GST & INDIRECT TAXES

GST on Rent

Rent services are categories in two part A. Commercial Property B. Residential Property. A. Commercial Property: - The services provided through renting or leasing of the commercial property is covered under the entry no 16 of Notification No 11/2017 –Central Tax (Rate) dated 28 th Jun 2017. The related portion of the notification entry is as follows :- 16 Heading 9972 (i) Services by the Central Government, State Government, Union territory or local authority to governmental authority or government entity, by way of lease of land. Nil (ii) Supply of land or undivided share of land by way of lease or sub lease where such supply is a part of composite supply of construction of flats, etc. specified in the entry in column (3), against serial number 3, at item [(i), (ia), (ib), (ic), (id), (ie) and (if)]66. Provided that...

SLUMP SALE AND ITS TAXABILITY

SLUMP SALE AND ITS TAXABILITY MEANING OF “SLUMP SALE” AND “UNDERTAKING” The scheme of taxation of a “slump sale” is provided under section 2(42C) r. w. section 50B of the Act. Section 2(42C) defines slump sale to mean a transfer of one or more undertakings for a lumpsum consideration without values being assigned to the individual assets and liabilities in such sales. The term “undertaking” is defined in Explanation 1 to clause (19AA) of section 2 of the Act. The Finance Act 2021, has amended the definition of “slump sale” to provide that all types of ‘transfer’ as defined under section 2(47) shall be included within the scope of slump sale. The effect of this amendment is that all types of slump transfers, including slump exchange, are now governed by section 50B of the Act. By virtue of this amendment the decision of the Bombay High Court in case of Bharat Bijilee Ltd 46 taxmann.com 257(Bom) got nullified. However, the conclusive words “in such sales” were inadvertently re...

INCOME FROM SALARIES

INCOME FROM SALARIES BASIC CONCEPT Any payment made by an employer to an employee for the services rendered by him is chargeable to tax as salary and envisages a ‘contract of employment’. The employer - employee relationship or master-servant relationship is an essential ingredient of a ‘contract of employment’ as against a ‘contract for employment’. The distinguishing feature of a ‘contract of employment’ that differentiates it from a ‘contract for employment’ is that the master or employer has the right to supervise and control the work done by the employee and not only directs what and when the work is to be done, but also how it should be done, and the employee is bound to carry out the said instructions. On the other hand, under a contract for employment, the master merely directs what is to be done, while the methodology for carrying out the work is left to the discretion of the servant. E.g. any fees received by a part-time consultant will not be assessed as salary but wil...

SECTIONS 43CA, 56(2)(VII) & 194-IA - RELATED TO TRANSACTIONS OF CERTAIN IMMOVABLE PROPERTY

SECTIONS 43CA, 56(2)(VII) & 194-IA - RELATED TO TRANSACTIONS OF CERTAIN IMMOVABLE PROPERTY Section 43CA Section 43CA was inserted by Finance Act, 2013 w.e.f. 01-04-2014 and is similar to the provisions of Section 50C. The provisions of section 50C are not applicable in relation to immovable property held as stock-in-trade, which section 43CA covers. Section 43CA provides that where the consideration for the transfer of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable for purpose of stamp duty by the state government [i.e. stamp value], the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration for the purposes of computing income under the head “Profits and gains of business of profession”. By virtue of Finance Act 2020, a 10% margin of error is now allowed for applicability of deeming fiction of this section. Such 10% is to be calculated on considerati...

INCOME FROM CAPITAL GAINS

INCOME FROM CAPITAL GAINS 1. CHARGEABILITY U/S. 45 Profits or gains arising from the transfer of a capital asset is chargeable to tax in the year in which transfer takes place under the head “Capital Gains”. Definitions Transfer: Section 2(47) Transfer in relation to a capital asset includes sale, exchange, or relinquishment of the asset or extinguishment of any rights therein or the compulsory acquisition thereof under any law or conversion of the asset by the owner in stock-in-trade of a business carried on by him or the maturity or redemption of a zero coupon bond, any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 (4 of 1882) or any transaction which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation 2 to the section clarifies the following:— "transfer" incl...

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