Introduction of Section 43B(h) in the Income Tax Act.

by Pushkar Mer

As per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006,the buyer is required to make payment within 45 days of the acceptance of goods or services rendered. If payment not made within 45 days, interest liability arises.

To support MSMEs government seems to be very serious.

The MSME Return form was introduced by the Ministry of Corporate Affairs (MCA) on 22 January 2019 to strengthen the provisions of the MSME Development Act, 2006 (MSMED). In half yearly MEME Return, every company is required to file outstanding details of MSMEs.

Now government has decided to disallow such expenses in case of violation of payment condition as per MSMED Act (means payment must have to be released to MSMEs within 45 days.

The Finance Act, 2023, introduced Section 43B(h) in the Income Tax Act to ensure timely payments are made to MSMEs and to maintain uninterrupted cash flow. This rule will be applicable w.e.f. 1st April, 2024. However, industries is requesting government to postpone this rule for 1 year.

Unlike Section 37(1), the deductibility under Section 43B is not linked to the distinction between capital expenditure and revenue expenditure. Section 43B applies to sums payable in respect of which a deduction is otherwise allowable under this Act.

Therefore, Section 43B(h) would apply to amounts payable to micro or small enterprises with respect to the purchase of capital goods for which a 100% deduction is admissible under Sections 30 to 36. For example, the deduction of 100% of capital expenditure under Section 35AD and the deduction of 100% of capital expenditure on scientific research under Section.

If a 100% deduction of capital expenditure is not allowable, there would be no disallowance with respect to depreciation on capital goods purchased if the MSE supplier of capital goods is not paid in time. This is because depreciation is not a “sum payable in respect of which deduction is otherwise allowable”. What can be disallowed under Section 43B(h) must have the character of a sum payable in respect of which deduction is otherwise allowable.

The Courts had taken the view that depreciation cannot be disallowed on the cost of the asset which was capitalized in books of account, but tax thereon was not deducted under Section 40(a)(i)/(ia) of the Act.

Extension of time limit for foreign remittance

by Pushkar Mer

As per master circular of Reserve Bank of India, all remittance against import of goods or service should be made within 6 months of import. However, AD Category – I bank can extend time period up to 1 year for trade payable and 3 years for Capital goods in  following conditions.

(i) AD Category – I banks can consider granting extension of time for settlement of import dues up to a period of six months at a time (maximum up to the period of three years) irrespective of the invoice value for delays on account of disputes about quantity or quality or non-fulfilment of terms of contract; financial difficulties and cases where importer has filed suit against the seller. In cases where sector specific guidelines have been issued by Reserve Bank of India for extension of time (i.e. rough, cut and polished diamonds), the same will be applicable.

(ii) While granting extension of time, AD Category –I banks must ensure that:

  1. The import transactions covered by the invoices are not under investigation by Directorate of Enforcement / Central Bureau of Investigation or other investigating agencies;
  2. While considering extension beyond one year from the date of remittance8, the total outstanding of the importer does not exceed USD one million or 10 per cent of the average import remittances during the preceding two financial years, whichever is lower; and
  3. Where extension of time has been granted by the AD Category – I banks, the date up to which extension has been granted may be indicated in the ‘Remarks’ column.

(iii) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.

(iv) The above shall be reported in IDPMS as per message “Bill of Entry Extension” and the date up to which extension is granted will be indicated in “Extension Date” column

Storage of Payment System Data

by Pushkar Mer

The entire payment data shall be stored in systems located only in India, except in cases clarified herein.

The data should include end-to-end transaction details and information pertaining to payment or settlement transaction that is gathered / transmitted / processed as part of a payment message / instruction. This may, interalia, include – Customer data (Name, Mobile Number, email, Aadhaar Number, PAN number, etc. as applicable); Payment sensitive data (customer and beneficiary account details); Payment Credentials (OTP, PIN, Passwords, etc.); and, Transaction data (originating & destination system information, transaction reference, timestamp, amount, etc.).

  • There is no bar on processing of payment transactions outside India if so desired by the PSOs. However, the data shall be stored only in India after the processing. The complete end-to-end transaction details should be part of the data.
  • In case the processing is done abroad, the data should be deleted from the systems abroad and brought back to India not later than the one business day or 24 hours from payment processing, whichever is earlier. The same should be stored only in India.
  • However, any subsequent activity such as settlement processing after payment processing, if done outside India, shall also be undertaken / performed on a near real time basis. The data should be stored only in India.
  • In case of any other related processing activity, such as chargeback, etc., the data can be accessed, at any time, from India where it is stored.

Banks having server outside India have been strictly directed by RBI for not sharing customer account sensitive data in bank statement

In order to be in adherence to the Reserve Bank of India (RBI) Directive, the below listed information will not be available in the periodic banks statement/s for RTGS and NEFT transactions undertaken at your end (in cases if banks are storing data outside India):-

  • Serial Number of the Transaction
  • Message to Beneficiary
  • Beneficiary IFSC Number
  • Remitting IFSC Number
  • Address of the Remitter
  • Remarks
  • Debit Account Number
  • Beneficiary Account Number
  • Remitter Account Number
  • Reject Reason Description
  • Sender to Receiver Information

Press release dated February 10,2024 on Fraudulent Summons

by Pushkar Mer

It has been noticed that some individuals with fraudulent intent are creating and sending fake summons to the taxpayers who may or may not be under investigation by DGGI (Directorate General of GST Intelligence). These summons may look real because they have Director Identification Number (DIN), but these DIN numbers are not issued by DGGI. Taxpayers can check veracity of any communication by using ‘verify CBIC-DIN’ window on CBIC’s website.

Mercedes-Benz get stay order against demand for GST on Expat Salary

by Pushkar Mer

In a relief for the auto major Mercedes-Benz, Bombay High court has granted an interim-stay of order demanding GST dues on expat-salary payment by the company. Last year, honorable Supreme Court has held that the salary of overseas employees (deputed to Indian company) that is reimbursement to the overseas entities will be subject to service tax. This decision shakes companies. Based on this decision GST department aggressively started issuing notices to companies demanding GST on reimbursement of expat salary. Directorate General of GST Intelligence (DGGI) recovers INR 2,500 Crores GST dues not paid on expat salaries. Many companies deposited GST on reimbursement of expat salaries. Some companies decided to challenge GST notices. However, rules are not yet clarified and companies are advices to analyze Supreme Court (SC) decision made in case of Northern operating Systems Pvt Ltd and check facts. If facts are matching with NOS arrangements, then GST need to be deposited, if company can differentiate facts, it can decide to challenge GST demand notice in court. This decision will be huge impact on company’s cash flow because GST demand will be calculated w.e.f. 01.07.2027 and interest and penalty will also be required to be deposited under section 73/74 of CGST Act.

केशब दा

by Pushkar Mer

मैन्युफ़ैक्चरिंग उद्योग में NG (Not Good) शब्द बहुत प्रयोग किया जाता है। डिफ़ेक्टिव पार्ट्स , डिफ़ेक्टिव कार्यप्रणाली इत्यादि के लिए ये शब्द इस्तेमाल होता है । जब भी ये शब्द सुनाई देता है केशब दा बहुत याद आते हैं । केशब दा एक जाने माने NG Receiver हैं उन्हें दुनिया में कुछ भी अच्छा नहीं लगता और उन्हें ये ग़लतफ़हमी भी है कि यदि उनके हाथ में पावर आ गई तो वे सबको सुधार सकते हैं । जब सत्संग में भी जाते हैं तो अच्छी बातों को एसे अलग कर देते हैं जैसे हंस दूध और पानी को अलग कर देता है । अगर एक घंटे के प्रवचन में चाहे एक वाक्य ग़लत बोला गया हो केशब दा को केवल वही वाक्य याद रहेगा बाक़ी प्रवचन का एक शब्द भी उन्हें याद नहीं रहेगा । उन्हें बचपन से अब तक की वो सारी बातें याद हैं जो निगेटिव हैं लेकिन ग़ज़ब की याददास्त वाले केशब दा को अच्छा कुछ भी याद नहीं है । अगर अच्छाई का पहाड़ भी केशब दा के सामने आ जाए तो उसमें भी केशब दा कुछ ना कुछ कमी ज़रूर ढूँढ़ निकालेंगे । एसा लगता है ऊपर वाले ने केशब दा के एंटिना में कुछ गडबड़ कर दी जिससे केशब दा केवल निगेटिव सिग्नल ही पकड़ते हैं  ।

Interim Budget 2024

by Pushkar Mer

It was expected the FM can announce some exemptions for new tax regime. However, tax payers are not expecting much because of past few years trend, but no change is income tax slabs is extremely disappointing for common man and the middle class.

India is the fastest growing major economy in the world and in the coming years will become the world’s third largest economy with a $5 trillion GDP.

The government is working to make India a developed country by 2047, Finance Minister Nirmala Sitharaman said on Thursday. Presenting the interim Budget 2024-25, Sitharaman also said minimum support prices for ‘annadata’ (farmers) have been increased periodically and appropriately. 

The government on Thursday announced the extension of healthcare cover under Ayushman Bharat to all ASHA and anganwadi workers. 

The government has also increased the defence budget this year by Rs. 6.2 lakh crore, which will constitute around 8% of the total expenditure.

बैल को पहचानिए

by Pushkar Mer

अगर आपको किसी बड़े काम का नेतृत्व करना है तो आपका पहला काम होगा टीम के सदस्यों की व्यक्तिगत क्षमता को पहचानना । ये काम आसान नहीं है इसके लिए आपको काम की गहरी समझं होना ज़रूरी है । आज के समय में जो जितना निकम्मा होगा वो प्रथम दृष्टया सबसे ज़्यादा काम का लगेगा क्योंकि काम करना और काम दिखाना दोनों अलग अलग चीजें हैं । कुछ लोग चूहा भी मार दें तो उसकी एसी शानदार व्याख्या करते है जैसे उन्होंने शेर मार दिया हो । जो असल काम के लोग होते हैं अगर सचमुच शेर भी मार दें तो भी चुप रहते हैं । जिन्हें काम की गहरी समझं नहीं होती वो चूहा मार को ही बड़ा शिकारी मानते हैं । 

आप किसी भी टीम से तभी अच्छा काम करवा सकते हैं जब आपको सदस्यों की व्यक्तिगत क्षमता का पता हो । अगर खेत में जुताई करनी है तो बैल को ही काम पर लगाना होगा । कुत्ते बिल्ली को हल चलाने में नहीं लगा सकते ।