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BRBL MODULE – C
Chapter: 24 TAX LAWS
What we will study?
*All about definition Tax Laws?
INTRODUCTION:
The banks and financial institutions are required to
implement the provisions of the tax laws by deducting taxes
at source, crediting the tax deducted at source to the
income tax authorities and also have to comply with the
provisions relating to Goods and Service Tax, etc., in their
day to day operations.
INCOME TAX:
Scope and Extent:
The Income Tax Act 1961 came into force from April 1st
1962 and extends to the whole of India to govern the law
relating to taxation on Income of individuals, corporates etc.
This Act envisages taxation of income of an assesse on the
basis of his
(a) Residence
(b) Place of source of income.
Meaning of Income:
The term 'Income' has been elaborately defined in Section
2(24) of the Income Tax Act 1961 as "income" includes
(i) profits and gains;
(ii) Dividend;
(iia) Voluntary contributions received by a trust created
wholly or partly for charitable or religious purposes or by an
institution established wholly or partly for such purposes or
by an association or institution referred to in clause (21) or
clause (23), or by a fund or trust or institution referred to in
sub-clause
(iv) or sub-clause
(v) or by any university or other educational institution
referred to in sub-clause
(iiiad) or sub-clause
(vi) or by any hospital or other institution referred to in sub-
clause
(iiiae) or sub-clause (via)] of clause (23C), of section 10] or
by an electoral trust.
Explanation:
for the purposes of this sub-clause, "trust" includes any
other legal obligation;
(iii) The value of any perquisite or profit in lieu of salary
taxable under clauses (2) and (3) of section 17;
(iiia) any special allowance or benefit, other than perquisite
included under sub-clause
(iii), specifically granted to the assesse to meet expenses
wholly, necessarily and exclusively for the performance of
the duties of an office or employment of profit;
(iiib) any allowance granted to the assesse either to meet
his personal expenses at the place where the duties of his
office or employment of profit are ordinarily performed by
him or at a place where he ordinarily resides or to
compensate him for the increased cost of living;
(iv) the value of any benefit or perquisite, whether
convertible into money or not, obtained from a company
either by a director or by a person who has a substantial
interest in the company, or by a relative of the director or
such person, and any sum paid by any such company in
respect of any obligation which, but for such payment,
would have been payable by the director or other person
aforesaid;
(iva) the value of any benefit or perquisite, whether
convertible into money or not, obtained by any
representative assesse mentioned in clause (iii) or clause (iv)
of sub-section (1) of section 160 or by any person on whose
behalf or for whose benefit any income is receivable by the
representative assesse (such person being hereafter in this
sub-clause referred to as the "beneficiary") and any sum
paid by the representative assesse in respect of any
obligation which, but for such payment, would have been
payable by the beneficiary;
(v) Any sum chargeable to income-tax under clauses (ii) and
(iii) of section 28 or section 41 or section 59; 8
(va) Any sum chargeable to income-tax under clause (iiia) of
section 28;
(vb) any sum chargeable to income-tax under clause (iiib) of
section 28;
(vc) any sum chargeable to income-tax under clause
(iiic) of section 28;
(vd) the value of any benefit or perquisite taxable under
clause (iv) of section 28;
(ve) any sum chargeable to income-tax under clause (v) of
section 28;
(vi) Any capital gains chargeable under section 45;
(vii) the profits and gains of any business of insurance
carried on by a mutual insurance company or by a co-
operative society, computed in accordance with section 44
or any surplus taken to be such profits and gains by virtue of
provisions contained in the First Schedule; )
(viii) the profits and gains of any business of banking
(including providing credit facilities) carried on by a co-
operative society with its members;
(ix) any winnings from lotteries, crossword puzzles, races
including horse races, card other games of any sort or from
gambling or betting of any form or nature whatsoever.
Explanation- for the purposes of this sub-clause,-—

(i) "Lottery" includes winnings from prizes awarded to any
person by draw of lots or by chance or in any other manner
whatsoever, under any scheme or arrangement by whatever
name called;
(ii) "Card game and other game of any sort" includes any
game show, an entertainment program on television or
electronic mode, in which people compete to win prizes or
any other similar game;
(x) Any sum received by the assesses from his employees as
contributions to any provident fund or superannuation fund
or any fund set up under the provisions of the Employees'
State Insurance Act, 1948 (34 of 1948), or any other fund for
the welfare of such employees;
(xi) Any sum received under a Keyman insurance policy
including the sum allocated by way of bonus on such policy.
Explanation –
for the purposes of this clause, the expression "Keyman
insurance policy" shall have the meaning assigned to it in
the Explanation to clause (10D) of section 10;
(xii) Any sum referred to in 12[clause (va) of section 28;
(xiia) The fair market value of inventory referred to in clause
(via) of section 28;
(xiii) Any sum referred to in clause (v) of sub-section (2) of
section 56;
(xiv) Any sum referred to in clause (vi) of sub-section (2) of
section 56;
(xv) Any sum of money or value of property referred to in
clause (vii) or clause (viia)] of subsection (2) of section 56;
(xvi) Any consideration received for issue of shares as
exceeds the fair market value of the shares referred to in
clause (viib) of sub-section (2) of section 56;] 5
(xvii) any sum of money referred to in clause (ix) of sub-
section (2) of section 56;
(xviia) Any sum of money or value of property referred to in
clause (x) of sub-section (2) section 56;
(xviib) any compensation or other payment referred to in
clause (xi) of sub-section (2) of section 56;
(xviii) assistance in the form of a subsidy or grant or cash
incentive or duty drawback or waiver or concession or
reimbursement (by whatever name called) by the Central
Government or a State Government or any authority or
body or agency in cash or kind to the assesse other than,
(a) the subsidy or grant or reimbursement which is taken
into account for determination of the actual cost of the
asset in accordance with the provisions of Explanation 10 to
clause (1) of section 43; or
(b) the subsidy or grant by the Central Government for the
purpose of the corpus of a trust or institution established by
the Central Government or a State Government, as the case
may be."
Assesse and Assessment year:
The income accruing, or arising, to a person (called
'Assesse') is taxed on the basis of 'Assessment Year'.
The term Assessment Year represents the period of 12
months beginning from 1st April every year.
The income arising in the previous year' and the tax paid
thereon including the tax deducted at source, self assessed
tax paid thereon is assessed in the assessment year.
Previous year has been defined in Section 3 of the Income
Tax Act 1961 as for the purposes of this Act, "previous year"
means the financial year immediately preceding the
assessment year:
Provided that, in the case of a business or profession newly
set up, or a source of income newly coming into existence,
in the said financial year, the previous year shall be the
period beginning with the date of setting up of the business
or profession or, as the case may be, the date on which the
source of income newly comeing into existence and ending
with the said financial year"
Total Income:
As per Section 5 of the statute “(1) Subject to the provisions
of this Act, the total income of any previous year of a person
who is a resident includes all income from whatever source
derived which
(a) Is received or is deemed to be received in India in such
year by or on behalf of such person; or
(b) Accrues or arises or is deemed to accrue or arise to him
in India during such year; or
(c) Accrues or arises to him outside India during such year:
Provided that, in the case of a person not ordinarily resident
in India within the meaning of sub-section
(6) of section 6, the income which accrues or arises to him
outside India shall not be so included unless it is derived
from a business controlled in or a profession set up in India.
(2) Subject to the provisions of this Act, the total income of
any previous year of a person who is a non-resident includes
all income from whatever source derived which
(a) Is received or is deemed to be received in India in such
year by or on behalf of such person; or
(b) Accrues or arises or is deemed to accrue or arise to him
in India during such year.
Explanation 1.-
Income accruing or arising outside India shall not be
deemed to be received in India within the meaning of this
section by reason only of the fact that it is taken into
account in a balance sheet prepared in India.
Explanation 2.-
For the removal of doubts, it is hereby declared that income
which has been included in the total income of a person on
the basis that it has accrued or arisen or is deemed to have
accrued or arisen to him shall not again be so included on
the basis that it is received or deemed to be received by him
in India"
Residential status:
The residential status of an assesse is determined on the
basis of the number of days an assesse was present in India
during the previous year.
In the case of corporates, it is determined on the basis of
location of control and management of the company and
also the place of registration.
When a company is an Indian company, that is a company
registered under Companies Act of India or a body
corporate set up by statute or a company whose control and
management of a company is based in India, such a
company is treated as resident in India.
There is also a third category called resident but not
ordinarily resident which is relevant only for assesses who
are individuals and Hindu undivided families.
The income declared by the resident assesse from anywhere
in the world is taxable under Income Tax Act in India.
As against this, the case of non-resident and persons who
are not ordinarily resident in India, any income derived
abroad is not taxable and only income accruing or arising in
India is liable to tax in India.
Under IT Act - Other norms are:
(a) Quoting PAN for opening a
(b) Declaration in Form 60 and 61. /c, purchase of DD, Term
Deposit above Rs. 50,000.
(c) Repayment of Term Deposit above Rs. 20,000 by pay-
order//credit to a Bank Account Limit of deposit of cash in a
Savings Account up to Rs. 10 lacs and Rs. 50 lacs in a Current
Account in a Financial Year.
Computation of income:
Income Tax Act, 1961 envisages taxation of income under
following heads:
*Salaries
*Income from house property
*Profits and gains from business or profession
*Capital gains
*Income from other sources
Computation of Taxable income involves the following steps
namely
(a) Income arising under various heads to income is
computed separately as per the relevant sections covering
such incomes.
(b) After having computed the income under each head
separately, the ‘gross total income' representing the sum of
above amounts computed under such heads is arrived at.
(c) Chapter VIA etc. of the Income Tax Act provides for
various deductions allowable from the gross total income.
The deductions so allowed are reduced from the gross total
income to derive the taxable income.
(d) Income Tax as per relevant slabs and cess, if any,
applicable, and interest, if any, applicable, at given rates is
calculated on the Taxable Income
We may add that from the FY 2020-21, an individual
assessee has been given the option to either continue with
the existing method of calculation of income tax as brought
out above or alternatively if it suits them chose the new tax
regime under which they would have to forgo 70 tax
deductions and exemptions such as sections 80C, 80D, tax
exemption on HRA, LTA etc for higher tax exemption slabs.
Income not included in Taxable Income:

Certain categories of income are exempt from tax and such
income is not taken into account in the computation of
income.
These items of income are excluded from the computation
at the beginning.
These exempt incomes have been described in Section 10 of
the IT Act and some of them have been detailed hereunder
for example purposes.
These are……
*Agricultural income;
*Subject to the provisions of sub-section (2) of section 64,
any sum received by an individual as a member of a Hindu
Undivided Family, where such sum has been paid out of the
income of the family, or, in the case of any impartible estate,
where such sum has been paid out of the income of the
estate belonging to the family;
(2A) in the case of a person being a partner of a firm which
is separately assessed as such, his share in the total income
of the firm.
Explanation:
For the purposes of this clause, the share of a partner in the
total income of a firm separately assessed as such shall,
notwithstanding anything contained in any other law, be an
amount which bears to the total income of the firm the
same proportion as the amount of his share in the profits of
the firm in accordance with the partnership deed bears to
such profits;
(4) (i) in the case of a non-resident, any income by way of
interest on such securities or bonds as the Central
Government may, by notification in the Official Gazette,
specify in this behalf, including income by way of premium
on the redemption of such bonds:
Provided that the Central Government shall not specify, for
the purposes of this sub-clause, such securities or bonds on
or after the 1st day of June, 2002;
(ii) in the case of an individual, any income by way of
interest on moneys standing to his credit in a Non-Resident
(External) Account in any bank in India in accordance with
the Foreign Exchange Management Act, 1999 (42 of 1999),
and the rules made thereunder:
Provided that such individual is a person resident outside
India as defined in clause (w)] of section 2 of the said Act or
is a person who has been permitted by the Reserve Bank of
India to maintain the aforesaid Account; (4B) In the case of
an individual, being a citizen of India or a person of Indian
origin, who is a nonresident, any income from interest on
such savings certificates issued before the 1st day of June,
2002 by the Central Government as that Government may,
by notification in the Official Gazette, specify in this behalf:
Provided that the individual has subscribed to such
certificates in convertible foreign exchange remitted from a
country outside India in accordance with the provisions of
the Foreign Exchange Management Act, 1999 (42 of 1999)],
and any rules made thereunder.
Explanation:
for the purposes of this clause,
(a) A person shall be deemed to be of Indian origin if he, or
either of his parents or any of his grandparents, was born in
undivided India;
(b) "convertible foreign exchange" means foreign exchange
which is for the time being treated by the Reserve Bank of
India as convertible foreign exchange for the purposes of
the Foreign Exchange Management Act, 1999 (42 of 1999),
and any rules made thereunder;.. "" )
Assessment Proceedings:
Every person whose total income in a previous year exceeds
the maximum amount which is not liable to tax is required
to file his return by the due date prescribed in section 139.
A company or partnership firm has to file its return of
income.
Income Tax department has prescribed different forms
known as ITRS applicable to various categories of assesses
which are compulsorily required to be filed on-line except
Super Senior Citizens are given option to submit 'return' in
paper mode provided the computation does not have any
income chargeable under head of 'Profits and Gains from
Business or Profession'.
Now with insertion of sub-section 5E to Section 139A in the
IT Act (Finance No. 2 Act, 2019) has made Aadhar and PAN
interchangeable meaning that an individual having an
Aadhar number but not having a PAN number will be able to
file his/her return on the basis of the Aadhar number
A corporate assesse is required to file its return of income in
the prescribed ITR..
Corporate assesses are required to file the return of income
in computer media (e-filing).
The due date for filing of this return is presently October 31
of the Assessment year if there are no exceptions such as
the pandemic caused by the COVID'19 in the year
2020/2021.
A return of income can be revised to correct any mistake in
computation of income in the original return by filing
another return within one year from the end of the
assessment year or before completion of assessment
whichever is earlier.
A return declaring loss should be filed before the due date
and any delay in filing of such return declaring loss will
result in denial of the benefit of carry forward of such loss
and set off in future years.
The returns filed by an assessee is assessed by an officer
duly designated for this purpose (Assessing Officer - AO).
The assessment could be in the nature of summary
assessment where the return of income is accepted u/s
143(1) by AO without any further enquiry.
The AO may also scrutinize the return furnished, by issuing a
notice u/s143 (2) of the Act and complete the assessment
under Section 143(3) which is commonly called as 'Scrutiny
Assessment'.
The AO determines the total income and issues an
assessment order along with the notice of demand. The
demand if any, raised after scrutiny assessment is payable
within 30 days of the service of the assessment order and
the demand notice on the assesse.
When a person fails to file his return of income as
prescribed in the Act, the AO can issue a notice under
section 142 calling him to file a return and proceed to assess
the income.
AO can also reopen and reassess the income under
prescribed circumstances.
Payment of Taxes:
Advance tax is payable as per the provisions of section 210
of the Income Tax Act.
Advance tax arises from the concept of 'pay as you carn'.
In the case of corporate assesses, advance tax is payable in
four instalments as given below:
(a) By June 15-15%
(b) By September 15-45%
(c) By December 15-75%
(d) By March 15-100% of the advance tax payable.
The advance tax which is paid by an assesse on the basis of
estimation of income may at times fall short of the tax
payable as per the return of income.
Such a shortfall, if any, shall be paid by way of 'self-
assessment tax' under Section 140A of the Income Tax Act.
Deduction/collection of tax at source:

Members of Co-operative bank are exempted from TDS.
Apart from advance taxes and selfassessment, income tax is
also payable through other modes, viz.,
Deduction of Tax at Source (TDS) and Collection of Tax at
Source (TCS).
The provisions relating to TDS are important in the normal
day-to-day business activities of a bank and are relevant
when payments of specific nature are made.
The following payments generally occur during the course of
business activities of a bank and are covered under TDS
under the Income Tax Act, 1961.
(i) Salaries - Section 192
(ii) Interest on securities - Section 193
(iii) Payment of interest, other than interest of securities -
Section 194A
(iv) Payment to contractors or sub-contractors - 194C
(v) Payment of brokerage and commission – Section 194H
(vi) Payment by way of rent - Section 1941
(vii) Payment of professional and technical fees - Section
194J
(viii) Payment to non-resident - Section 195
The compliance with regard to provisions of the Act relating
to TDS requires special attention as it casts an onerous
responsibility on the person paying such amounts.
Firstly, the person deducting tax at source is required to
obtain Tax Deduction Account Number (TAN) by filing an
application in Form 49B.
Tax shall be deducted at source as per the rates given in the
Finance Act of the respective years.
The tax deducted at source is required to be deposited in
the Government account, generally within one week from
the end of the month in which tax is deducted at source.
It should be noted that whenever the amount payable by
way of interest, professional fees, rent, etc., are credited
into the account of payee in the books of the payer without
actually making payment to the person concerned, it is
deemed to be a payment and there is an obligation to
deduct tax at source.
Frequently payments are required to be made to non-
residents.
It should be noted that the relevant covers payment interest
and any other sum not being section 195 salaries.
The rate of deduction of tax on payments made to non-
residents under Section 195 is also given in the Finance Act
of the relevant year.
The Government of India enters into agreements for
avoidance of double taxation of income both on the basis of
residence and source with other countries.
The rate given in the Double Taxation Avoidable Agreement
(DTAA) with the respective country where the recipient is
resident will have to be taken into account.
The rates applicable as per the DTAA will have to be applied
for the purposes of TDS, when it is lower than the rates
given in the Finance Act.
A person deducting tax at source is required to file quarterly
return of TDS in prescribed form for salaries, other than
salaries and payments to non-residents.
These returns are also required to be filed in computer
media.
It should be noted that as per the provision of Section 40(a)
of the Act, any failure to deduct tax at source or payment of
TDS into Government account, results in disallowance of the
relevant expenditure in computation of income of the bank,
e.g. a payment of Rs. 1 lakh is to be made by a bank to a
contractor on which tax has not been deducted at source,
then entire amount of Rs. 1 lak will be added back and
treated as income of the bank in the computation of income
and the bank will be liable to pay tax on the same.
Besides, improper or non-compliance with regard to TDS
also attracts levy of interest, penalty and prosecution.
Non-compliance with provisions relating to TDS attracts:
*Levy of interest @ 12% p.a. on the amount on tax payable
at source from the date on which it is deductible until the
date of payment.
*Recovery of tax deductible at source from the person
responsible for deduction.
*Non-payment of tax deducted at source into Government
a/c attracts prosecution proceedings and imprisonment
from 3 months to 7 years under Section 276B of the Income
Tax Act.
*Any failure to file returns/statements in this regard attracts
penalty @ of Rs.
INR200 per day for the period of default.
(Sec 234 E).
The amount of fee shall not exceed the amount of tax
deductible or collectible, as the case may be.
Permanent Account Number (PAN):

Quoting of PAN has become mandatory in certain
transactions.
PAN is required to be quoted when an account is opened
where amount of Fixed deposit/time deposit purchased by
a depositor in any bank exceeds Rs. 50,000/-. Opening of
bank accounts also require quoting PAN.
If a minor, having no taxable income, desires to open such a
bank account or a fixed deposit then he/she shall quote PAN
of his/her father or mother or guardian, as the case may be
in the document covering the transaction (i.e. application
for opening account).
If the parent or a guardian does not have a PAN, declaration
in Form No. 60 may be filed.
Similarly, cash payments for purchase of bank drafts or pay
orders or banker's cheques from a banking company, for an
amount aggregating to Rs. 50,000/- or more during any one
day or cash deposits aggregating Rs. 50,000/- or more with
any bank during any one day, require quoting of PAN.
Payment in cash in connection with travel to any foreign
country, of an amount exceeding Rs. 25,000/- at any one
time, has also been prescribed.
For this purpose, 'payment in cash in connection with travel'
includes payment in cash towards fare, or to a travel agent
or a tour operator, or for the purchase of foreign currency.
Payments to an ‘authorized person' as defined in section
2(c) of the Foreign Exchange Management Act, 1999 (FEMA)
are also covered under ‘payment in cash in connection with
travel'.
Reader may follow link for further reading
https://www.incometaxindia.gov.in/Pages/acts/income-tax-
act.aspx
COMMODITY TRANSACTION TAX:

Commodity Transaction Tax (CTT) was introduced under
Chapter VII of the Finance Act, 2013 Section 116 states that:
*"Appellate Tribunal" has been defined as the Appellate
Tribunal constituted under section 252 of the Income-tax
Act, 1961 (43 of 1961);
*"Assessing Officer" means the Income-tax Officer or
Assistant Commissioner of Income-tax or Deputy
Commissioner of Income-tax or Joint Commissioner of
Income-tax or Additional Commissioner of Income-tax who
is authorised by the Board to exercise or perform all or any
of the powers and functions conferred on, or assigned to, an
Assessing Officer under this Chapter;
*"Board" means the Central Board of Direct Taxes
constituted under the Central Boards of Revenue Act, 1963
(54 of 1963);
*"commodities transaction tax" means tax leviable on the
taxable commodities transactions under the provisions of
this Chapter;
*"commodity derivative" means
(i) a contract for delivery of goods which is not a ready
delivery contract; or
(ii) a contract for differences which derives its value from
prices or indices of prices
(A) of such underlying goods; or
(B) of related services and rights, such as warehousing and
freight; or
(C) with reference to weather and similar events and
activities, having a bearing on the commodity sector;
*"taxable commodities transaction" means a transaction of
[sale of commodity derivatives or sale of commodity
derivatives based on prices or indices of prices of
commodity derivatives or option on commodity derivatives
or option in goods in respect of commodities, other than
agricultural commodities, traded in recognised stock
exchange]
Charge of commodities transaction tax:

Section 117 deals with the rate of commodity transaction
tax for various transactions.
The present rates (after amendments) are provided in the
table below.
SL.NO Taxable commodities transaction Rate Payable by
(1) (2) (3) (4)
1. Sale of commodity derivative 0.01% seller
2. Sale of commodity derivatives 0.01% seller
based on prices or indices of
prices of commodity derivatives
3. Sale of option on commodity 0.05% seller
derivative
4. Sale of option in goods 0.05% Seller
5. Sale of option on commodity 0.0001% Purchaser*
derivative, where option is
exercised
6. Sale of option in goods, where 0.0001 Purchaser*
option is exercised resulting in percent
actual delivery of goods
7. Sale of option in goods, where 0.125 Purchaser*
option is exercised resulting in a percent
settlement otherwise than by the
actual delivery of goods]
*Amendment Finance Act 2020
Collection and recovery of commodities transaction tax:

Section 119:
*The law makes the recognised stock exchange (assessee)
dealing in commodity trading responsible for collection of
the commodities transaction tax from the seller who enters
into a taxable commodities transaction in that recognised
stock exchange at the rate specified.
*The commodities transaction tax collected during any
calendar month in accordance with the provisions of sub-
section (1) shall be paid by every assessee to the credit of
the Central Government by the seventh day of the month
immediately following the said calendar month.
Any assesses who fails to collect the tax in accordance with
the provisions of sub-section (1) shall, notwithstanding such
failure, be liable to pay the tax to the credit of the Central
Government in accordance with the provisions of sub-
section (2).
GOODS AND SERVICES TAX (GST):

(A) Importance of GST:
The Goods and Services Tax (GST) is one indirect tax for the
whole nation which was enacted on April 12th 2017 and
came into force in India from July 8th 2017.
GST is a single tax on the supply of goods and services, right
from the manufacturer to the consumer.
Credits of input taxes paid at each stage will be available in
the subsequent stage of value addition, which makes GST
essentially a tax only on value addition at each stage.
The final consumer will thus bear only the GST charged by
the last dealer in the supply chain, with set-off benefits at
all the previous stages.
There are various benefits to business and industry, Central
and State Governments, and for the ultimate consumers.
The benefits to the business and industry include:
Easy compliance, uniformity of tax rates and structures,
removal of cascading of taxes, improved competitiveness,
etc.
The benefits to Central and State Governments are that GST
is simple and easy to administer, there are better controls
on leakage, higher revenue efficiency, etc.
For the consumer, the benefits can be grouped under single
and transparent tax proportionate to the value of goods and
services, relief in overall tax burden, etc.
The GST subsumes taxes levied and collected by the Centre
viz.
Central Excise duty, Additional Excise Duty, Additional
Duties of Customs (commonly known as CVD), Service Tax,
etc. and at State level Entertainment Tax, Octroi and Entry
tax, Luxury Tax, Purchase Tax, Taxes on lottery, betting and
gambling, and other taxes levied by the State.
GST is expected, over a period of time, to bring together
State economies and improve overall economic growth of
the nation.
GST is a dual GST with the Centre and States simultaneously
levying it on a common tax base.
The GST levied by the Centre on intra-State supply of goods
and/or services called the Central GST (CGST) and that
levied by the States/ Union territory is called the State GST
(SGST)/ UTGST.
Similarly, Integrated GST (IGST) is which is levied and
administered by Centre on every inter-state supply of goods
and services.
There are around 160 countries in the world that have GST
in place.
GST is a destination based taxed where the tax is collected
by the State where goods are consumed.
GST has been implemented with the effect from July 1,
2017.
GST is also expected to allow the country to better negotiate
its terms in the international trade forums.
It is aimed at increasing the taxpayer base by bringing SMEs
and the unorganized sector under its compliance.
It is expected to make the Indian market more stable than
before and help Indian companies compete effectively with
foreign companies.
With the GST on goods and services, the government is
looking at improving the economy by eliminating the
cascading system of tax and streamlining the business
process in India.
Imports in GST Regime:

Import of services has specifically been defined under
Integrated Goods and Services Tax Act i.e.
IGST Act, 2017 and refers to supply of any service where the
supplier is located outside India, the recipient is located in
India and the place of supply of service is in India.
As per the provisions contained in Section 7(1) (b) of the
CGST Act, 2017, import of services for a consideration
whether or not in the course or furtherance of business
shall be considered as a supply.
Thus, in general, import of services without consideration
shall not be considered as supply.
However, business test is not required to be fulfilled for
import of service to be considered as supply.
Furthermore, in view of the provisions contained in
Schedule I of the CGST Act, 2017, the import of services by a
taxable person from a related person or from a distinct
person as defined in Section 25 of the CGST Act, 2017, in the
course or furtherance of business shall be treated as supply
even if it is made without any consideration.
As per the provisions contained in Section 21 of the IGST
Act, 2017, all import of services made on or after the
appointed day i.e 1st July, 2017 will be liable to integrated
tax regardless of whether the transactions for such import
of services had been initiated before the appointed day.
However, if the tax on such import of services had been paid
in full under the existing law, no tax shall be payable on such
import under the IGST Act.

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Explanation- for the purposes of this sub-clause,-—

Income not included in Taxable Income:

Deduction/collection of tax at source:

Permanent Account Number (PAN):

COMMODITY TRANSACTION TAX:

Charge of commodities transaction tax:

Collection and recovery of commodities transaction tax:

GOODS AND SERVICES TAX (GST):

Imports in GST Regime:

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