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e-invoicing for turnover exceeding 100 Cr Notification 88/2020

In pursuance of the Notification No. 88/2020 – Central Tax dated 10th November, 2020, the Central Government has made further amendment to the Notification No. 13/2020 dated 21st March, 2020 whereby with effect from 1st day of January, 2021, for the words five hundred crore rupees the word one hundred crore rupees shall be substituted.

In the Notification  No. 13/2020 – Central Tax dated 21st March, 2020 it was notified that registered person, other than those referred in sub-rules (2), (3), (4) and (4A) of rule 54 of the said rules, whose aggregate turnover in a financial year exceeds one hundred crore rupees, as a class of registered person who shall prepare invoice and other prescribed documents, in terms of sub-rule(4) of rule 48 of the said rules in respect of supply of goods or services or both to a registered person.

As per Rule 54 of the Central Goods and Service Tax (CGST) Rules, 2017 sub-rules (2), (3), (4) and (4A) covers: –

(2) Where the supplier of taxable service is an insurer or a banking company or a financial institution, including a non-banking financial company,

(3) Where the supplier of taxable service is a goods transport agency supplying services in relation to transportation of goods by road in a goods carriage

(4) Where the supplier of taxable service is supplying passenger transportation service

(4A) A registered person supplying services by way of admission to exhibition of cinematograph films in multiplex screens

(5) The provisions of sub-rule (2) or sub-rule (4) shall apply, mutatis mutandis, to the documents issued under rule 49 or rule 50 or rule 51 or rule 52 or rule 53.

As per Rule 48 on Manner of issuing invoices: –

(4) The invoice shall be prepared by such class of registered persons as may be notified by the Government, on the recommendations of the Council, by including such particulars contained in FORM GST INV-01 after obtaining an Invoice Reference Number by uploading information contained therein on the Common Goods and Services Tax Electronic Portal in such manner and subject to such conditions and restrictions as may be specified in the notification.

(5) Every invoice issued by a person to whom sub-rule (4) applies in any manner other than the manner specified in the said sub-rule shall not be treated as an invoice.

(6) The provisions of sub-rules (1) and (2) shall not apply to an invoice prepared in the manner specified in sub-rule (4).]

FAQ’s on Section 206C(1H) of the Income-tax Act, 1961

1. Please advise system to be followed from step one to the end.

Ans. As per Circular no. 17 of 2020 dt. 29th September, 2020, point no. 4.4.2 (iii) – Since the threshold of fifty lakh rupees is with respect to the previous year, calculation of receipt of sale consideration for triggering TCS under sub-section (1H) of section 206C shall be computed from 1st April, 2020. Hence, if a person being seller has already received fifty lakh rupees or more up to 30th September 2020 from a buyer, the TCS under sub-section (1H) of section 206C shall apply on all receipt of sale consideration during the previous year, on or after 1st October 2020, from such buyer.

Following entries to be passed in books of accounts:-

Entry on Sales booking:-

Debtor …………………Dr.       1,18,000

TCS Receivable ……….Dr.            88.50

To Sales                                                           1,00,000

To GST Payable                                                   18,000 (assumed to be @ 18%)

To TCS Payable                                                    88.50  (@ 0.075% of (Sales value including GST) considering abatement of 25% prescribed by Press Release of Central Board of Direct Tax dated 13th May, 2020 which is applicable upto 31/03/2021.)

(As per Circular no. 17 of 2020 dt. 29th September, 2020, point no. 4.6.1 – It is requested to clarify that whether adjustment is required to be made for sales return, discount or indirect taxes including GST for the purpose of collection of tax under sub-section (lH) of section 206C of the Act. It is hereby clarified that no adjustment on account of sale return or discount or indirect taxes including GST is required to be made for collection of tax under sub-section (IH) of section 206C of the Act since the collection is made with reference to receipt of amount of sale consideration.)

Entry on Payment received from debtor

Bank ……………Dr.          1,18,088.50

To Debtor                                                         1,18,000

To TCS Receivable                                                 88.50

(As per Circular no. 17 of 2020 dt. 29th September, 2020, point no. 2 – a seller receiving an amount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year to collect tax from the buyer a sum equal to 0.1 per cent (subject to the provisions of proposed sub-section (10A) of the section 206C of the Act) of the sale consideration exceeding fifty lakh rupees as income-tax. The collection is required to be made at the time of receipt of amount of sales consideration.)

Entry on Payment of TCS Liability

TCS Payable ……………..Dr.           88.50

To Bank                                                                    88.50

(As per Rule 37CA(2) All sums collected in accordance with the provisions of section 206C by collectors other than an office of the Government shall be paid to the credit of the Central Government within one week from the last day of the month in which the collection is made.)

  1. Do we charge TCS in our Invoicing.

Ans. We have two options.

  1. Either we charge TCS on the invoice or;
  2. Raise a debit note for this amount

We need to make sure that the invoice/ Debit note are GST Compliant. It will be less complex if we charge TCS on invoice on the assumption that the amount received, from the buyer is inclusive of TCS and do the reverse calculation for the TCS amount and credit the same to government.

  1. Is TCS charged on the billing amount before GST or on amount including GST.

Ans. TCS is required to be charged on invoicing amount including GST. Please refer to the clarification in Point no. 4.6.1 of Circular no. 17 of 2020 dated 29th September, 2020.

  1. Do we deposit TCS based on billing date or after receipt of payment from your customer.

Ans. TCS is to be deposited on receipt of payment from the buyer irrespective whether it is an advance or against an invoice.

(As per Circular no. 17 of 2020 dt. 29th September, 2020, point no. 4.4.2 – Since sub-section (1H) of section 206C of the Act applies on receipt of sale consideration, the provision of this sub-section shall not apply on any sale consideration received before 1st October 2020. Consequently, it would apply on all sale consideration (including advance received for sale) received on or after 1st October 2020 even if the sale was carried out before 1st October 2020.

  1. If TCS have to be deposited on payment basis, do we deposit TCS on all payments receipt after 01/10/2020 i.e. even including supplies made prior 01/10/2020 and payment received after 01/10/2020.

Ans. Yes, you need to deposit TCS on all payments received after 01/10/2020, even if it relates to supplies before 01/10/2020. This is clarified in circular no. 17 of 2020 dated 29th September, 2020. Please refer to clarification in point no. 4.4.2 of Circular no. 17 of 2020 dated 29th September, 2020 above.

6. We have division of our Company located at different states near customer premises. Do we charge TCS on supply made to our own division. In the Balance Sheet the sale is consider as Stock Transfer and not sale despite the fact that GST bill are raised for movement of goods.

Ans. As per explanation to sub section (1H) of Section 206C (a) “buyer” means a person who purchases any goods, but does not include,: —

(A) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or (B) a local authority as defined in the Explanation to clause (20) of section 10; or (C) a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein;

(b) “seller” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the sale of goods is carried out, not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

 As per Section 2(31) of Income tax act, 1961 “person” includes—

  • an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses.

Accordingly, the provision of TCS under section 206C(1H) is not applicable in case of Stock Transfers.

Disclaimer: – Khurana Khurana & Associates LLP shall not be liable for any direct, indirect, incidental, consequential damages, or any loss of profit or revenue whether incurred directly or indirectly. Laws may change with passage of time. 

Investment in Plant and Machinery for Micro, Small and Medium Enterprises Development Act, 2006

Ministry of Small Scale Industries vide notification dated 5th October, 2006 specified the items, the cost of which shall be excluded while calculating the investment in plant and machinery: –

  1. Equipment such as tools, jigs, dies, moulds, and spare parts for maintenance and the cost of consumable stores;
  2. Installation of plant and machinery;
  3. Research and development equipment and population control equipment;
  4. Power generator set and extra transformer installed by the enterprise as per the regulations of the state electricity board;
  5. Bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation;
  6. Procurement or installation of cables, wires, bus bars, electrical control panels (not mounted on individual machines), oil circuit breakers or miniature circuit breaker which are necessarily to be used for providing electrical power to the plant and machinery or for safety measures;
  7. Gas producer plant;
  8. Transportation charges (excluding sales-tax or value added tax and excise duty) for indigenous machinery from the place of their manufacture to the site of the enterprise;
  9. Charge paid for technical know-how for erection of plant and machinery;
  10. Such storage tanks which stores raw materials and finished products only and are not linked with the manufacturing process; and
  11. Fire fighting equipment

While calculating the investment in plant and machinery, the original price thereof, irrespective of whether the plant and machinery are new or second hand, shall be taken into account provided that in case of imported machinery, the following shall be included in calculating the value, namely:

  1. Import duty (excluding miscellaneous expenses such as transportation from the port to the site of the factory, demurrage paid at the port);
  2. Shipping charges
  3. Customs clearance charges; and
  4. Sales tax and value added tax

Source:- Investment under MSMED Act 2006

Activities which may be included by companies in their Corporate Social Responsibility Policies Activities

SCHEDULE VII

(See Section 135)

Activities which may be included by companies in their Corporate Social Responsibility Policies Activities relating to: —

(i) Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water.

(ii) Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.

(iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.

(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga.

(v) protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts;

(vi) measures for the benefit of armed forces veterans, war widows and their dependents;

(vii) training to promote rural sports, nationally recognised sports, paralympic sports and olympic sports

(viii) contribution to the prime minister’s national relief fund or Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)] or any other fund set up by the central govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women;

(ix) Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities, Indian Institute of Technology (IITs), National Laboratories and Autonomous Bodies (established under the auspices of Indian Council of Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE), Defence Research and Development Organisation (DRDO), Department of Biotechnology (DBT), Department of Science and Technology (DST), Ministry of Electronics and Information Technology engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs).

(x) rural development projects

(xi) slum area development. The term `slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.

(xii) disaster management, including relief, rehabilitation and reconstruction activities.

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