such as:

  • Salary
  • Interest income
  • Rent
  • Commission
  • Professional service fees
  • others

It displays the TAN of the deductor along with date and amount of TDS deduction.

For instance, your employer’s TAN will be shown against TDS on your salary. Similarly, banks’ TAN will reflect against TDS on your interest income.

Part A1: TDS on 15G/15H

If you have submitted Form 15G/15H for non-deduction of TDS on certain incomes, this section will provide details of such income.

For example, no TDS is required on interest income below ₹40,000 in a year for senior citizens if Form 15H is submitted. Part A1 will show interest income on which you have furnished Form 15H to the bank for non-deduction of TDS.

Part A2: TDS on Property/Contract

This section has details of:

  • TDS under section 194IA: Deducted on sale of immovable property valued above ₹50 lakhs. Applicable if you are the seller.
  • TDS under section 194IB: Deducted by tenant on rent paid above ₹50,000 per month. Applicable if you are the landlord.
  • TDS under section 194M: Deducted by payer on fees above ₹50 lakhs to a resident professional or contractor. Applicable if you are the recipient of such fees.

Part B: TCS

It shows details of Tax Collected at Source by the seller of specified goods when sale consideration exceeds ₹50 lakhs in a financial year.

For example, TCS is applicable if you have sold:

  • Motor vehicle above ₹10 lakhs
  • Jewellery above ₹5 lakhs
  • Any goods/services above ₹50 lakhs

Part B will have details if the seller has collected TCS on purchase of such goods from you.

Part C: Advance/Self-Assessment Tax

This part displays details of all advance tax and/or self-assessment tax paid by you for the financial year.

It also shows challan information like BSR code, date of deposit and challan identification number (CIN) to validate tax payment.

Part D: Refund

If tax refund has been issued to you for the assessment year, details will appear here.

It shows:

  • Assessment year
  • Refund amount
  • Date of refund payment
  • Interest on refund
  • Mode of payment (cheque/bank transfer etc.)

Part E: Specified Financial Transactions

Banks and other institutions have to report high-value financial transactions to tax authorities. These transactions are reflected here such as:

  • Purchase of mutual funds above ₹10 lakhs (or ₹50,000 per transaction)
  • Purchase of bonds, debentures above ₹10 lakhs
  • Purchase of shares in a company exceeding ₹10 lakhs or 1% of share capital
  • Buyer’s PAN in sale of immovable property above ₹10 lakhs
  • Off-market transfer of shares, mutual funds, bonds etc.

Part F: TDS on Property Purchase

This section shows TDS deducted by the buyer/tenant if you have:

  • Sold immovable property above ₹50 lakhs
  • Rented out property above ₹50,000 per month
  • Received professional fees above ₹50 lakhs

It helps reconcile whether the tax has been properly deducted on such incomes.

Part G: TDS Defaults

If any TDS defaults are detected after processing the TDS returns, details will be available here.

However, demands raised by the assessing officer do not form part of this section.

Part H: GST Turnover

This part reflects turnover details as per monthly GST returns (GSTR-3B). It helps correlate GST and income tax information.

This comprehensive view of taxes deducted, collected, and paid gives complete clarity on your tax liabilities and credits for the financial year.

How to View and Download Form 26AS

You can check your Form 26AS in two ways:

  1. TRACES Website

The Tax Information Network (TIN) website operated by NSDL allows you to freely view, download and print Form 26AS.

  1. Net Banking

Many banks provide facility to view Form 26AS through net banking if your PAN is linked to the account.

Let’s look at the step-by-step process for both:

Download from TRACES Website

Here is the process to download Form 26AS from the TRACES portal:

Step 1) Visit the TRACES website

Step 2) Enter your PAN as user ID

Step 3) Enter password and Captcha code

Step 4) Go to ‘View Form 26AS’ option

Step 5) Select Assessment Year and format – HTML, PDF etc.

Step 6) Enter verification code

Step 7) Click ‘View/Download’. Form 26AS will open up.

Step 8) You can print or download the PDF copy.

That’s it! Within few minutes you can download Form 26AS from the TRACES website.

View through Net Banking

Here are the steps to check Form 26AS through net banking:

Step 1) Login to net banking account of authorized bank

Step 2) Look for ‘Tax Credit Statement’ or ‘Form 26AS’ link

Step 3) Click on link and enter PAN details

Step 4) Form 26AS will open up with all details

Step 5) You can print or download the PDF copy

Currently, over 20 banks provide Form 26AS downloading facility through net banking. Some of the authorized banks are:

  • Axis Bank
  • Bank of Baroda
  • Bank of India
  • Canara Bank
  • HDFC Bank
  • ICICI Bank
  • IDBI Bank
  • Kotak Mahindra Bank
  • Punjab National Bank
  • State Bank of India
  • Yes Bank

So in addition to TRACES, you can also easily check Form 26AS via net banking!

Benefits of Form 26AS

Here are some major benefits of Form 26AS for taxpayers:

Consolidated tax information

  • Form 26AS consolidates all your tax payment, deduction and collection information in one place. Saves time tracking from different sources.

Verify tax credits

  • You can validate whether tax deducted on various incomes has been credited to the Income Tax Department. Identify any mismatches.

Accuracy in tax filing

  • With comprehensive tax data, you can file error-free returns based on correct TDS, advance tax and TCS credits.

Track high-value transactions

  • Details of financial transactions helps you reconcile related incomes and taxes.

Monitor demands and refunds

  • Outstanding demands and refunds issued for each year are shown. No surprises.

Auto-population of ITR

  • Information from 26AS can be used to pre-fill and file ITR quickly. Reduces effort.

So clearly, Form 26AS makes tax filing transparent, accurate and hassle-free!

New Form 26AS and Annual Information Statement

In June 2020, the income tax department expanded Form 26AS into an ‘Annual Information Statement (AIS)’.

The revamped Form 26AS includes comprehensive information on specified financial transactions, foreign remittances, pending/completed assessments and demands.

Here are some new details covered:

Foreign remittances

Banks have to report details of any foreign remittance over ₹5 lakhs received by an individual via Form 15CC. Such information will now be shown.

Breakup of salary income

Components of salary like basic, HRA, LTA, deductions claimed under section 80C, 80D etc. will be mentioned. Employers provide this data.

Pending/completed assessments

Details of scrutiny assessments, returned income, assessed income, demands raised, refunds issued for each year will be displayed.

Purchase of high-value items

Details of purchase of mutual funds, bonds, debentures, shares exceeding ₹10 lakhs will be provided as reported by institutions.

TDS proceedings

Status of defective TDS returns, defaults in TDS payments, demands raised and rectifications will be shown.

The aim of the enhanced AIS is to provide comprehensive data to taxpayers for easier voluntary compliance.

Taxpayers can also provide online feedback in case any information is incorrect in AIS. This results in updated and accurate data.

Things to Verify in Form 16/16A and Form 26AS

It is important to cross-check your Form 16/16A with Form 26AS.

This helps identify any mismatches between taxes deducted and actual credits in your Form 26AS.

Here are some things you should verify:

  • Verify name, PAN, TAN of deductor in both Form 16/16A and Form 26AS
  • Match TDS amount as per Form 16/16A with actual tax credited in Form 26AS
  • Check if TDS credits are for correct assessment year
  • Ensure incomes are reflected properly in Form 26AS as per Form 16/16A
  • Confirm tax credits are available before filing ITR based on Form 16/16A

Any discrepancy found must be corrected by contacting the deductor. This will ensure seamless tax filing for you without notice from the Income Tax Department.

Frequently Asked Questions

Here are some common queries about Form 26AS:

Q: How can I download Form 26AS without login?

You can view and download Form 26AS from net banking if your PAN is linked to the account. No separate registration is needed.

Q: What is the password to open Form 26AS PDF?

The password to open Form 26AS PDF is your date of birth in DDMMYYYY format.

Q: I found wrong entry in my Form 26AS. What should I do?

Inform the deductor who has furnished incorrect TDS return. They will have to file a correction statement to rectify errors in Form 26AS.

Q: Where can I see interest on income tax refund credited?

Interest on refund granted is shown in Part D of your Form 26AS.

Q: Is buyer’s PAN shown in Form 26AS for property sale?

Yes, if you have sold immovable property above ₹10 lakhs, buyer’s PAN is shown under Part E of Form 26AS.

Q: How long does it take to update Form 26AS after e-filing TDS return?

It takes 8-10 days to update Form 26AS after the deductor e-files TDS return.

Q: Can I edit or make changes to Form 26AS on my own?

No, a taxpayer cannot make changes to Form 26AS directly. You have to contact the deductor for any corrections.

Q: Where is data of my mutual fund investments shown?

Purchase of mutual funds above ₹10 lakhs will be shown in Part E of Form 26AS.

We hope this detailed guide to Form 26AS helps you access and leverage your Tax Credit Statement for accurate tax filing and planning. Do cross-check it with Form 16/16A before you file ITR!


The Complete Guide to GSTR-2B: Auto-drafted ITC Statement

Introduction

GSTR-2B has emerged as one of the most crucial forms under the Goods and Services Tax (GST) regime in India. This auto-drafted input tax credit (ITC) statement holds the key to error-free GST compliance and smooth tax credit claims for businesses.

But what exactly is GSTR-2B? How can it benefit taxpayers in India? When and how did it come about? This guide will answer all such questions in detail and serve as an authoritative resource on everything you need to know about GSTR-2B.

Whether you are a business owner, accounting professional, or simply someone looking to understand GSTR-2B better, you have come to the right place. By the end of this guide, you will have clarity on:

  • The meaning and concept behind GSTR-2B
  • How it compares with the existing GSTR-2A form
  • Its availability, format, contents, and special features
  • The right way to match it with your purchase register
  • Common FAQs on GSTR-2B

So let’s get right into it!

What is GSTR-2B?

GSTR-2B is essentially a static, auto-drafted ITC statement available to all GST registered taxpayers in India (except for composition dealers). It allows taxpayers to view a consolidated summary of their eligible ITC for a particular tax period, as filed by their respective suppliers.

In other words, it is a read-only statement containing information on all inward supplies received by a taxpayer based on which they can claim input tax credit. The information in GSTR-2B is fetched directly from the GSTR-1, GSTR-5, and GSTR-6 filed by a taxpayer’s suppliers.

Specifically, GSTR-2B provides information on the following:

  • Invoices issued by suppliers where ITC can be availed
  • Invoices issued by suppliers where ITC cannot be availed
  • ITC distributed by Input Service Distributors (ISDs)
  • Amendments to invoices or debit notes

One of the biggest benefits of GSTR-2B is that it remains static or constant for a tax period. This allows taxpayers to identify the exact documents based on which ITC claims can be made for that period.

For instance, if you generate GSTR-2B for the July 2023 period on 14th August 2023, the information contained in it will remain unchanged. It does not dynamically update like the existing GSTR-2A form. This enables better reconciliation of ITC claimed in monthly GSTR-3B returns.

GSTR-2B aims to bring in further transparency to the tax compliance process. It was introduced by the GSTN and made effective from August 2020, starting with the tax period of August 2020 itself.

Let us now understand the importance and benefits of GSTR-2B in detail.

Importance and Benefits of GSTR-2B

GSTR-2B serves multiple benefits for taxpayers across all industries and verticals. Some of its top merits are:

  1. Enables reconciliation of ITC claims

One of the biggest advantages of GSTR-2B is that it allows taxpayers to easily reconcile their input credit claims with supplier records.

The statement provides document-level granularity of credit details which helps identify any missing invoices or amendments. You can match this data directly with your purchase register to ensure no invoice gets missed.

  1. Avoids double claiming of ITC

Since GSTR-2B provides a consolidated view of eligible ITC, taxpayers can use it as a single source of truth. This prevents the same tax credit from being claimed twice accidentally.

It brings in transparency and minimizes ITC claim errors arising from multiple sources like GSTR-2A, GSTR-3B, books of accounts etc.

  1. Ensures proper ITC reversals

GSTR-2B clearly flags ineligible ITC that is required to be reversed in GSTR-3B. Taxpayers can take suitable action based on the advisory for each section.

This prevents inadequate reversals and non-compliance with provisions of Section 16(2) of CGST Act.

  1. Pays correct GST on reverse charge

For supplies that are subject to reverse charge, GSTR-2B indicates if the liability has been discharged. If not, taxpayers can pay the applicable GST on reverse charge basis.

This helps avoid tax loss on import of services or supplies from unregistered dealers.

  1. Identifies ITC claim tables in GSTR-3B

GSTR-2B specifies the exact tables and sections under which credit for a particular invoice needs to be claimed in the GSTR-3B.

This makes return filing easier and minimizes errors in claiming input credit in wrong sections.

  1. Enables error-free GST filings

By providing all the required ITC information in one place, GSTR-2B can greatly simplify GST return filing.

Taxpayers can seamlessly transfer the ITC values from GSTR-2B to GSTR-3B without sifting through voluminous data from multiple sources.

  1. Cuts down reconciliation time

The clean and sorted data structure of GSTR-2B minimizes the time required for reconciling ITC claims.

Rather than manually compiling ITC details from different accounting and GST records, taxpayers can find everything at one place in GSTR-2B.

Considering these advantages, it is vital for taxpayers to access and leverage the information provided in the GSTR-2B statement.

Availability of GSTR-2B

Let us now understand when and how GSTR-2B is made available to taxpayers:

  • Launch Date: GSTR-2B was introduced by GSTN from the tax period of August 2020 onwards. The first GSTR-2B statement could be generated for August 2020 period.
  • Access Date: For any tax period, GSTR-2B is made available from the 14th of the next month onwards.

For example, GSTR-2B for the October 2023 tax period will be available from 14th November 2023.

  • Cut-off Date: The statement considers all relevant forms filed by suppliers till the 11th or 13th of the succeeding month (based on supplier type). So GSTR-2B for October 2023 will consider GSTR-1 filed till 11th or 13th November 2023.
  • Notification: Taxpayers receive an email or SMS when the GSTR-2B statement is generated for any tax period.
  • Validity: The statement remains valid and unchanged for a particular tax period, until the filing due date for September month returns of next financial year or Annual Return, whichever is earlier.
  • Access Mechanism: Taxpayers can access GSTR-2B directly from the GST Portal by logging in, selecting the tax period, and clicking on ‘View’ or ‘Download’.

Therefore, taxpayers must download the GSTR-2B statement each month in a timely manner. In case any invoices are missing, follow up must be done with suppliers to ensure timely reflection.

The utility also allows taxpayers to view document-wise ITC details as well as the breakup of available/ineligible input tax credit for each tax period.

Now let us understand the contents and special features of GSTR-2B in detail.

Contents and Features of GSTR-2B

GSTR-2B aims to provide maximum relevant information to taxpayers in a user-friendly manner. Some of its key contents and features are:

A) Summary Statement

The statement provides a consolidated summary of input credit available and not available, divided into various sections. This allows taxpayers to get the big picture at one glance.

B) Document-wise Details

All documents are provided at an invoice level, including their relevant amendments. Taxpayers can view and download these details easily.

C) Section-wise Advisory

GSTR-2B provides an advisory for each section clarifying the action taxpayers need to take in their respective GSTR-3B i.e. whether to claim, not claim, or reverse the given input credit.

D) Search and Filter Options

Taxpayers can search for supplier-wise data and even sort information using filters, minimizing manual efforts.

E) Cut-off Dates

Cut-off dates are clearly highlighted, depicting the last date until which forms are considered from suppliers. This provides clarity on any missing invoices.

F) Sources of Information

It clarifies the specific forms through which data is fetched i.e. GSTR-1, GSTR-5, GSTR-6. Taxpayers remain informed.

G) Detailed Format

The detailed format covers granular aspects ranging from sections where ITC can/cannot be claimed to imports data.

H) PDF and Excel Download

GSTR-2B data can be downloaded in PDF and Excel formats for offline usage and sharing.

I) Email/SMS Notifications

Taxpayers receive notifications when the GSTR-2B is generated to ensure timely action.

J) Advanced Search Option

Where records exceed 1,000, taxpayers can use the advanced search option to extract data as required.

These features make GSTR-2B extremely useful and easy to use. Taxpayers must leverage them appropriately to maximize its effectiveness.

Comparing GSTR-2A and GSTR-2B

GSTR-2A and GSTR-2B are two important statements for claiming input tax credit (ITC) under GST. While GSTR-2A has been the popular tool for ITC claims, GSTR-2B was introduced to provide greater clarity and finalize ITC claims for a tax period.

Key Differences:

Type

  • GSTR-2A is a dynamic statement that gets updated frequently as suppliers file returns.
  • GSTR-2B is a static statement for a tax period and does not change after generation.

Information Source

  • GSTR-2A draws information from GSTR-1, GSTR-5, GSTR-6, GSTR-7, GSTR-8
  • GSTR-2B uses GSTR-1, GSTR-5, GSTR-6

Availability

  • GSTR-2A can be accessed anytime
  • GSTR-2B is available only from 14th of the next month

Nature

  • GSTR-2A details get updated and changed frequently
  • GSTR-2B remains constant for a tax period

Advisories

  • GSTR-2A does not specify any action to be taken
  • GSTR-2B provides section-wise advisory for taking actions in GSTR-3B

Records Viewable

  • GSTR-2A allows viewing 500 records max
  • GSTR-2B allows viewing 1,000 records max

Updating Facility

  • GSTR-2A allows suppliers to update details
  • No updates allowed in GSTR-2B after statement generation

Key Takeaway:

GSTR-2B offers definitive ITC numbers and clear advisory for a tax period. Taxpayers should rely on GSTR-2B rather than GSTR-2A for finalizing their ITC claims and decisions. Using both interchangeably can lead to incorrect claims and tax liabilities.

Matching GSTR-2B and Purchase Register

Merely accessing the GSTR-2B statement is not enough. Taxpayers must thoroughly reconcile it against their own purchase registers and books of account. This helps ensure:

  • No invoice is missed out that needs to be followed up with suppliers
  • Ineligible ITC is reversed as prescribed
  • GSTR-3B contains no errors in ITC claims or reversals

Some key principles to remember when undertaking this matching are:

  • Import purchase register into Offline Tool after making it GSTR-2B format compliant
  • Match documents on parameters like supplier GSTIN, tax amounts, document number etc.
  • Identify reasons for mismatches like data entry errors, amendmends by supplier etc.
  • Follow up urgently with suppliers if any invoices are missing in their GSTR-1
  • Ensure no blocked credit gets claimed and reversals are done properly
  • Double check if any amendments or debit/credit notes are incorporated
  • Ascertain if GST paid under reverse charge for imports etc. is accounted for
  • Do not consider GSTR-2A details if the same invoice is present in GSTR-2B
  • Verify if credit is being taken only up to the allowed time limit under law

Therefore, taxpayers must do periodic reconciliation of GSTR-2B data at a line item level.

Frequently Asked Questions

Here are some common FAQs on GSTR-2B:

Q: What are the key benefits of GSTR-2B over GSTR-2A?

GSTR-2B allows taxpayers to identify the exact ITC available for a month clearly. It remains constant without day-to-day changes like 2A. Further, it provides advisory on claiming or reversing such ITC in GSTR-3B along with document-level granularity.

Q: How is GSTR-2B generated?

GSTR-2B is auto-drafted for a taxpayer based on the ITC details furnished by their suppliers in their respective GSTR-1, GSTR-5, and GSTR-6. The statement gets generated on 14th of the next month.

Q: Can taxpayers make changes to GSTR-2B on the portal?

No, GSTR-2B is a non-editable read-only statement. Taxpayers cannot make any changes to it on the portal directly. It remains constant for a tax period.

Q: What are the sources of information for GSTR-2B?

GSTR-2B gets populated using details from GSTR-1, GSTR-5, and GSTR-6 filed by a taxpayer’s suppliers. It also contains import of goods information from ICEGATE.

Q: Can credit claimed in GSTR-3B exceed the amount shown in GSTR-2B?

Legally, taxpayers cannot claim ITC in GSTR-3B that is greater than the amount specified in their respective GSTR-2B for that tax period. The onus lies on taxpayers to ensure this.

Conclusion

In summary, GSTR-2B serves as a comprehensive, definitive statement of ITC claims for taxpayers each month. By reconciling it thoroughly with their purchase registers and accounting for any reversals, taxpayers can file error-free GSTR-3B.

Some key takeaways from this guide are:

  • GSTR-2B is a static, read-only statement containing detailed ITC information
  • It is generated monthly based on suppliers’ returns and made available from 14th onwards
  • Taxpayers must download it each month and reconcile with books of accounts
  • The reconciliation must be done at an invoice-level to avoid any errors
  • Advisory contained in it must be followed for claiming or reversing input credit

Using GSTR-2B smartly can go a long way in simplifying GST compliance for taxpayers. Reconciling it along with suitable follow up and communication with suppliers is vital.

Taxpayers can also explore automated reconciliation tools which can match GSTR-2B and books of account seamlessly in a few minutes. Such intelligent solutions help ensure 100% accuracy in ITC claims and minimise future tax liabilities.

With this, we come to the end of this detailed guide on mastering GSTR-2B. We hope you found it useful. Stay tuned for more insightful articles to make your GST compliance experience smooth and stress-free!

GSTR-7: A Comprehensive Guide to Return Filing, Format, Eligibility and Rules

Introduction

Filing GSTR-7, the monthly Tax Deducted at Source (TDS) return, is a compliance requirement for all individuals deducting TDS under Goods and Services Tax (GST). This comprehensive guide will explain everything you need to know about GSTR-7, including the filing format, eligibility, due dates, and other key rules.

Whether you are an accountant helping clients file GSTR-7 or a business owner deducting TDS for the first time, this article will provide clarity on all aspects of GSTR-7. Read on for a detailed understanding of this important GST return.

What is GSTR-7?

GSTR-7 is a monthly return that must be filed by every individual who deducts Tax Deducted at Source (TDS) under GST. It contains details of all:

  • TDS deducted
  • TDS paid
  • TDS payable
  • Any TDS refunds claimed

In simple terms, GSTR-7 provides the government with insights into TDS compliance for the filer. It enables tax authorities to cross-check if the right TDS amounts were deducted and paid correctly.

Filing GSTR-7 is mandatory for all GST registrants who deduct TDS, irrespective of their business type, size or industry. It is an important compliance requirement under GST.

Who Can Deduct TDS under GST?

As per GST laws, the following individuals or entities can deduct TDS:

  • Central or State Government Departments and Establishments
  • Local Authorities
  • Government Agencies
  • Persons or entities notified by the Central or State Governments on recommendation of the GST Council

Additionally, the following can also deduct TDS as per Notification No. 33/2017 – Central Tax dated 15th September 2017:

  • Authorities, boards, or bodies established by Parliament, State Legislatures, or governments and having 51% or more government equity
  • Societies registered under the Societies Registration Act, 1860 and established by the Central or State Governments or local authorities
  • Public Sector Undertakings

These deductors are required to deduct TDS when the total value of a contract exceeds Rs. 2.5 lakhs. The TDS rate is 2% divided as 1% CGST and 1% SGST for intrastate supplies. For interstate supplies, the TDS rate is 2% IGST. However, no TDS will be deducted if supplier and recipient locations are different.

Why is GSTR-7 Important?

Filing GSTR-7 is crucial for:

  • Providing Visibility of TDS Compliance: The government can verify if the right TDS amounts were deducted and deposited correctly each month.
  • Enabling ITC for Suppliers: Suppliers can claim the TDS amount reflected in GSTR-7 as Input Tax Credit (ITC). This helps improve working capital.
  • Avoiding Discrepancies: Any mismatch between GSTR-7 and GSTR-2A can be identified and resolved proactively.
  • Claiming TDS Refunds: Taxpayers can claim TDS refunds seamlessly through GSTR-7 if excess TDS was deducted and taxes paid.

Overall, GSTR-7 return filing ensures disciplined TDS compliance under GST for smooth ITC claims and tax administration.

Due Date for Filing GSTR-7

The due date for filing GSTR-7 is the 10th of the next month. For example, the GSTR-7 deadline for TDS deducted in October 2023 is November 10, 2023.

Strict adherence to the monthly deadline is vital to avoid interest and late fees. The table below summarizes the due dates for GSTR-7 filing for different months:

MonthDue Date for Filing GSTR-7
October 2023November 10, 2023
November 2023December 10, 2023
December 2023January 10, 2024

Penalties for Not Filing GSTR-7

Late filing of GSTR-7 attracts the following repercussions:

  • Late Fees: Rs.50per day (Rs. 25 CGST + Rs. 25 SGST) with a maximum cap of Rs. 2,000
  • Interest: 18% annual interest on TDS amount till date of payment

These penalties apply even if the delay is just by 1 day. Hence, taxpayers must prioritize on-time GSTR-7 filing every month.

How to Revise GSTR-7?

Unlike GSTR-1 and GSTR-3B, GSTR-7 filed for a month cannot be revised.

Any corrections must be reported in the GSTR-7 of the subsequent month. For example, if there is an error in the GSTR-7 filed for October 2023, it can be rectified only through GSTR-7 for November 2023.

Based on the corrections filed, GSTR-7A (the TDS certificate) will also be amended. So taxpayers must be extremely careful while filing GSTR-7 and cross-check all details.

Details Required in GSTR-7

GSTR-7 must be filed online on the Government Portal and contains the following sections:

1. GSTIN

Auto-populated based on login details

Auto-populated from registration data

3. Details of TDS

Covers GSTIN of deductee, total and TDS amount (CGST, SGST, IGST)

4. Corrections in Earlier Periods

Original and revised details of past month’s TDS

5. Tax Deducted and Paid

Tax amount deducted and paid (CGST, SGST, IGST)

6. Interests and Late Fees

Interest, late fee payable and paid on TDS

7. Refund Claimed

Details for claiming refund of excess TDS

8. Cash Ledger Credits

Auto-populated credits from return filing

Filers must report all information accurately as per their TDS deducted, paid, and pending. Declarations regarding the correctness of data must also be submitted along with the return filing on the portal.

Frequently Asked Questions

Q: Can I file a revised GSTR-7?

A: No, GSTR-7 once filed for a month cannot be revised. Any changes have to be reported in next month’s GSTR-7.

Q: Is there any offline utility for filing GSTR-7?

A:Yes. GSTR 7 return can be filed through offline mode also.

Q: Can I claim refund of excess TDS through GSTR-7?

A: Yes, filers can claim refund of any excess TDS amount through GSTR-7.

Q: What is the maximum late fee for delayed GSTR-7 filing?

A: Maximum Rs. 2,000 (Rs. 1000 CGST + Rs. 1000 SGST)

Conclusion

File error-free GSTR-7 on time every month to avoid penalties and seamlessly enable ITC claims for suppliers. Ensure you report accurate details of all TDS deducted and paid. Double check form accuracy before filing as revisions are not permitted.

Filing GSTR-7 does not have to be confusing or intimidating. By understanding the key rules and formats outlined above, you can discharge your GST TDS compliance with confidence. Reach out to accounting services like Filingwala for any assistance with TDS filing under GST. Their team of experts can help you stay compliant with GSTR-7 filings in a hassle-free manner every month.

Conditions for Grant of Copyright in India: A Comprehensive Guide

Conditions for Grant of Copyright

Copyright protection grants creators exclusive rights over their original works and is an important incentive for innovation and creativity. However, copyright in India is not automatic and requires certain conditions to be fulfilled.

This comprehensive guide examines the key conditions for obtaining copyright registration in India. It provides clarity on copyright eligibility, statutory requirements, and the works that cannot be copyrighted.

With insights from legal experts and real-world examples, this guide empowers creators to make informed decisions and fully leverage copyright law in India.

Copyright is a legal right granted to creators of original literary, dramatic, musical and artistic works like books, music, paintings, sculpture, and films. The Indian Copyright Act 1957 provides the creator exclusive rights to reproduce, publish, sell or translate their work.

Copyright protection gives creators control over how their work is used and prevents others from copying or exploiting it without permission. It allows creators to benefit financially from their intellectual effort and creativity.

Copyright comes into effect automatically when a work is created and no formality is required for acquiring it. However, registration of copyright offers additional legal benefits and protections.

While copyright subsists automatically, registration offers numerous advantages:

  • Establishes proof of ownership: Registration serves as evidence of your ownership in case of infringement disputes.
  • Enhances enforcement: Registration is required for filing infringement lawsuits in a court of law.
  • Deters plagiarism: Registering copyright acts as a public notice that deters unauthorized use of your work.
  • Access to remedies: Registration enables you to claim statutory damages and attorney’s fees in infringement lawsuits.
  • Easier licensing and transfers: Registration simplifies the process of granting licenses or transferring ownership rights.
  • International protection: Registration in India can facilitate obtaining protection in other countries.

Experts strongly recommend copyright registration as it strengthens your ability to enforce your rights and seek remedies under law.

A wide range of original works are eligible for copyright registration in India:

  • Literary works like novels, poems, short stories, textbooks, computer programs and databases.
  • Artistic works including paintings, drawings, photographs, sculpture, architecture, maps, logos and illustrations.
  • Dramatic works such as choreography, scripts and plays.
  • Musical works like songs, instrumental music, and musical compositions.
  • Sound recordings of songs, lectures, speeches or other recordings.
  • Cinematographic films and videos.
  • Computer software programs.

Any original work that is the result of creative skill and intellectual effort and not merely a copy of an existing work can be registered, provided other eligibility criteria are met. Factual or commonplace works may not fulfill originality requirements.

For a work to enjoy copyright protection in India, it must comply with certain conditions:

Originality Requirement

The work must be original and not a copy of another work. It should originate from the author and represent their creative output. Works that are derivative or not significantly unique cannot be copyrighted.

For instance, a new song composition demonstrates originality, while merely changing the lyrics of an existing song may not meet the originality bar.

Tangible Form Requirement

The work must be fixed in a tangible medium of expression, like text on paper or an audio recording. Ideas, concepts or procedures that are not expressed in tangible form cannot be copyrighted.

For example, a novel printed in a book can be copyrighted but not the idea for the novel.

Citizenship Criteria

  • For unpublished works, the author must be a citizen of India at the time of their death.
  • For published works, the author must be an Indian citizen at the date of first publication. This applies to works first published in India.

These requirements ensure copyright protection benefits creators with Indian citizenship.

First Publication Criteria

The work must be published for the first time to get copyright. Works already published previously either in India or abroad are not eligible.

First publication implies the work is made available to the public for the first time through print, digital publication, public performance, etc.

For instance, a music album released publicly now is eligible for copyright versus one already published.

Meeting these conditions allows creators to apply for copyright registration in India. Additionally, compliance with formalities like providing a complete application, fees and depositing copies is required.

Works That Cannot Be Copyrighted

There are certain categories of work that are not protected under copyright law:

Ideas and Procedures

Abstract ideas, concepts, principles, or methods by themselves cannot be copyrighted. Copyright law only protects the expression of ideas and not the ideas themselves.

For example, you cannot copyright the idea or concept for a documentary. But you can copyright the actual documentary content that expresses the idea.

Facts and Information

Factual information like news, historical events, natural or scientific discoveries, and other data are not eligible for copyright. Copyright does not control information itself.

For instance, you cannot copyright a phone directory or calendar since they contain common factual data. But creative expression of facts like a biography can be protected.

Commonly Used Things

Familiar symbols, common designs, everyday items and trivial content lack the originality needed for copyright registration.

For example, standard formats like tables, schedules or commonly used icons cannot be copyrighted.

Works in the Public Domain

Works whose copyright term has expired are in the public domain and hence cannot be copyrighted anew. This includes works freely licensed for public use.

For instance, Shakespeare’s Romeo and Juliet is now in the public domain and cannot be copyrighted as a new work.

Only the original selection, arrangement or expression of public domain content can be copyrighted, not the content itself.

To register a copyright, you must submit an application to the Copyright Office in the prescribed format along with the required fee.

The application must provide details like name and address of the copyright claimant, type of work, year of publication, and a copy of the work.

Once your eligibility is verified, you will receive a copyright registration certificate, typically within 1-2 months. This certificate serves as prima facie evidence of your copyright ownership.

You can also register multiple works through a single application under certain conditions and deposit an identifying portion instead of the full work. The Copyright Office also facilitates tracking applications and communicating with applicants online.

Copyright is infringed when someone uses the protected work without permission from the owner. This could involve unauthorized reproduction, distribution, public display, commercial exploitation, or derivative works based on the original.

Infringement is a punishable offence under the Copyright Act. On conviction, penalties include imprisonment of 6 months to 3 years along with a minimum fine of ₹50,000.

In civil lawsuits, remedies like injunctions, damages, account of profits, and seizure of infringing copies are available. Enhanced penalties can be levied on repeat offenders.

Conclusion

Copyright registration unlocks several benefits under Indian law for creators of literary and artistic works. By satisfying key originality, citizenship, tangibility and publication requirements, authors can obtain legal protection for their creativity.

Understanding copyright eligibility also clarifies what cannot be protected, like ideas, facts or public domain content. Securing copyright fosters innovation and balances public access with protecting creators’ interests.

Consult experts like Filingwala.com to ensure your work meets copyright standards in India before application. Their team can also help navigate the registration process for efficiency and thorough compliance.

Leverage copyright law to control use of your original works and curb misuse. A registered copyright deters infringement and strengthens your ability to protect your creative investment.

FAQs

Copyright generally subsists for 60 years after the author’s death. For works with joint authors or unknown authors (like companies), it lasts 60 years from publication date.

No. Once registered, copyright protection is valid for the entire duration without any need for renewals.

Yes, original blog posts constitute literary works that can be copyrighted provided other requirements are met. However, short or factual posts may lack sufficient creativity.

Is permission needed to use copyrighted content?

Yes, unless the use falls under fair dealing exceptions, express permission from copyright holders is required for reproducing, distributing or modifying a copyrighted work.

Key benefits include establishment of ownership, enhanced enforcement and remedies, deterrence against infringement, simplified licensing and international protection.

How to Get 40% Rebate on PMC Property Tax in 2024 (Last Date Extended!)

Input Tax Credit under GST - Conditions to Claim in 2023 [Comprehensive Guide]

Want to save big on your PMC property tax bill? You may be eligible for a 40% rebate. Read this guide to learn how to apply for the PMC tax discount before the new extended deadline.

The Pune Municipal Corporation (PMC) offers a 40% rebate on property tax for self-occupied residential properties. This discount on PMC tax was introduced 50 years ago, discontinued briefly, and then reinstated in 2023.

The last date to submit the PT-3 form for the PMC tax rebate was recently extended after low application numbers. Read on to learn everything you need to know to claim your 40% discount before the new deadline.

Overview of 40% PMC Property Tax Rebate

The Maharashtra State Legislative Assembly passed a bill on August 3, 2023 allowing the PMC to continue providing a 40% rebate on property tax for self-occupied homes. This PMC tax discount applies to residential properties that are not rented out.

The rebate was temporarily discontinued in 2019 while awaiting state government approval. During that time, PMC collected full tax amounts without the 40% discount. Now that the rebate is reinstated, PMC will refund excess taxes paid by eligible homeowners over four years.

Who is Eligible for the PMC Tax Discount?

To qualify for the 40% discount on PMC property tax, your home must meet the following criteria:

  • Registered as self-occupied residential property with the PMC
  • Not rented out (investment properties don’t qualify)
  • Properties registered after April 1, 2018 must submit PT-3 form
  • Properties registered before April 1, 2019 are automatically eligible

Newly registered properties after April 1, 2019 must provide documentation proving self-occupancy to receive the PMC tax rebate.

Steps to Get the 40% PMC Property Tax Rebate

Follow these steps to claim your 40% discount on PMC property tax:

  1. Obtain a no objection certificate (NOC) from your housing society stating the property is self-occupied.
  2. Fill out PMC form PT-3 available on the PMC website.
  3. Pay fee of Rs. 25 per application.
  4. Submit PT-3 form and supporting documents (see next section for details).
  5. Provide proof of all properties owned in Pune city limits.
  6. Submit to nearest PMC ward office before the deadline (details below).

Failure to provide full documentation by the deadline will result in paying full tax with no rebate.

Required Documents for PMC Tax Rebate

You must submit the following documents to PMC to claim the 40% property tax discount:

  • No Objection Certificate from housing society
  • PT-3 application form
  • Fee of Rs. 25 per form
  • Proof of self-occupancy:
    • Voting card
    • Passport
    • Driving license
    • Ration card
    • Gas connection proof
  • Proof of all properties owned in Pune

How to Download the PMC PT-3 Form

Follow these simple steps to download the PMC PT-3 form:

  1. Go to PMC Property Tax Website
  2. Scroll to the bottom and click on “PT-3 form” under Forms New
  3. The PT-3 form will open in a new tab (in Marathi)
  4. Fill out the PT-3 form completely and submit along with documents

You can also collect the PT-3 form directly from any PMC ward office or citizen facilitation center.

Where to Submit Documents for PMC Rebate

You can submit the PMC tax rebate documents at the following PMC locations:

  • Citizen facilitation centers
  • Regional ward offices
  • Peth Inspector’s offices

To find the nearest PMC office, visit the PMC website office locator.

Key Deadlines for PMC Property Tax Rebate

The original deadline to file for the PMC tax rebate was November 30, 2023. However, this was extended due to low application numbers.

Over 96,000 Pune homeowners applied for the 40% PMC tax rebate as of the initial deadline. The new extended deadline has not been announced yet, but PMC has confirmed they will continue accepting applications past November 30.

Check the PMC website for the latest updates on exact dates. Act quickly once the new deadline is announced to save 40% on your property tax bill!

Frequently Asked Questions

How do I get 40% off PMC property tax?

Submit the PT-3 application form and required documents to PMC before the deadline. Homeowners registered after April 1, 2019 must prove self-occupancy to qualify.

What was the last date for PMC property tax?

The last date for full payment of PMC property tax for FY 2022-23 was June 30, 2023.

Who pays property tax to PMC?

Any property owners within PMC jurisdiction must pay applicable PMC property taxes annually.

What tax rebates are available for FY 2023-24?

For individual taxpayers, the maximum tax rebate under Section 80C for FY 2023-24 is Rs. 1.5 lakh.

How much does it cost to apply for PMC tax rebate?

You must pay a fee of Rs. 25 per PT-3 application form submitted to PMC.

Get 40% Off PMC Property Tax Now

Don’t miss this opportunity to save big on your annual property tax bill. File your PMC PT-3 application today to claim a 40% rebate before the extended deadline.

Ready to submit your PMC tax rebate application? Get help ensuring 100% accuracy and on-time filing from the experts at Filingwala. Their tax professionals know the latest PMC rules and can do all the paperwork for you, hassle-free! Contact them now to take advantage of this 40% PMC tax discount.

Input Tax Credit under GST – Conditions to Claim in 2023 [Comprehensive Guide]

Input Tax Credit under GST - Conditions to Claim in 2023 [Comprehensive Guide]

Input Tax Credit (ITC) is an integral part of the Goods and Services Tax (GST) framework in India. It allows businesses to reduce their tax burden on output supplies by setting off the tax already paid on inputs.

However, ITC is governed by specific conditions and time limits. Businesses must fulfill all requirements to successfully claim ITC and reduce their GST liability.

This comprehensive guide will explore all key aspects of ITC under GST – from eligibility conditions to time limits and ineligible credits. Read on to master ITC and optimize your tax savings!

Introduction

‘Input Tax Credit’ or ‘ITC’ refers to the GST paid by a business on purchases that will be used for furtherance of business activities. ITC helps avoid the cascading effect of taxes.

For example, if a manufacturer pays Rs 100 as GST on raw materials, they can claim the Rs 100 as credit to set off against the GST payable on finished goods.

ITC can be claimed on all business purchases, barring specific exceptions. The key is – the expenses must be used for furthering business activities. ITC cannot be claimed for personal purchases or expenses.

However, businesses cannot arbitrarily claim ITC. Section 16 of the CGST Act lays down specific conditions to be eligible to claim ITC. Further, Section 17(5) lists specific expenses where ITC cannot be claimed.

Meeting the ITC eligibility criteria and conditions accurately is crucial for GST compliance. If found incorrect, it can lead to penalties, interest and loss of ITC. Let’s understand the key rules for ITC claim.

Latest Updates on ITC Rules

Finance Minister Nirmala Sitharaman proposed important changes to ITC provisions in the Union Budget 2023. These tweaks aim to improve compliance and reduce ITC frauds.

Some key ITC amendments proposed in Budget 2023 are:

  • If buyer fails to pay the supplier within 180 days, ITC claimed will have to be paid back with interest. This aims to curb fake ITC claims.
  • Last date for filing GSTR-1 and GSTR-3B reduced to 3 years from the due date. This blocks revenue leakage via past ITC claims.
  • CSR expenses added to the list of ineligible ITC under Section 17(5). Companies cannot claim GST paid on CSR spends.
  • ITC proportional to high sea sales made as exempt supply will be ineligible.
  • Schedule III amendments related to non-supply transactions will apply retrospectively from July 2017.
  • Composition scheme extended to e-commerce operators. However, they cannot claim ITC.

These changes will come into effect once notified by CBIC. Businesses must gear up to incorporate the amendments into their ITC calculations.

Conditions to Claim ITC

Section 16(2) of the CGST Act outlines the key conditions to be eligible for ITC claim. Fulfilling these conditions is mandatory to claim ITC and reduce GST liability.

Let’s examine the key ITC eligibility conditions in detail:

1. Goods/services used for business purposes

This is the fundamental condition. ITC can only be claimed on purchases used to further business activities. Personal and non-business purchases do not qualify for ITC.

For example, a manufacturer can claim ITC on machinery purchased for the factory. But no ITC is allowed on a car purchased for personal use.

2. Possession of tax invoice/debit note/other tax paying document

To claim ITC, businesses must have a valid tax invoice, debit note or other tax paying document for the purchase.

For example, if a business has recorded ITC of Rs. 5,600 in its GSTR-2B for January 2022, but does not possess the purchase invoice, ITC cannot be claimed while filing GSTR-3B.

3. Supplier must upload invoice in GSTR-1 and ITC must reflect in GSTR-2B

The supplier must have uploaded the tax invoice on GST portal in GSTR-1. Only then will it reflect in the recipient’s GSTR-2B.

If the invoice is missing in GSTR-2B, ITC claim will be rejected, even if the business has the purchase invoice. Regularly matching purchases with GSTR-2B is crucial.

4. Receipt of goods/services

Businesses can only claim ITC on purchases after receiving the goods or services. Merely having the invoice is not sufficient – actual receipt is key.

For example, if goods are invoiced in January but received in February, ITC can only be claimed in February’s GSTR-3B, not January’s.

5. Payment of GST returns

ITC can only be claimed if the business has filed its GST returns – mainly GSTR-1 and GSTR-3B. Non-filers cannot claim any ITC.

6. Payment to vendor within 180 days

If payment is not made to the supplier within 180 days of the invoice date, the ITC claimed will have to be paid back with interest. This provision will come into force once notified by CBIC.

7. Ineligible ITC

ITC cannot be claimed on purchases specified under Section 17(5) – like food expenses, luxury cars, etc. We’ll examine this in the next section.

8. Time limit for availment

ITC must be claimed within the prescribed time limits under GST law. Typically, ITC can be claimed till September of next financial year or till filing annual returns – whichever is earlier.

9. No depreciation claimed on tax component

If businesses have claimed depreciation on the tax component of capital goods, credit cannot be claimed on the same amount.

10. Reversal of common credits

If inputs are used for both taxable and exempt supplies, common ITC must be reversed proportionately.

Adhering to these conditions accurately is vital for smooth ITC claims and GST compliance. Non-compliance can attract heavy penalties.

Time Limit to Claim ITC

The GST law prescribes a time limit to claim ITC, to avoid past claims leading to revenue leakage.

As per Section 16(4), the last date for claiming ITC is the earliest of:

  • September 30th of the next financial year

Or

  • Date of filing Annual Returns (GSTR-9) for that financial year

For example, for FY 2021-22, the last date would be earlier of:

  • September 30, 2022

Or

  • Date of filing GSTR-9 for 2021-22

If the GSTR-9 is filed on December 31, 2022, the last date for claiming ITC for 2021-22 would be September 30, 2022.

For debit notes, the above time limit applies from the date of the debit note, rather than the original tax invoice. Delayed claims post the time limit will lead to lapse of ITC.

Ineligible ITC

While ITC is available on most business purchases, the GST law expressly prohibits ITC claim on specific expenses through Section 17(5).

Some major categories where ITC is blocked are:

  • Motor vehicles used for transportation of persons (e.g. cars)
  • Food and beverages
  • Health and fitness expenses – gym, yoga, healthcare
  • Beauty treatment and cosmetic surgery
  • Alcohol and petroleum products
  • Outdoor catering and hospitality
  • Employee insurance
  • Works contract services for construction of immovable property
  • Goods/services for personal use
  • Corporate Social Responsibility (CSR) expenses

However, there are certain exceptions where ITC may still be claimed on these expenses for furtherance of business.

For instance, ITC can be claimed on –

  • Health insurance if mandated by law for employees
  • Food or rent-a-cab if provided as a service to customers
  • Beauty services if used to provide beauty treatment services

Scrutinizing purchases with the Section 17(5) blocked list is crucial before claiming ITC. Non-compliance can invite penalties.

Special Cases

There are some special cases related to ITC claim that businesses should be aware of:

  • Banks and financial institutions cannot claim ITC on inputs or input services
  • Goods lost or stolen post-receipt will lead to ITC reversal
  • Capital goods need to be tracked for reversals if use changes to non-business
  • Partial exemption scenario: ITC common to exempted and taxable supplies will need proportionate reversal
  • Insurance/banking companies: Need to reverse ITC on inputs based on taxable turnover ratio
  • Mixed supplies: ITC to be reversed basis the taxable portion of mixed supply
  • E-commerce operators registered under composition scheme cannot claim ITC

Keeping abreast of special provisions relevant to your business activities is important to accurately compute eligible ITC.

FAQs on ITC

Here are some common FAQs on ITC provisions and compliance:

Q. Can ITC be claimed on capital goods?

Yes, ITC can be claimed on capital goods like machinery and equipment purchased for business use.

Q. What if tax is paid under reverse charge by the recipient?

Even for RCM liability paid, the recipient can claim ITC subject to fulfilling Section 16 conditions.

Q. Is ITC available on job work expenses?

ITC can be claimed by the principal on job work charges paid to the contractor.

Q. Can ITC be claimed if GST is paid through e-cash ledger?

Yes, ITC can be claimed irrespective of the mode of GST payment – cash ledger or credit ledger.

Q. Is ITC allowed on purchases from unregistered dealers?

No, ITC is not allowed on procurement from unregistered dealers. The supplier must be a registered taxpayer.

Q. Can ITC be claimed on pre-registration purchases?

No, ITC cannot be claimed for purchases made prior to obtaining GST registration.

Q. Is there any maximum limit for claiming ITC?

No, there is no upper limit on the amount of ITC that can be claimed, as long as conditions are met.

Q. Can ITC be claimed after the time limit of September 30th?

No, the time limit for ITC claim cannot be extended beyond September 30th. Claim lapses after this date.

Keeping updated on ITC provisions is vital for optimizing GST liability. Businesses are advised to consult a GST expert or Chartered Accountant to ensure compliance.

Conclusion

Input tax credit is invaluable in reducing GST burden for businesses. However, non-compliance with ITC rules can prove costly.

Businesses must ensure all conditions under Section 16 are fulfilled, expenses are scrutinized for ineligibility under Section 17(5) and time limits for claim are met – to avoid penalties.

With Budget 2023 enhancing compliance on ITC, businesses must gear up to incorporate the changes and strengthen processes.

Accurately computing eligible ITC is key to optimizing GST liability for any business. Partnering with a tax expert like Filingwala can help ensure ITC compliance while minimizing tax outgo.

Filingwala is one of India’s top accounting services platforms – assisting over 10,000 businesses with GST registration, filing, accounting and other compliance needs.

Their team of Chartered Accountants and tax experts stay updated with the latest changes to provide* tailored assistance** on ITC, returns, invoices and other areas – ensuring 100% accuracy and compliance.*

To eliminate GST stress and confidently claim your rightful ITC, trust the experts at Filingwala. Visit www.filingwala.com or call 9152666002 today.

The Complete Guide to GST Penalties and Appeals in India

A Step-by-Step Understanding of GST Offenses, Penalties, Prosecution, Appeals and Strategies to Avoid Them

The Goods and Services Tax (GST) regime brought in a unified tax system and compliance procedures across India. However, the complex GST laws also introduced stringent penalties and prosecution provisions for non-compliance. Even minor errors can impose hefty fines or prosecution if not handled carefully.

This comprehensive, guide will explain GST penalties and appeals in simple terms to help businesses stay compliant. We cover:

An Overview of GST Offenses and Penalties

The GST Act classifies 21 types of offenses that attract penalties if committed. Here are some major non-compliance issues that call for penalties:

  • Not registering under GST – This offense attracts a penalty between Rs. 10,000 to Rs. 100,000. Not registering despite being liable is a serious offense.
  • No invoice or false invoice – This can impose a heavy penalty of 10% of tax amount, subject to Rs. 10,000 minimum. Issuing false invoices to avail input credit or evade taxes invites the highest penalties.
  • Wrong GSTIN on invoice – Entering a wrong GSTIN attracts a 100% tax amount penalty, with a minimum of Rs. 10,000. This is considered an act of evasion.
  • Fake financial records – Keeping fake accounts or filing false returns to evade taxes also imposes a 100% tax amount penalty. It can even lead to prosecution.
  • Suppressing sales – Deliberately suppressing sales figures to evade taxes also attracts 100% tax penalty and prosecution.
  • Excess ITC claim – Claiming ineligible input tax credit or excess ITC attracts 10% penalty on the tax amount, with Rs. 10,000 as the minimum. This is a common error to watch out for.
  • Ineligible person taking Composition Scheme – Opting for the Composition Scheme even when ineligible can attract a penalty up to Rs. 10,000. Meet the turnover criteria carefully.

Clearly, the penalties can be quite steep even for seemingly minor errors or omissions. Businesses need to be extra cautious with their GST compliance.

Penalty for Delayed Filing or Non-Filing of GST Returns

Late filing or non-filing of GST returns is another offense that attracts heavy fines. The penalties are as follows:

Late Fee: Delay in filing GST returns attracts a late fee of Rs. 200 per day (Rs. 100 under CGST + Rs. 100 under SGST). The maximum late fee applicable is upto Rs. 5,000 or 0.25% of turnover in the state, whichever is lower.

Non-Filing: If you do not file your GST returns at all, then subsequent returns get blocked. You cannot file further returns until the missing return is filed. This builds up the late fee with each passing month. Ultimately, it can also lead to prosecution after a point.

Hence, it is critical for businesses to file each GST return (GSTR-1, GSTR-3B etc.) before the due date every month/quarter. Even nil returns have to be filed to avoid compliance issues.

Penalties for Tax Evasion and Fraud

More severe penalties are applicable when offenses are committed deliberately to evade taxes or defraud the exchequer. These attract 100% penalty of tax amount evaded along with prosecution.

Issuing fake invoices to wrongly claim ITC, suppressing sales to reduce GST liability, maintaining fake accounts/records to under-report income are some examples of fraudulent activities to evade tax.

The penalty imposed for tax evasion or fraud under GST is 100% of the tax amount evaded or wrongly claimed as credit. A minimum penalty of Rs. 10,000 applies in all cases.

Jail term upto 5 years can also be imposed based on the tax amount involved:

Tax Amount InvolvedJail Term
Rs. 100 – 200 lakhsUpto 1 year
Rs. 200 – 500 lakhsUpto 3 years
Above Rs. 500 lakhsUpto 5 years

In case of prosecution, the offender will have to appear before a Magistrate leading to expensive and tedious litigation. Hence, sufficient precautions must be taken to avoid prosecution triggers.

Search, Seizure and Confiscation Provisions

GST officers also have the power to search premises and seize goods or documents in specific cases.

If the GST officer has reasons to believe that a registered person is hiding goods to evade tax, he can authorize the search and seizure of:

  • Goods at the premises under inspection
  • Documents/account books that indicate suppression of transactions
  • Goods in transit without valid documents (e-way bill, invoice etc.)

The seized goods are released only after payment of the applicable tax and penalty. The GST officer can also levy a penalty equal to 150% of the tax liability by confiscating the goods.

Hence, it is important to maintain transparent records and fully compliant documents/e-way bills during transit. Otherwise, seizure of goods can cause severe disruption to business.

Compounding to Avoid Prosecution

Compounding offers a way to avoid lengthy prosecution and litigation under GST. Here, the offender pays a compounding fee to settle the offense instead of facing criminal prosecution.

The key advantages of compounding are:

  • Avoid multiple court appearances before a Magistrate for prosecution
  • Resolve the issue by paying a fixed compounding fee instead of litigation expenses
  • Settle compounding through written correspondence instead of physical appearance in courts

However, compounding is not permissible for offenses involving tax evasion or fraud beyond Rs. 1 crore. For small errors or omissions without malicious intent, compounding is an effective way to close the issue with a small fine instead of criminal prosecution.

How to Appeal against Penalties

The GST law does provide an elaborate appeals mechanism to contest unfavorable orders. It is a 4-tier appeals process:

First Appeal: Any order passed by the Adjudicating Authority (tax officer) can be challenged by filing a first appeal before the First Appellate Authority

Second Appeal: If the first appeal’s outcome is unsatisfactory, the next appeal lies before the GST Appellate Tribunal against the first appellate authority’s order.

Third Appeal: The third level of appeal against the Appellate Tribunal’s order lies before the High Court.

Fourth Appeal: Finally, the order passed by the High Court can be challenged before the Supreme Court, which is the highest appeals forum.

The first appeal must be filed within 3 months while the higher appeals need to be filed within 6 months. Condonation from delays is permissible in some cases.

One can also apply for Advance Ruling to seek clarification on GST issues before undertaking a transaction. The Authority will give a binding ruling after hearing the applicant. This prevents future litigation.

How to Avoid Penalties and Prosecution under GST

The ideal approach is to avoid the risks of hefty GST penalties and prosecution by ensuring rigorous compliance and self-audits. Some useful tips include:

  • Register under GST as soon as turnover exceeds the prescribed threshold. Avoid penalties for non-registration.
  • File all GST returns on time, even nil returns, to avoid late fees. Delays cascade into bigger issues.
  • Maintain accurate and updated tax records like invoices, books of accounts etc.
  • Reconcile books regularly with GST returns to confirm no gaps or errors.
  • Review and validate every input tax credit claim to ensure it is correct and eligible.
  • Ensure invoices issued and received have complete details as per rules to claim ITC.
  • Conduct voluntary audits and reviews to catch any errors early. Easy to correct mistakes before scrutiny.
  • Seek regular expert help and guidance from Chartered Accountants and Tax professionals to remain compliant.

Also, stay updated with the latest GST notifications and changes to avoid penalties arising from new provisions. Use technology tools to simplify compliance management.

Frequently Asked Questions

Q: What is the penalty for late filing of GST returns?

A: Late filing of GST returns attracts a late fee of Rs. 200 per day (Rs. 100 under CGST + Rs. 100 under SGST) subject to a maximum of Rs. 5,000 or 0.25% of turnover in the state.

Q: Can I appeal against GST penalties?

A: Yes, a 4-tier appeals process is available under GST law to appeal against any adverse order. You can appeal to the First Appellate Authority, GST Appellate Tribunal, High Court and Supreme Court.

Q: What is the penalty for not registering under GST?

A: Not registering under GST despite being liable attracts a penalty between Rs. 10,000 to Rs. 100,000 based on tax liability. Register as soon as turnover exceeds the threshold.

Q: Can I compound offenses instead of prosecution?

A: Yes, compounding allows you to pay a compromise fee and avoid expensive litigation. But compounding is not available for fraud over Rs. 1 crore.

Q: What documents are required during GST transit of goods?

A: You need invoice/delivery note, e-way bill and other documents during transit of goods above Rs. 50,000. Non-compliance can lead to seizure of goods.

Accurate compliance is crucial for businesses handling GST. Minor errors or gaps can impose hefty penalties while serious non-compliance attracts prosecution.

Hence, it is advisable to take professional assistance from reputed platforms like Filingwala to remain updated and steer clear of GST penalties.

Filingwala’s GST compliance packages help you stay on top of your GST filings and obligations through the year. Their team of Tax Experts also assists with GST registrations, returns filing, reconciliations, and other services at affordable pricing.

Leverage technology and expert help to sail through GST compliance smoothly and avoid penalties.

The Complete Guide to Understanding GST on Health Insurance in India (2022)

The Complete Guide to Understanding GST on Health Insurance in India (2022)

Health insurance is crucial for protecting yourself and your family from massive medical bills. But with the implementation of Goods and Services Tax (GST) in 2017, the taxation on health plans has increased. This has left many confused about how GST affects their insurance premiums.

This comprehensive guide will explain everything you need to know about GST on health insurance in India. You’ll learn about GST rates, how it impacts your premiums, tax saving options, and even how to efficiently buy health plans in the GST regime.

So if you want to make well-informed decisions and save money on your health plans, read on!

Introduction: How GST Has Impacted Health Insurance in India

The Goods and Services Tax (GST) regime has led to significant changes in India’s health insurance sector. Implemented in 2017, this unified taxation system subsumed several previous indirect taxes, including service tax and excise duties.

Health insurance premiums now attract 18% GST, a 3% increase from the previous 15% service tax. This has driven up policy costs for both new customers and renewing policyholders.

But how exactly has GST affected health plans in India? Here’s a quick overview before we dive into the details:

  • 18% GST applicable on all health insurance premiums
  • Increased premium costs for customers
  • Added tax burden on insurance companies
  • Greater transparency in taxation
  • Input Tax Credit benefits for insurers
  • Promotes digital adoption in the sector

While GST has increased costs, it has also streamlined taxation and encouraged transparency. Further, we’ll explore both the positive and negative impacts of GST on health insurance in India.

Armed with this knowledge, you can make prudent decisions while buying or renewing your health plans. But first, let’s start by understanding what GST actually is.

What is GST and How Does it Work?

Goods and Services Tax or GST refers to the indirect tax levied on the supply of goods and services in India. Implemented in 2017, it replaced a web of indirect taxes like VAT, service tax, excise duties, etc. charged by the central and state governments.

Some key points about GST:

  • Nationwide unified taxation system
  • Levies tax on the supply of goods and services
  • Has 4 tax slabs – 5%, 12%, 18% and 28%
  • Came into effect from 1st July 2017 under the GST Act 2017
  • GST replaces several previous indirect taxes and duties
  • Governed by the GST Council comprising state finance ministers

GST essentially consolidates the myriad central and state indirect taxes into a unified tax system. The tax is levied at each stage of the supply chain, but with input tax credit, taxes already paid can be claimed back. This reduces the cascading effect of layered taxes.

Health insurance plans come under the ambit of GST, falling under the 18% tax slab. Now let’s see how GST is applicable to health insurance premiums.

GST Rates Applicable on Health Insurance in India

Health insurance premiums attract an 18% GST rate under the new taxation regime. This means an extra tax burden of 3% over and above the previous 15% service tax.

This 18% GST rate applies to:

  • All health insurance plans – individual, family floater, senior citizen, critical illness etc.
  • Both new policies as well as renewals
  • Premiums paid via any mode – online, cheque, cash etc.
  • Both individual and corporate health plans

So whether you purchase a new health plan or renew your existing policy, you have to pay 18% GST on the premium.

There are no exemptions or special provisions for health insurance under GST. This increased tax rate is applicable across the board.

How Does GST Impact the Cost of Your Health Insurance?

The 18% GST directly increases your health premium’s tax component, leading to higher overall costs. Let’s see two examples to understand the impact:

Scenario 1 – New Health Insurance Plan

Sum insured: ₹5 lakhs

Base premium amount: ₹10,000

Applicable GST: 18%

GST amount on ₹10,000 at 18%: ₹1,800

Total premium payable: ₹10,000 + ₹1,800 = ₹11,800

Scenario 2 – Existing Health Plan Renewal

Sum insured: ₹5 lakhs

Base renewal premium: ₹11,000

Previous service tax of 15%: ₹1,650

New GST of 18%: ₹1,980 (18% of ₹11,000)

Total renewal premium: ₹11,000 + ₹1,980 = ₹12,980

For both new plans and renewals, the 18% GST pushes up the tax amount and final premium costs. Existing policyholders could see an increase of ₹300-500 in their renewal premium.

Over time, this added GST burden on insurers may compel them to raise base premiums too. So in the long run, health plans can become even more expensive thanks to GST.

Tax Savings on Health Insurance Under Section 80D

The increased premium costs can be balanced out to an extent by claiming tax deductions under Section 80D. This section allows tax deductions on health insurance premium paid for yourself, spouse and dependant children.

You can claim deductions up to ₹25,000 for regular health plans. An additional deduction of ₹50,000 is applicable for buying policies for parents over 60 years of age.

Further, ₹5,000 can be claimed as deduction for preventive health check-ups annually. NRIs, senior citizens and very senior citizens have higher deduction limits.

So make sure to claim these tax deductions at the time of filing returns. It will help offset the higher costs due to GST to some extent.

Types of GST Applicable on Health Insurance

Broadly, there are three kinds of GST applicable in health insurance:

  1. GST on Premiums

This 18% GST is applicable on all health premiums paid by policyholders. It is added to your premium amount and paid to the insurer.

  1. Input Tax Credit

Insurers can claim input GST credit for taxes paid on their business-related purchases. This helps lower overall tax liability and operating costs.

  1. GST on Medical Services

If you avail any medical service not covered by insurance, you may need to pay GST directly to the hospital.

While GST on premiums causes an added burden, input tax credit gives some benefit to insurance companies. Let’s look at both these aspects in detail.

GST on Premiums – HSN Codes and Impact

Health insurance premiums fall under HSN Code 997133 of the GST Common Service Tariff. This pertains to all kinds of insurance and reinsurance services.

The applicable tax rate under this head is 18% which is charged on health premiums. This additional tax burden can increase costs for customers.

Some ways this GST on premiums impacts various stakeholders:

For policyholders:

  • Increases overall premium payouts
  • Renewals also attract 18% GST

For insurance companies:

  • Additional tax compliance burden
  • Increased operating costs
  • Need to modify management systems

For the government:

  • Widens tax revenue base
  • Increased digitization and formalization of the sector
  • Easier to track compliance due to e-invoicing

While adding to the tax outgo, GST also makes the system more structured and transparent. This leads to long-term gains for all parties.

Input Tax Credit Under GST

Insurance companies incur costs and taxes during their regular business activities. Under GST, they can claim input tax credit for taxes already paid on business expenses.

Some common expenses on which input GST can be claimed are:

  • Taxes paid on office supplies like stationery, equipment etc.
  • GST paid on office maintenance and utilities
  • Tax on consulting, legal and outsourced services
  • GST paid while procuring reinsurance
  • Tax on employee benefits like health policies, medical reimbursements

This input tax credit mechanism reduces the overall GST burden on insurers. It may allow them to offer competitive premium rates to policyholders.

However, certain costs like employee salaries, rent etc. do not qualify for input tax credit. But still, the input credit benefits add to the positives of GST for insurance firms.

GST on Medical Services Not Covered by Insurance

Another area where GST kicks in is when you avail any medical service not covered by your health insurance policy.

For instance, if you get a diagnostic test done at a lab on your own, you have to pay GST on the bill amount. Or if you undergo a treatment not covered by your insurer, the hospital may charge GST.

The GST levied on such uncovered medical expenses is based on the specific service. Diagnostic tests attract a GST of 18% while medicines are taxed at 5%.

So while making claims, policyholders should check if any GST is applicable on the excluded services as per current regulations.

The Positive Impacts of GST on Health Insurance

While increasing costs, GST has also led to some benefits for India’s health insurance ecosystem. Let’s examine these positives of GST on health plans:

Simplified taxation structure

GST has subsumed a complex web of multiple indirect taxes like service tax, VAT, excise etc. It has brought all health plans under a simple, unified tax regime.

Improved transparency and compliance

The digital invoicing mandated under GST creates transparency. It reduces tax evasion and drives greater compliance from insurers.

Faster digitization

GST has accelerated the digital transformation of India’s insurance sector due to mandatory e-invoicing and online tax filing.

Reduced tax on reinsurance

Reinsurance services previously attracted a service tax of 15%. Under GST, the rate is lower at 12%, reducing costs for insurers.

Input tax credit benefits

Input credit allows insurers to lower tax liability and potentially offer competitive premiums to policyholders.

Focus on customer service

With GST streamlining taxation, insurers are free to focus more on enhancing services and products for policyholders.

GST has certainly increased the tax burden on health insurance consumers. However, it has also led to efficiency gains, transparency and increased formalization of the industry.

How is GST Calculated on Health Insurance Premiums?

Wondering how the 18% GST is calculated on your premiums? Here is a quick 4-step process:

Step 1: Identify the base premium amount (excluding taxes)

Step 2: Apply the GST rate, which is 18%

Step 3: Calculate the GST amount. GST Amount = (Premium x 18%) ÷ 100

Step 4: Add GST amount to base premium to derive the total payable

Let’s understand this via an example:

Base premium amount: ₹15,000

GST rate: 18%

GST amount = (15,000 x 18%) ÷ 100 = ₹2,700

Total premium payable = ₹15,000 + ₹2,700 = ₹17,700

This shows how 18% GST significantly inflates the base premium amount. But the right health plan is still critical despite the tax implications.

Why Do You Need Health Insurance in India?

In a country like India, health insurance is a necessity and not just a choice. With no social security, medical inflation is rising at 15-20% annually.

Hospitalization costs are now massive with expenses like:

  • ICU charges of ₹15,000-30,000 per day
  • Angioplasty costing ₹2.5-3 lakhs
  • Knee replacement surgery for ₹5-6 lakhs
  • Cancer treatments running to ₹15-20 lakhs

As per National Sample Survey Office (NSSO), over 80% of India’s population has no health insurance. Without insurance, most families are only 1 illness away from financial devastation.

Some compelling reasons why health insurance is absolutely essential:

It protects against catastrophic healthcare costs

By distributing risk across many insured individuals, health plans ensure you get coverage for hospital bills running to lakhs.

Covers expenses of pre- and post-hospitalization

Good health plans don’t just cover hospitalization but also medical costs incurred 30-90 days before and after.

Cashless claim settlement

You don’t pay anything out of pocket for covered expenses. Insurer directly settles hospital bills.

Covers day care procedures

Many advanced non-surgical treatments are now done on an out-patient basis and covered by insurers.

Tax benefits up to ₹75,000

Premiums paid are exempt under Section 80D of the Income Tax Act.

Facilitates access to better healthcare

Cashless facility at top hospitals ensures you get the best treatment.

Peace of mind during health crises

Health insurance alleviates financial stress during medical emergencies.

Protection for entire family

Individual and family floater plans safeguard the health of your loved ones.

While GST has increased premium costs, the benefits clearly outweigh the added tax burden. Comprehensive health insurance is the only way to protect your finances and access top-quality healthcare.

How Does Filingwala.com Help You Buy the Right Health Plan?

With GST making health plans costlier, buying adequate coverage at optimal prices has become tougher for Indian families.

This is where Filingwala.com comes into the picture!

Filingwala.com is India’s top financial services marketplace catering to all your accounting, taxation and compliance needs under one roof.

As part of our services, we also assist you in:

  • Choosing the right health insurance policy as per your coverage needs and budget
  • Locating suitable plans by leading national and regional insurance providers
  • Optimizing premium costs and availing all applicable discounts
  • Navigating exclusions and making an informed purchase decision
  • Claiming tax deductions under Section 80D
  • Managing policy renewals

With Filingwala.com as your health insurance advisors, you benefit from:

  • Expert analysis of your insurance needs
  • Comparing 10+ top health plans from various insurers
  • Identifying plans with lowest premiums
  • Ensuring adequate coverage for hospitalization, OPD and critical illness
  • Multi-policy and multi-year discounts of up to 30%
  • Choosing ideal sum insured and deductibles
  • Smoother renewals and assistance with claims
  • End-to-end policy management

By outsourcing your health insurance needs to Filingwala.com, you get the right coverage at the best price, even in the post-GST era. We take care of evaluating numerous plans, negotiating discounts, explaining policy terms, and getting you maximum savings.

So what are you waiting for? Consult Filingwala.com experts today to buy cost-effective, comprehensive health insurance for yourself and your loved ones!

Impact of GST on Health Insurance Renewals

GST not just hits new policy buyers but also existing policyholders renewing their health plans. Earlier, customers renewing policies issued before GST implementation were exempt from paying the new 18% tax.

But as per a recent circular, insurers will now have to collect GST even from such renewing policyholders. So existing plans will also be subject to the 18% tax on renewals after GST rollout.

This applies even if you originally bought the policy under the previous tax regime. The GST has to be paid in a phased manner – 9% collected in FY 2018-19 and the balance 9% from FY 2019-20.

So in effect, the new GST rate becomes uniformly applicable to all health insurance renewals, irrespective of purchase date.

Let’s see an example:

Policy Details

Purchase Date: June 2017 (pre-GST regime)

Sum Insured: ₹3 lakhs

Base Premium: ₹8,000

Service Tax: 15% = ₹1,200

Total Premium Paid: ₹8,000 + ₹1,200 = ₹9,200

Renewal in 2019

Renewal Premium: ₹8,500

Phase 1 GST @ 9% = ₹765

Phase 2 GST @ 9% = ₹765

Total Tax = ₹1,530 (18% of ₹8,500)

Final Premium = ₹8,500 + ₹1,530 = ₹10,030

So a customer who paid only ₹9,200 earlier has to shell out ₹10,030 on renewal, despite buying the policy pre-GST.

This increased tax burden can compel insurers to raise premium costs too. So renewing your health plan after GST is likely to be costlier. But allowing your policy to lapse is riskier – so continue renewing it even if costs are higher.

The Downsides of GST on Health Insurance

While GST has helped streamline indirect taxation and abolished cascading taxes, there are some definite downsides for health insurance consumers.

Here are some of the drawbacks of GST that add to policyholders’ costs:

Higher premiums

The increase from 15% service tax to 18% GST has directly inflated policy costs for customers.

Renewal premiums also costlier

GST has now been made applicable on renewals of existing policies too, leading to higher payouts.

Rise in treatment costs

Hospitals may levy GST on medical services not covered by your health plan, hiking your overall treatment cost.

Insurers may raise base premiums

If the increased tax burden strains insurer profits significantly, they may hike base premiums to maintain profitability. This will compound costs for policyholders over the long-term.

No exemptions for healthcare

Unlike education and basic food items, healthcare does not get any special exemptions from GST. This move could have provided some relief on premiums.

Compliance difficulties for small insurers

GST compliance in terms of registration, timely filing and e-invoicing can be challenging for smaller, regional insurance firms.

Added compliance load for policyholders

Customers now need to save and submit their GST invoices while filing claims or income tax returns. This increases paperwork requirements.

Can discourage insurance adoption

The added tax cost can deter lower-income groups from investing in health insurance, leaving them financially exposed.

So while GST makes the system more organized, the additional burden on policyholders and compliance pressures on insurers can’t be ignored. However, the pros of health plans still outweigh the cons of GST.

Frequently Asked Questions on GST and Health Insurance

Here are some common GST-related queries answered for health insurance consumers:

Q1. Does GST also apply when I renew my existing health policy?

Yes, 18% GST will be levied even on renewals of policies originally purchased before GST implementation.

Q2. How much GST will I have to pay if I take a family floater plan?

Irrespective of the type of policy, the applicable GST will be 18% of the total premium amount.

Q3. Can I claim input tax credit on health insurance GST?

No, only registered businesses supplying goods/services can claim input tax credit on GST paid. As an individual, you cannot claim input credit.

Q4. Is GST charged on medical expenses not covered by insurance?

Yes, hospitals may charge GST on any treatment or diagnostic service not covered under your health insurance plan.

Q5. Does GST also apply to health plans bought online?

Whether bought online or offline, all health policies will attract 18% GST on the premium payable.

Q6. How do I claim tax deduction on health premium and GST?

While filing ITR, claim deduction on the total amount paid towards premium, including GST, under Section 80D.

Q7. Is there any provision to avoid paying GST on health premiums?

No, the 18% GST is mandatory on all health plans without exceptions. You cannot avoid paying it.

Q8. Will healthcare services like teleconsultations also have GST?

No, online doctor consultation, diagnostic tests etc. are exempt from GST.

Q9. Are Ayushman Bharat premiums or other government schemes exempt?

Most government health schemes are exempt from GST under specific provisions.

Q10. Can insurers offer discounts to offset the GST impact?

Yes, insurers can offer discounts or loyalty bonuses to help policyholders lower the effective premium amount.

We hope these answers help you understand GST and how you can buy the best health plan while maximizing savings!

The Final Word

The implementation of GST has significantly altered India’s health insurance landscape. For consumers, it has led to an increase in premium costs – but has also brought standardization and transparency.

There’s no doubt that GST has increased the tax burden on health plans. But with the right insurer offering optimal coverage and discounts, you can still find affordable coverage for your family.

The key is to harness the expertise of advisors like Filingwala.com, who can help identify the most suitable health insurance products and provide end-to-end policy administration. This ensures you get adequately covered without breaking the bank!

So focus your energy on finding the ideal health plan rather than worrying about GST rates. Ultimately, being uninsured puts you at the biggest financial risk – not GST!