HOW TO PREPARE FOR CHANGES EFFECTIVE 01 OCTOBER 2023
"Change is inevitable, but preparation is optional. As we approach the highly anticipated date of October 1st, 2023, a wave of transformative modifications looms over various aspects of our lives. From new regulations and policies to technological advancements shaping industries, it's crucial to stay ahead and adapt.
Here's what is stores effective 01st October 2023:
Goods and Services Tax
Effective October 1, 2023, some changes have been made to the GST Law. Critical one being : Addition of a new condition for the supply of services or goods to SEZ Developer/Unit.
In Addition to this, there are also restrictions placed on the Input Tax Credit for CSR Expenses
Further, it is critical to reversal of Input Tax Credit under Rule 42 and Rule 43 for supplies from Bonded Warehouse.
Currently Importers are required to pay 5% IGST under RCM on Ocean Freight Charges (when goods cleared at FOB), however vide notification 11/2023 Integrated Taxes(rate) , they are now exempted
The timeframe for filing returns and statements, such as GSTR 1, GSTR 3B, TDS Statement, and Annual Return has been limited to three years.
Registration requirements have been exempted for certain persons supplying goods through E-commerce operator, further the suppliers providing services through E-Commerce Operators can now opt in for Composition Scheme
Clarifications on the Impacts of Other Amendments:
a. Zero-rated Supplies to Special Economic Zones (SEZ):
The words “for authorized operations” have been added to clause (b) of Section 16(1) to remove the ambiguity that only the supplies made for authorized operations to SEZ unit or developer shall qualify as zero-rated supplies.
Earlier, the requirement existed under Rule 89 of the CGST Rues 2017 to provide endorsement from designated officer of SEZ (Specified Officer or Authorized Officer) regarding authorized operations while claiming refund of accumulated ITC or IGST by the DTA supplier. Now, the same has been incorporated under the Statute so that the Rules cannot be challenged as superseding the Statute.
For the period prior to 01.10.2023, one may argue that even if endorsement of authorized operations is unavailable, still the supply to SEZ qualifies as zero- rated supply qua Section 16 of the IGST Act 2017. Ultimately, the intention to use such supplies for Authorized Operations has been confirmed
b. Zero-rated supplies not permitted with payment of IGST until notified under Section 16 (3) & (4) of IGST Act 2017:
The default option now generally is supplying under LUT without tax payment and claiming refund of accumulated ITC or pay IGST upfront and claim cash refund. Now, Ministry of Finance has issued a notification, specifying that all goods and services eligible for export on payment of integrated tax, except for the one's mentioned in Table-1 of the notification 01/2023 IGST, which are non other than cigarettes, pan-masala, and other tobacco related products. By using the phrase "Eligible for specified class", the government has notified all goods as Eligible for Export of with Payment of Tax and instead of claiming refunds under RFD-01
Income Tax
Effective October 1, 2023, the revised Tax Collected at Source (TCS) rates will come into effect, necessitating attention from businesses. TCS will be applicable if expenditure surpasses a specific threshold during a fiscal year, regardless of the nature of the transaction—be it a foreign trip, international remittances, investments in foreign assets, mutual funds or cryptocurrencies, or educational expenses abroad.
Under the Reserve Bank of India’s (RBI) Liberalized Remittance Scheme (LRS), individuals can send abroad up to $250,000 annually. However, from October 1, 2023, a TCS of 20 percent will be imposed on international remittances exceeding ?7,00,000 ($8,400 approx.) within a fiscal year, excluding medical and educational expenses.
For those availing loans for overseas education, a lower TCS rate of 0.5 per cent would be levied above the ?7,00,000 threshold
Other Personal Finances Changes
Conclusions:
With these changes being rolled out, it is vital to understand the implications and adapt to them. To ensure compliance and make the most of these changes, it is suggested to keep a tab of them, develop processes to ensure none of these sneak out from your eye.
That's us signing off for today, keep watching out for this space for more such updates, until we meet next..
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AUDIT | INTERNATIONAL TAXATION | GST
1 年Thanks for the updates Jasmeen