sbs interns’ digest · digest by for private circulation only an attempt to share knowledge...
TRANSCRIPT
Vo
lum
e
1
SBS
Digest
By
Fo
r P
riv
ate
cir
cu
latio
n o
nly
Interns’
An attempt to share knowledge
Interns ofSBS and Company LLP
-4
5
No
vem
ber-2
01
9
P
ag
es
-1
3
CONTENTS
IDT.....................................................................................................................................................1
GST ON HEALTH CARE SERVICES
DT & ASSURANCE (TAX)......................................................................................................................3
RESIDENTIAL STATUS ...................................................................................................................................3
DT & ASSURANCE (AUDIT)..................................................................................................................8
194J TDS ON FEE FOR PROFESSIONAL OR TECHNICAL SERVICES.......................................................................................8
........................................................................................................................1
SBS Interns' Digest www.sbsandco.com/interns-digest
1Data Source-Wikipedia
GST ON HEALTH CARE SERVICES
1 | P a g e
IDT
Contributed by Dileep K & Vetted by CA ManindarINTRODUCTION:
1. Health is a state of complete physical, mental and social well-being. Public health care systems are
organized by government for free or for subsidy to serve better healthcare, nutrition and standard of
living of people. However, due to quality concerns and inadequate facilities, most of the Indian1
population are with no option but to use the private healthcare facilities which encompasses 58% of
hospitals and 81% of doctors. This article trials to spot on the GST implications on the services
provided by private healthcare sector by considering the Central Tax rate Notification vide 12/2017
dated 28.06.2017.
GST IMPACT ON HEALTH CARE SERVICES:
2. Health care services are exempted from GST as per Central Tax Rate [CT(R)] Notification No. [NN]
12/2017dated 28.06.2017 under the entry of SL No. 72 Heading 9993 and relevant extract is
reproduced as under;
Services by way of-
(a) health care services by a clinical establishment, an authorised medical practitioner or
paramedics;
(b) services provided by way of transportation of a patient in an ambulance, other than those
specified in (a) above.
3. In order to eligible for the above exemption under NN 12/2017-CT(R), services must be of health care
services and for this purpose, the term “healthcare services” has been defined vide para 2(zg) of NN
12/2017-CT(R) which is reproduced hereunder:
‘health care services’ means any service by way of diagnosis or treatment or care for illness, injury,
deformity, abnormality or pregnancy in any recognised system of medicines in India and includes
services by way of transportation of the patient to and from a clinical establishment, but does not
include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to
reconstruct anatomy or functions of body affected due to congenital defects, developmental
abnormalities, injury or trauma.
4. Hence the above definition made clear that healthcare services are exempted from GST and hair
plant, cosmetic or plastic surgery shall remain taxable exceptsuch activities undertaken to restore or
reconstruct anatomy or functions of body affected due to congenital defects, developmental
abnormalities, injury or trauma.
5. Upon careful perusal of healthcare service definition and entry 72 under the above notification, it is
evident that to qualify for exemption under NN 12/2017-CT(R)serviceswhich fall under the purview of
definition are to be provided either by a clinical establishment, an authorised medical practitioner or
paramedics. For this purpose, the terms clinical establishment and authorised medical practitioner
has been defined vide Para 2(s) and 2(k);
2 | P a g e
GS
T o
n H
ea
lth ca
re se
rvice
s
“clinical establishment” means a hospital, nursing home, clinic, sanatorium or any other institution
by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care
for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in
India, or a place established as an independent entity or a part of an establishment to carry out
diagnostic or investigative services of diseases
The term “paramedics” is not defined in the said NN no.12/2017-CT(R)however oxford dictionary
meaning for the same is - paramedic is a person whose job is to help people who are sick or injured,
but who is not a doctor or a nurse. Paramedics treated the injured at the roadside.
“authorised medical practitioner” means a medical practitioner registered with any of the councils
of the recognised system of medicines established or recognised by law in India and includes a
medical professional having the requisite qualification to practice in any recognised system of
medicines in India as per any law for the time being in force;
6. If any of the activities leading to Supply of Services falls under the ambit of above definitions, it is
totally exempted and there is no GST liability on those services which is curative other thanfor
cosmetic related in a healthcare sector.
7. In connection to the other activity as specified in clause (b)of the said entry under the notification of
which services provided by way of transporting patients in an ambulance shall not attract GST and
have been exempted from tax liability without any restrictions as such.
8. Apart from the above entry, the notification has alsospecifically exemptedcertain servicesfrom
attracting GST which are related tohealth sector. The relevant entries are reproduced hereunder;
- SL. No. 46: Services by a veterinary clinic in relation to health care of animals or birds.
- SL. No. 73: Services provided by the cord blood banks by way of preservation of stem cells or any
other service in relation to such preservation.
9. Hence the said entries in the notification made clear that healthcare services in relation to animals or
birds and services provided in preserving of stem cells of the born babies also exempted unreservedly
from GST and attracts no liability.
Conclusion:
10. There might be a several related entries which will directly or indirectly affects the healthcare sector.
However, this article tries to impart only to limited extent. Also, there are several clarifications
regarding the allied activities that are linked to medical sector which will be discussed in forthcoming
articles. Stay connected, cheers until next article.
This article is contributed by Dileep K, Intern of SBS and Company LLP. The author can be reached
RESIDENTIAL STATUS
3 | P a g e
DT & ASSURANCE (TAX)
Contributed by Ravi Teja & Vetted by CA Harsha
I. Why to determine Residential Status?
?There are three principles adopted internationally to guide taxation
?Citizenship Principle
?Source Principle
?Residence Principle
?In the country like US, income is taxed based on Citizenship and Source based taxation systems,
whereas India follows the Residence based and Source based taxation systems.
?Since India follows Residence and Source based taxation system
?Tax Incidence on an assessee depends on his residential status. For instance, whether an income
accrued to an individual outside India, is taxable in India depends upon the residential status of
that individual in India.
?Similarly, whether an income earned by a foreign national in India or outside India is taxable in
India depends on the residential status of the individual, rather than on his citizenship.
?Therefore, the determination of the residential status of a person is very significant in order to
find out his tax liability.
II. Categorization of Residential Status:
Person
Individual & HUF Other
Resident Non-Resident
Ordinarily
Resident
Not-
ordinarilyResident
Resident Non-Resident
4 | P a g e
Re
side
ntia
l Sta
tus
He is in India for a period of 182 days or more in the relevant Previous Year (PY)
He is in India for a period of 60 days or more in the relevant PY and 365 days or more during
4 years immediately preceding the relevant PY
ExplanationBasic
Condition
A
B
He has been resident in India at least 2 out of 10 previous years immediately preceding the
relevant PY
He has been in India for a period of 730 days or more during 7 years immediately preceding
the relevant PY
ExplanationAdditional
Condition
A
B
5 | P a g e
He has been resident in India in at least 2 out of 10 previous years immediately preceding
the relevant PY
He has been in India for period of 730 days or more during 7 years immediately preceding
the relevant PY
ExplanationCondition
A
B
Re
side
ntia
l Sta
tus
6 | P a g e
Taxation of Income in India
Residents
Global Income
Non-Residents
Indian Income
Re
side
ntia
l Sta
tus
7 | P a g e
This article is contributed by Ravi Teja, Intern of SBS and Company LLP. The author can be reached
The following chart highlights the provisions of tax incidence in brief:
Income received or deemed to be received in India
whether earned in India or elsewhere
Income accrues or arises or deemed to be accrue or
arise in India, whether received in India or elsewhere
Income which accrues or arises outside India and
received outside India from a business controlled
from India
Income which accrues or arises outside India from
any other source
Income which accrues or arises outside India and
received outside India during the years preceding the
PYs and remitted to India during PY
Taxed Taxed Taxed
Taxed Taxed Taxed
Taxed Taxed Not Taxed
Taxed Not TaxedNot Taxed
Not TaxedNot TaxedNot Taxed
Tax incidence in the case of
R-OR R-NOR NR
Nature of Income
Re
side
ntia
l Sta
tus
194J TDS ON FEE FOR PROFESSIONAL OR TECHNICAL SERVICES
8 | P a g e
DT & ASSURANCE (AUDIT)
Contributed by Rambabu & Vetted by CA Ramprasad
General Rule –Income earnedin one year is taxed in the next year.
Exceptions– In order to meet its regular needs Governments collects Tax by way of TDS (u/s 192 to 195 of
Income tax act, 1961), TCS (u/s 206 of Income tax act, 1961), Advance tax (u/s 208 of income Tax act,
1961)in the year in which such income is earned.
What is TDS?
• TDS is acronym for Tax Deducted at Source.
• It follows the principle of “Pay as you earn”.
• It is tax deducted on specified services / works at the time of payment or at the time of crediting
to such payee account (in any mode) whichever is earlier.
Example 1: M/s. ABC & Associates receives Rs. 1,20,000 towards Internal audit fee from A limited for Q1.
A limited, at the time of crediting M/s. ABC & Associates or at the time of making payment to M/s. ABC &
Associates whichever earlier deducts certain amount from such sum which is payable to M/s. ABC &
Associates and deposits the same to the Government within specified time limits.
Objectives of TDS: -
?To collect the tax at the point where income is earned by providing certain specified services.
?Government requires funds throughout the year. Hence, advance tax and tax deducted at source
and tax collected at source help the government to get funds throughout the year to meet its
outflow of funds.
Section 194J- TDS on Fees for Professional or Technical Services: -
Applicability:
?This Section applies where an assessee other than Individual/Hindu undivided Family while
making payment to other person or at the time of crediting such person by whatever name called
whether suspense account or by any other name deducts certain amount for the services
specified under this section and deposits the same to Government.
?This section also applies to Individuals or Hindu Undivided family, whose Turnover or Gross
Receipts exceeds the monetary limits specified under clause(a) (i.e., Turnover exceeds Rs. 1 crore
in case of business) and clause (b) (Gross Receipts exceed Rs. 50 lakhs in case of profession) of
section 44AB of Income tax Act, 1961 during the immediately preceding financial year.
Example 2:Mr. Ram has provided certain Reconciliation works for A limited. A limited while making
payment to Mr. Ram or at the time of crediting Mr. Ram shall deduct specified amount and shall deposits
the same to Government account within specified time limits.
9 | P a g e
19
4J T
DS
on
fee
for p
rofe
ssion
al o
r tech
nica
l serv
ices
Example3: Mr. X is the tax consultant of Mr. Y, and Mr. Y gross receipts from his profession is Rs. 49 lakhs
during the immediately preceding financial year. Mr. Y is not under obligation to deduct TDS at the time of
paying to Mr. X, since his gross receipts are within the limits specified under clause (b) of section 44AB.
Services Covered:
The following Services were covered under this section:
• Fee for Professional Services or
• Fee for Technical Services or
• Any remuneration or commission or fees by whatever name other than those are deductible
under section 192 of Income tax Act, 1961 to a director of a company.
• Royalty fees or
• Any sum covered under clause (va) of section 28 (i.e., Non-Compete fees)
Definitions:
1. Professional Services
• Professional services means those services rendered by a person who is engaged in the course of
carrying on a profession of
?legal, or
?medical, or
?engineering, or
?architectural, or
?the profession of accountancy, or
?Interior decorating, or
?Advertising, or
?other profession notified by the Board for the purposes of this section or for the purpose of
section 44AA (according following services were notified till now:
?Authorized representative who represents on behalf of others before law or tribunal
other than person carrying on legal profession, Profession of Accountancy, such person is
not an employee who has to represent on behalf of his Employer.
?Film Artist – Any person in his professional capacity engaged in the production of a
cinematographic film whether produced by him or other person as an Actor, An actress,
cameraman, Director (including Assistant director), Music Director (Including Assistant
Music director), Dance Director (Including Assistant Dance director), art director
(Including Assistant Art director)…etc.,
?Person engaged in profession of Company Secretary.
?Information Technology Services.
Example 4: Mr. Handsome receives a remuneration of Rs. 13 crores for acting in a Film. The producer
while making payment shall deduct certain on the amount to be payable to Mr. Handsome and deposits it
to Government within specified time limits.
10 | P a g e
Example 5:Mr. A, a Practising Chartered Accountant attends for a hearing before Assessing Officer on
behalf of A limited. A limited while making payment to Mr. A has to deduct TDS under section 194J and
deposits it to Government within specified time limits.
2. Fee for Technical Services:
• It means any consideration received (including Lump sum) for rendering any
?Managerial, or
?Technical, or
?Consultancy Services
?But does not include consideration received for mining, construction, assembling, or like
project or payments which would be taxable under the head “Salaries”.
3. Royalty Fees:
• Any sum received for the following activities other those which are taxable under the head
“Capital Gain”.
?For transfer of all or any of rights in respect of a patent, invention, model secret formula,
process, trademark, design, or similar property.
?For imparting any information concerning the working of or the use of a patent, invention,
model, design, secret formula, process or trademark.
?Imparting any information concerning technical, industrial, commercial, or scientific
knowledge, expertise or skill.
?Use or Right to use any commercial, Industrial, Scientific equipment other than which are
referred to in section 44BB (i.e., Plant and Machinery used in the Extraction of Mineral Oil).
?The transfer of all or any rights in respect of any copy right, literacy, artistic, or scientific work
including films or video tapes in connection with Television or Tapes in use except,
?Consideration received on sale of or distribution of cinematographic films.
Example 6:Mr. Ram has invented an application called “Zoom Car” which he intends to transfer the right
to use to M/s. M limited for which he received a compensation of Rs.1,00,00,000. M limited at the time of
making payment (either lumpsum amount or part payment) shall deduct TDS and pay the balance
amount to Mr. Ram.
4. Non-Compete Fees:
• Any sum received in Cash or Kind for not carrying out any activity in relation a Business or
Profession except:
?Compensation received or receivable, in cash or kind, on account of transfer of right to
manufacture, produce or process, any article or thing which would be taxable under the head
“Capital Gain”.
?Any compensation received from Multilateral fund of the Montreal Protocol on substances that
deplete the Ozone layer under the United Nations Environment Programme in accordance with
the terms of agreement entered with the Government of India.
• Any Sum received for not sharing any know how, patent, copy right, license, franchiseetc., to
assist in the manufacture of production of an article or thing.
19
4J T
DS
on
fee
for p
rofe
ssion
al o
r tech
nica
l serv
ices
11 | P a g e
Example 7:Mr Ram received a compensation of Rs. 2 crores for transferring the right to manufacture a
tablet to C limited. C limited while making the payment to Mr. Ram shall deduct TDS at a rate specified
under this section and deposit the same to the Government.
Threshold Limit:
[Note 1- It may be noted that no limit has been described for Fees payable to Directors, in other words
even if company pays 1 rupee for services covered other than section 192 to the Directors (Ex: Sitting
fees), the company shall deduct TDS u/s 194J.]
[Note 2- Here the limit is more than 30,000 if the value of services is equal to 30,000 or less, then TDS shall
not be deducted on such sum].
Example 8:Mr. A has received Rs. 30,000 for reconciliation works from A Ltd. Then while paying to Mr. A, A
Ltd shall not deduct TDS under section 194J because the consideration does not exceed Rs. 30,000.
Example 9:Mr. A, a Director in a Private limited company received salary remuneration from such
company then TDS shall not be deducted in accordance with section 194J while the same has to be
deducted in accordance with section 192.
Example 10:Mr. A, a Director in a Private limited company received an amount of Rs.12,500 from a
company towards sitting fees for meetings he attended then the company has to deduct TDS under
section 194J.
19
4J T
DS
on
fee
for p
rofe
ssion
al o
r tech
nica
l serv
ices
12 | P a g e
This article is contributed by Rambabu, Intern of SBS and Company LLP. The author can be reached
Rate of TDS:
The Rate of TDS to be deducted is classified as follows:
• Payee carrying on business other than operating Call centre – The rate shall be 10%
• If the payee is engaged in business of operating Call centre - The rate shall be 2%
[Note: - It may be noted that the above rates are applicable only when Payee has provided PAN, if he fails
to provide PAN the rate shall be higher of 20% or rate defined in that section (here rate is 10% or 2% as the
case may be) whichever is Higher as per section 206AA of Income Tax Act, 1961.]
Due dates for payment of TDS
The due date for payment of TDS shall be as follows
• For April to February – 7th of next month
• For the month of March - 30th April.
Interest for Failure to Deduct or late payment of TDS
In case the assessee failed to pay TDS to Government within due date, he shall be liable to interest
undersection 201(1A). The rate of interest shall be as follows:
Failed to deduct the TDS – Rate of Interest shall be 1% per month or part of a month from the date on
which it was deductible till the date actually it was deducted.
TDS deducted but failed to deposit the same to Government – The rate of interest shall be 1.5% per month
or part thereof from date on which tax has been deducted to the date on which it was actually paid.
Example 11:Mr. A has provided certain reconciliation to B Ltd. on 10-08-2019. And raised an invoice for an
amount of Rs. 60,000 on 15-08-2019. B Ltd. has credited to Mr. A in its books on 16-08-2019 without
deducting TDS. B limited has deducted TDS on 25-10-2019. For this, B Ltd has to a pay Interest of
(60,000*10%*1%*3[months]=120). B Ltd has to pay TDS amount along with Interest (6000+120=6120).
Penalty for Non deduction
If the Deductor fails to deduct TDS, then he may be liable to pay penalty of a sum equal to the tax amount
to be deducted under that section as defined under section 271C which shall be imposed by Joint
commissioner.
19
4J T
DS
on
fee
for p
rofe
ssion
al o
r tech
nica
l serv
ices
SBS Interns' Digest www.sbsandco.com/digest
13 | P a g e
SATURDAY SESSIONS
194J TDS on professional services - Rambabu Alternate Minimum Tax - varshitha
VenueSpeakerDateEventS.No.
1
2
Availability of credit in special circumstances
194J TDS on professional services
3
4
Disclosures for division I of schedule III of
Companies Act,2013
-
5
6
Alternative Minimum Tax under Income Tax Act,
1961
TDS under GST
Gnaneshwar
Ram Babu
Suma
-
Varshitha
Supriya
SBS - Hyd
SBS - Hyd
SBS - Hyd
SBS - Hyd
SBS - Hyd
SBS - Hyd
09/11/2019
16/11/2019
23/11/2019
30/11/2019
SESSION TIMINGS: 2:30 to 4:30 PM
7 AS 1-Disclosure of Accounting Policies Vishnu vardhan SBS - Hyd
8 SBS - Hyd
AS 1 Disclosure of Accounting policies - Vishnu Availability of credit in Special circumstances
- Gnaneshwar
Disclosure of division I for schedule III of
Companies Act, 2013 - Suma
TDS under GST - Supriya
- -
SBS Interns' Digest www.sbsandco.com/digest
Disclaimer:
SBS AND COMPANY LLP [Firm]does not endorse any of the content/opinion containedin any of the articles in SBS Interns’ digest,
and shall not be responsible for any loss whatsoever sustained by any person who relies on the same.
To unsubscribe, kindly drop us a mail at [email protected] with subject ‘unsubscribe’.
© All Rights Reserved with SBS and Company LLP
By
Team SBS
Visakhapatnam: 50-50-32/3, 1stFLOOR, T.P.T Colony, Seethammadara, Visakhapatnam, A. P – 530 013.
Sri City: Suite No. 306, 2nd Floor, Arcade 2745, Central Expressway, Sri City, A. P - 517 646.
Hyderabad: 6-3-900/6-9, Flat # 101, 103 & 104, Veeru Castle, Durganagar Colony, Panjagutta, Hyderabad, Telangana - 500 082.
Nellore : D.No 27/1/451, Ground Floor Santhi Nilayam, Adithya Nagar, Opp: Overhead Water Tank, SPSR Nellore, AP - 524002.