Monthly Archives: June 2022

ROC UPDATE ON DPT – 3

APPLICABILITY

Every Company (Public as well as Private)

COMPANIES ON WHICH DEPOSITS CHAPTER IS NOT APPLICABLE:

  • Banking Company
  • A Non-Banking Financial Company (NBFC)
  • A House Finance Company (Regd with National Housing Bank)
  • A Government Company

PURPOSE OF THE FORM

  • Return of Deposit;
  • Particular of transaction not considered as deposits under clause (c) of Sub-rule 1 of Rule 2; or
  • Return of Deposit and Particulars of transactions by a company not considered as deposit.

PERIOD OF DISCLOSURE

For the financial year 2020-21 i.e. 01.04.2020 till 31.03.2021

DUE DATE

  • Details of particulars which are not considered as Deposits under rules; or
  • Reporting within 30th June of every year (details pertaining to 31st March)

NET WORTH FILING DETAILS

As given in the form itself, “Net worth as per the last audited balance sheet preceding the date of return”, which suggests, the company shall provide the details of networth of the last audited balance sheet preceeding the date of return. For example: In case the return is being filed for FY 2020-21, and the accounts for the FY 2020-21 has not been audited till the due date of the Form DPT-3, then the company shall take up the details of last audited balance sheet of the company i.e. for FY 2019-20.

CONSEQUENCES OF NON – FILING

  • ON THE COMPANY
    • Fine of minimum of Rs. 1 Crore or twice the amount of deposits whichever is lower; (Fine may extend upto Rs. 10 crore)
  • OFFICER IN DEFAULT
    • Imprisonment upto seven years and
    • Fine of Rs. 25 Lakhs to Rs. 2 Crore.

MANDATORY REQUIREMENT AS PER THE FORM

  • Auditor’s Certificate (Can only be given by the statutory auditor of the company): In case of return of Deposit, it is mandatory, where the radio button 2 or 4 is selected;
  • In case of any charge, Copy of Instrument creating charge;
  • Proof of trust deed;
  • Particulars of Liquid Assets;
  • Others, if any.

APPLICABLE FEE TO THE FORM

Nominal Share CapitalFee Applicable
Less than Rs. 1,00,000Rs. 200
More than Rs. 1 Lakh and less than Rs. 5 LakhRs. 300
More than Rs. 5 Lakh and less than Rs. 25 LakhRs. 400
More than Rs. 25 Lakh and less than Rs. 1 CroreRs. 500
More than Rs. 1 croreRs. 600

AMOUNT CONSIDERED AS EXEMPTED DEPOSITS AS PER RULE – The amount which shall not be considered as deposits has been defined under rules 2(1)(c):

  • Loans from Foreign Banks, Financial Institutions, IFS, etc subject to FEMA.
  • Money received from any company
  • Amount issued as Convertible Cumulative Debenture (Provided it is mandatorily converted in shares in 10 years)
  • Amount issued as Secured Debenture (Provided it is 100% secured)
  • Amount received towards subscription of any securities
    • Provided allotment to be made within 60 days from the date of receipt of money or advance
    • Amount not refunded within 15 days from completion of 60 days will be refunded as deposits. Any adjustments will not be treated as refund.
  • Amount raised by issuance of units
  • Amount received by trust (Provided no interest is paid)
  • Advance received for supply of goods/services (in the course of business)
    • Maximum 365 days
    • Company Law Committee recommendation to omit subject to a written contract and disclosure in financial statements.
  • Amount received by Directors of the company – not being borrowed fund (Relative of Director in case of private limited company also included herein)
  • Amount Received from employee (Amount not exceeding his/her Annual Salary)
  • Commercial paper in consonance with RBI guidelines
  • Security Deposit for performance of contract
  • Convertible not issued by Start-up (25 Lakh or more repayable within 5 years)
  • Amount received by company from AIF, MF, Domestic Capital Venture, Infrastructure trusts, Real Estate Investments Trusts.
  • Share Warrants
  • Promoters unsecured funding (on stipulation imposed by lending institution or bank)
  • Amount accepted by Nidhi Company
  • Advance received under long terms projects for supply of capital goods.

NOTIFICATIONS ON DPT-3 BY MCA TILL DATE

Disclosure: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation and is of our personal opinion

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TCS 206C(1H) VS TDS 194Q

We have almost reached the end of Q1 of FY 21-22 It is a testing time for all businesses across the world on
account of the Coronavirus. We are all working and available to support our clients.

"We also request you to stay home and be safe"

As you are aware that from 01.10.20202 TCS 206C(1H) was made effective and from 01.07.2021 TDS 194Q shall be
applicable, we have summarised both the sections below along with vis-a-vis comparison & illustrations.

TCS SECTION 206C(1H)

New TCS Section 206C(1H) is made effective from 01.10.2020 vide Finance Act, 2020 and it mandates that:

  • A seller of goods is liable to collect TCS on sale of any goods from buyer.
  • TCS to be collected if the Aggregate value of goods is more than 50 lakhs.
  • TCS to be collected on Total sale value.
  • TCS @0.1% is to be collected on amount exceeding Rs. 50 lakhs if PAN of buyer is available.
  • If the buyer does not furnish their PAN/AADHAR number to the seller, then seller collect from the buyer, a sum equal of 1% in place of 0.1%

Seller– A person whose turnover exceeds Rs. 10 Crores in during the financial year immediately preceding, the financial
year in which the sale of good is carried out.
Buyer– Any person who purchase any goods, except importer of goods Central/State Government, Local Authority An
embassy, High Commission, legation, commission, consulate, and trade representation of a foreign state.

ACCOUNTING JOURNAL ENTRIES

EXPLANATION
A seller who receives any amount as consideration for sale of any goods. Then the Aggregate value of sale exceeding
50 lakh rupees in any previous year shall collect a sum equal to 0.1% of the sale consideration exceeding 50 lakh rupees from the buyer at the time of receipt as Income Tax. This section becomes operative from 1st October 2020.

IMPACT OF CREDIT NOTE/DEBIT NOTE
If sales return/credit note/debit note is before receipt of any consideration, then the impact will be included in the
amount of consideration. TCS will be applicable on the revised consideration. If the amount of consideration is already
received and TCS is collected and paid, no impact will be made at the time of passing entry for sales return/credit
note/debit note.

DUE DATE FOR RETURN
The person responsible for collecting tax shall deposit the TCS amount within 7 days from the last day of the month in
which the tax was collected. Every tax collector shall submit quarterly TCS return i.e., Form 27EQ in respect of the tax
collected by him in a particular quarter.

PRACTICAL ISSUES

  • Issues shall arise at the end of each quarter is reconciliation. There would be some vendors who might not deposit
  • TCS to the government and hence the purchaser might lose the credit of such TCS.
  • Charging TCS becomes an issue where advances are received from customers. Since the liability of depositing TCS is on receipt of amount, TCS must be paid on such advance.
  • If the dates of sales and payment receipt of goods are different than TCS is applicable on receipt of sale of goods.
  • TCS is not applicable on Inter-Branch Stock Transfers, as PAN of both the customer and supplier is same.

FEW EXAMPLES
Case – Mr. A sales goods of Rs 6000000 to Mr. B (with PAN and Aadhar detail).
Solution – In case it is cover under this section and we must pay tax on 10 lakh (60 lakh – 50 lakh) and rate of tax is 0.1%.
Case – Mr. A sales goods of Rs 60 lakh to Mr. B (without PAN and Aadhar detail).
Solution – It is also cover under this section and taxable amount is 10 lakhs, but rate of tax is 1% because here PAN and Aadhar details are not furnished.
Case – Y sales goods to Z of Rs 60 lakh. Z is liable to deduct TDS.
Solution – It is not covered under this section because according to section 206C (1H) the provision of this subsection shall not apply if the buyer is liable to deduct tax at source under any other provision of this act has deducted such amount.
Case – Mr. X sales goods to Mr. Y and takes advance on 29.9.2020 but sale is made on or after 1.10.2020.
Solution – Receipt is before 1.10.2020, but sale is taking place after 1.10.2020, TCS should be applicable.

TDS SECTION 194Q

New TDS Section 194Q is made effective from 01.07.2021 vide Finance Act, 2021 and it mandates that:

  • Any person, being a buyer who is responsible for paying any sum to any seller for purchase of any goods.
  • The value or aggregate of such value exceeding fifty lakh rupees in any previous year.
  • Shall, at the time of credit of such sum to the account of the seller or
  • At the time of payment thereof by any mode, whichever is earlier,
  • Deduct an amount equal to 0.1 per cent. of such sum exceeding fifty lakh rupees as income-tax.

Buyer– A person whose total sales, gross receipts or turnover from the business carried on by him exceed Rs. 10
crores during the financial year immediately preceding the financial year in which the purchase of goods is carried
out.

RATE OF TDS U/S 194Q
Buyer of all goods will be liable to deduct tax at source @ 0.1% of sale consideration, exceeding INR 50 Lakhs in a
Financial Year.
Tax to be deducted @ 5% if the seller does not provide PAN/Aadhar.

TURNOVER FOR APPLICABILITY OF SECTION 194Q
TDS obligation will be on buyers, whose gross receipts/turnover exceeds INR 10 Crores in preceding financial year.

ACCOUNTING JOURNAL ENTRIES

CONDITIONS FOR APPLICABILITY OF SECTION 194Q
No requirement of TDS u/s 194Q on a transaction, if TDS is deductible under any other provision or TCS is collectible
under section 206C excluding 206C(1H) on a given transaction.
• Either TDS u/s 194Q will apply or TCS u/s 206C(1H) will apply, Both TDS u/s 194Q and TCS u/s 206C(1H) will not apply on the same transaction.
• In case of potential overlap between the two provisions TDS u/s 194Q will apply and TCS u/s 206C(1H) will not apply.

DATE OF APPLICABILITY
This provision will be applicable with effect from 1st July 2021.
Time Limit for deduction of TDS under section 194Q Tax to be deducted at the earliest of the following dates:
• Time of credit of such sum to the account of the seller or
• Time of payment.

FEW EXAMPLES
Case – Mr. C purchase goods of Rs 8000000 from Mr. D (with PAN detail).
Solution – In case it is cover under this section and we have to deduct tax on 30 lakh (80 lakh – 50 lakh) and rate of tax is 0.1%.
Case – Mr. C purchase goods of Rs 80 lakh from Mr. D (without PAN detail).
Solution – It is also cover under this section and taxable amount is 30 lakh but rate of tax is 5% because here PAN details are not furnished.
Case – Y purchase goods from G of Rs 70 lakh. G is liable to deduct TCS u/s 206C(1H).
Solution – It will be covered under section 194Q because according to Memorandum Sec 194Q shall override Sec 206C(1H). Section 206C (1H) shall not be applicable if the buyer is liable to deduct tax at source under Sec 194Q.

Comparison of Sec 194Q and 206C(1H) of Income Tax Act, 1961

BASIS OF COMPARISONTDS 194QTCS 206 (1H)
PurposeTax to be DeductedTax to be Collected
Applicable toBuyer / PurchaserSeller
Date of Applicability01-07-202101-10-2020
When Deducted or CollectedPayment or Credit, whichever is Earlier.At the time of Receipt.
AdvancesTDS shall be deducted on advance payments made.TCS shall be collected on advance receipts.
Rate of TDS/TCS0.1%0.1%
Rate if PAN Not Available5%1%
Exceeding LimitTurnover/Gross Receipts/Sales from the business of buyer should exceed Rs.10 cr during previous year (excluding GST) purchase of goods of aggregate value exceeding Rs.50 lakhs in any previous year (the value of goods includes GST).Turnover/Gross Receipts/Sales from the business of seller should exceed Rs.10 cr during previous year (excluding GST) Sale consideration received exceeds Rs.50 lakhs in any previous year. (the value of goods includes GST).
ExceptionsTo be Notified by GovernmentIf buyer is importer of goods Central/State Government, Local Authority an Embassy, High Commission, Legation, Commission, Consulate and Trade representation of a Foreign State.
When to Collect / DepositTax so deducted shall be deposited with government by 7th day of subsequent month.Tax so collected shall be deposited with government by 7th day of subsequent month.
Quarterly Statement of Returns inForm 26QForm 27EQ
Certificate to be Issued inForm 16AForm 27D

ILLUSTRATIONS

Sl.No.Buyers TurnoverSellers TurnoverTransaction ValueSection Applicable
15 Cr.11 Cr.55 LakhsTCS – 206C(1H)
215 Cr.7 Cr.58 LakhsTDS – 194Q
312 Cr.13 Cr.54 LakhsTDS – 194Q
47 Cr.5 Cr.58 LakhsNA – Turnover Limit
512 Cr.15 Cr.48 LakhsNA – Transaction Value Limit
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Amendment of Importer-Exporter Code (IEC) related provisions under Chapter-1 and Chapter-2 of Foreign Trade Policy, 2015- 2020

Notification No. 58/2015-2020: https://bit.ly/3myxxkD

  • All IEC holders are now legally required to update and validate their IEC Details, even if there are no changes, from April to June once every year through Online system, failing which their IEC shall be de-activated and no import or export activity will be possible.
  • DGFT has mandated all IEC holders to update their Importer- Exporter Code (IEC) yearly between April  to  June.  IECs  not updated within this prescribed period would be de-activated.
  • Objective of the given exercise is to prune out inactive IECs and incorrect IEC details. The support of all active IEC holders for this limited updation is kindly solicited.
  • Due care has been taken to not add any specific compliance burden. The given process is automatic and no fees is charged for such updations. The online process can be completed within 5-10 minutes if all details are correct or within 30 minutes otherwise.
  • IECs not updated within this prescribed period would be de- activated(post June).
  • Subsequently, the firms that wish to re-activate their IEC (post de- activation for non-compliance), would be required to update the IEC. IEC shall be auto re-activated on updation after June.

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Important updates to the E-way bill portal.

This week we bring you some important updates made to the e-way bill portal and relevant changes to HSN reporting which will impact all GST taxpayers. The department also notified all the changes which were announced in the GST Council meeting last week. Good to see the speed with which the notifications have come through so taxpayers can benefit from them.

Following changes were made to e-way bill software by NIC

  1. E-way bill facility will be blocked for a GSTIN only for defaulting supplier GSTIN now and not for the defaulting recipient or transporter GSTIN.
  2. Where mode of transport is Ship, it has now been updated as Ship / Road cum Ship. Now users can enter vehicle number in case the goods are moved by Road initially, and for movement by Ship, the Bill of lading Number and date may be entered.
  3. Suspended GSTINs are now allowed for E-Waybill generation. Similarly, the recipient and transporter GSTINs which are suspended are also allowed for generation of e-waybill.

Some improvements have also been made in MIS reports

  1. For E-way bills which are about to expire, an Excel download option is provided.
  2. In the Outward Supplies report an additional column for mode of generation is provided.

Change in HSN Summary in GSTR-1

  1. GSTN has started auto-populating the ‘Description’ from the ‘HSN/SAC’ entered in the HSN Summary that is reported in GSTR-1. Even if the users provide their own description against the particular HSN/SAC, the same will be overwritten by the description as per the HSN master list. Therefore GSTN is not allowing to edit the description in the HSN summary to be filed in GSTR-1.
  2. There is a new column for rate of tax
  3. Total Value column has been removed

Please note that all of the above changes related to HSN Summary are applicable from the May 2021 period onwards.

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