The Chartered Accountant Student

WICASA - Akola Branch E-Newsletter- December 2019

INDEX

□ ICAI MOTO

□ WICASA CHAIRMAN’S COMMUNICATION

□ PREFACE

□ ARTICLES

□ HIGHLIGHTS OF WICASA EVENTS PHOTOGALLERY

□ UPCOMING EVENTS

□ DUE DATE CHARTS OF OCTOBER

WICASA CHAIRMAN’S COMMUNICATION

Warm Greeting to all the readers!

Dear FriendsWe have created HISTORY…… Yes it’s a big success first ever student conference at Akola and a great success. We had 450+ students who participated in the event .We have huge team of 40+ volunteers who have tirelessly worked. Friends this type of conference is like watching a movie it gets over in few hour or just couple of days but kind of efforts go behind making this conference are really applaudable.Last 15 days were cazy all the students were working late night till 11 pmActually these type of conference help you when you move forward in your life ie once you take job or start your practice ie you will be capable of handling teams ,knowing how to organize things all these rally matters so do come forward spend some time volunteer and help institute because by helping institute you help yourself. So this conference is done by the students. In background we have branch staff to help but primarily 90% of work is done by the students. We have received 45+ papers across India and out of which to select 15 was a tedious job. Thanks to our paper evaluator who have helped us in selecting the best papers. Thanks to paper presenter from who have come all the way from Mumbai, Bhopal, Jaipur, Gurgaon, Nagpur and other parts of India.Lastly thanks to Amravati WICASA for active participation as 90+ students came to Akola for Student conference.Best wises for upcoming results in Month of Jan 2020 and Wishing You a very Happy and Prosperous New Year.

CA Jalaj R BahetiChairman WICASA Akola Branch

The E-Newsletter ofWestern India Chartered Accountant

Students Association (WICASA), Akola is one of the channel to

reach student of Chartered Accountancy Profession to keep them

updated with the latest amendments in Law and Various Acts. Its

motive is to encourage students to come forward with their writing

skills and actively participate in WICASA Events.

The team behind this E-Newsletter have put their hard efforts for

collective improvement of pursuant of these common professions. In

this regards, we request you to contribute to these “Initiative of

Monthly E-Newsletter” by enthusiastically providing quality materials

(articles, legal updates, case law analysis, crosswords puzzles).

We believe that, with your active participation, we shall be

regularly providing you the E-Newsletter on Timely Basis. Hope this

E-Newsletter will be useful to you all. Let us make this initiative “both

way efforts” and a grand success.

The views expressed in thisE-Newsletter are of respective

auditors and neither the Akola Branch of ICAI nor WICASA,

Akola authenticate such views. Yet maximum efforts are put to ensure

the correct and up -to-date information in the E-Newsletter.

For contributing to WICASA, Akola E-Newsletter through articles

or other materials kindly contactCA Prasad Deshpande & Miss.

Shivani Kariya

PREFACE

ARTICLES

INCOME COMPUTATION AND DISCLOSURE STANDARD VI

THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES

This Standard is applicable for computation of income and gains chargeable under the head “Profits and Gains of business or profession” or “ Income from Other Sources “.This standard is issued and notified under section 142(2) vide circular No. 10/2017 dated 23/03/2017. The basic objective of this Standard is to calculate and book the income related to the;

• Treatment of transactions in foreign currencies,• Translating the financial statements of foreign operations,• Treatment of foreign currency transactions in the nature of forward

exchange contracts.And is not meant for maintenance of Books of accounts or Financial statements This standard is issued with the aim and mission of bringing uniformity in accounting polices followed by the managment and Accounting Standard 11 governing computation of income in accordance with the tax related provisions and also reducing the irregularities amongst them.The Tax Audit Report Form 3CA-3CD and 3CB-3CD has already been revised after issuance of ICDS for making mandatory disclosures under the report, if an entity is engaged in foreign transactions, operations and dealings.If there is any deviation between the policies adopted by the entity and ICDS- VI, then the same should be reported in the Tax Audit Report.

Note : For better understanding of this Standard, one should also refer Section 43A of Income tax act,1961 and rule 115 of Income tax rules, 1962

Pushp Kumar Sahu

REFORMS AND CHALLENGES IN REAL ESTATE DUE TO GST

INTRODUCTION:

• GST is a comprehensive indirect tax system charged on manufacture,

sale and consumption of goods and services at the national level.

• With multiple taxes applicable previously like Service tax and VAT,

with GST coming into the picture, indirect taxation in this sector is

wholly revamped.

• Real estate Industry is one of the most important pillars of the

Indian economy.

• It contributes between 6-8% to India’s GDP

TAXABILITY OF THE REAL ESTATE TRANSACTION:

PRE-GST TAXABILITY –

ARTICLES

Dhanashree Sable

Nature of Duty Rate of Tax When Was tax required

to be paid

VAT 1-4% On sale of under

Construction Property

Service Tax 4.5% On sale of under

Construction Property

Registration

Charge

0.5-1% On sale of under

Construction Property

Stamp Duty

Charges

5-7% On sale of under

Construction Property

VAT, Registration Charges, Stamp Duty Charges vary from state to

state. VAT was not applicable on completed or ready to sale

properties

Under the erstwhile indirect tax regime, Cenvat Credit on inputs used

for the construction of a building or a civil structure or any part

thereof was restricted too.

TAXABILITY UNDER GST –

PARTICULARS APPLICABILITYRATE OF TAX

Residential realestate project

Real estate

project

On ready to moveProperties

Not applicable - -

On under construction (residential) properties

Applicable:- On affordable*

houses (within 45 lakhs)

1.00% 1.00%

On non affordablehouses 5.00% 5.00%

On under construction commercialProperties

Applicable

5.00% 12.00%

On land transfer(under TDR/FSI/Lease)

• If properties sale after construction

• If under constructio n properties sale

• Applicable on TDR /FSI/Lease

• Not applicable on TDR/FSI/Lease (because GST will be applicable on properties sale by seller)

-Under RCM (by promoter)

*Note: Following are the qualifying criteria for the affordable houses:

A residential house/flat of carpet area of up to 90 sums in non-

metropolitan cities/towns and 60 sq meter in metropolitan cities

having value up to Rs. 45 lakhs (both for metropolitan and non-

metropolitan cities).

Metropolitan Cities are Bangalore, Chennai, Delhi NCR (limited

to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon,

Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).

• Conditions for availing concessional rate of GST: Tax shall be paid by debiting the electronic cash ledger. Input tax credit shall not be availed except to the extent prescribed

for on-going projects. At least 80% of the input and input services shall be received from

a registered person.

Cement procured from an unregistered dealer/builder/developer, promoter shall be liable to GST under RCM.

Purchase from unregistered dealers (other than Supply of various development rights): Value of input and input services (other than Supply of various

development rights) received from registered supplier shall not be less than 80% of the procurements. Otherwise promoter shall liable to pay tax under RCM.

Rate of GST to be applied as under:

Particulars Rate of GST

Cement 28%

Other Input/ Input Services 18%

GST on maintenance charges:

As per update on 23rd 2019, flat owners will have to pay GST at 18%, if their monthly contribution to the Resident’s welfare association (RWA) exceeds Rs 7,500.

Impact of GST: On buyer:• Under the earlier tax regime, buyers had to pay VAT, Service tax,

Registration charges & Stamp duty on purchase of properties under construction. Also since VAT, Registration charges & Stamp duty were state levies, prices of properties varied from state to state. Moreover, developers had to pay various duties like sales tax (CST), custom duty, OCTROI etc. for which credit was not available.

• Under GST, a single tax rate of 12% is applicable on properties under construction while GST is not applicable on completed or ready to sale properties which was the case in previous law. Hence buyers will benefit from reduction of prices under GST

On Developers/ Builders/Contractors:• Under the previous tax regime, developers had to bear Excise duty,

VAT, Customs duty, Entry taxes etc. on raw materials / inputs and Service tax on various input services like approval charges, architect professional fees, labor charges, legal charges etc. ITC was not available for duties like CST, Customs duty, Entry Tax etc. This would impact the pricing and subsequently the burden was transferred to the buyer.

• Under GST, developers’ construction costs are significantly reduced as multiple taxes are subsumed and due to the availability of input tax credit. Also, reduction in cost of logistics will be an added benefit. Hence developers may see improvement in margins.

On Stakeholders:The impact on the allied services like labor, material suppliers, service suppliers etc. depends on the increase or decrease in the tax levied on these goods and services. This will have a consequential impact on real estate industry as a whole.

Reverse charge mechanism and its impact:The concept of RCM has been borrowed from the erstwhile Service tax law. The scope of RCM has significantly expanded in GST which may adversely impact the developersOne of the significant additions to RCM under the GST law is, if goods are procured / service are received from a person who is not registered under GST, a registered person under the GST has to pay GST on all such supplies.Services supplied by any person by way of transfer of development rights of floor space index(FSI) (including additional FSI) for construction of a project by a promoter, then builder /promoter/developers need to pay tax under RCM.In cases where services are received from goods transporters, legal services received from an individual or firm, services received from the government or local authorities, like municipalities, etc. (subject to exceptions), developer has to pay the GST on the same.

Also, under GST, the developer cannot adjust the tax payable under RCM against the input credit available from the GST paid on the inputs. Instead, it has to be paid by cash/bank payment.It has one of the negative impacts on developers

Treatment of Input Tax Credit, Eligibility and Ineligibilit y:

ITC for ongoing projects where promoters opted for concessional rate of GST:Concessional rate of GST in case of ongoing projects would available to the promoters subject to the conditions that the ITC would be available to the extent prescribed in Annexure I for REP and Annexure II in case of RREP. Quantum of credit available shall be computed as follow:

Particulars Amount

Total ITC used in construction up to 31st

march2019

Xx

Less - ITC attributable towards construction of commercial real

estate

Portion

(xx)

Less - ITC attributable to construction of residential portion

which has time of supply on or before 31 March

2019

(xx)

Tax credit attributable to

residential portion ^

0 XX

The above methodology shall be applicable only in the following cases :

Where percentage completion as on 31 March 2019 is in process and inventory in stock.

Where percentage completion is zero but invoicing has been done having time of supply before 31 March 2019 and no input services or inputs have been received as on 31 March 2019.

ITC for ongoing projects where promoters has not opted for concessional rate of GST:Common ITC attributable to exempt supplies / taxable supply for each of the project are required to be computed at the end of each project. Calculate on the basis of following ratio:

Commercial

portion in

construction

projects

Common credit attributable to exempt

supply:

Step 1 – Common ITC attributable to

commercial portion in a project

Common ITC attributable to a

Project x Total carpet area of commercial

apartments in the project/Total carpet

area of all apartments in the project

Note: Common credit shall be computed

for the entire period i.e. from the

commencement of the project or 1 July

2017 whichever is later till the date of

completion or first occupation whichever

is earlier

Step 2 – Final eligible common credit

on commercial portionResult of step 1x Total carpet area of

commercial apartments which has not

been booked till date

of issuance of CC or first occupation

whichever is earlier / Total carpet area of

commercial apartments in the project

Residential

projects

Scope – All residential apartments, other

than RREP where the promoters have

opted for concessional rate of GST.

Common ITC attributable to exempt

supply –

Step 1 – Aggregate carpet area of

exempt supplies shall be computed

in the following manner:

• Aggregate carpet area of

apartments, construction of which

is exempt

• (+) Carpet area of constructed

property, but which has not been

booked till the date of issuance of

CC or first occupation

• Total aggregate carpet area for

exempt supplies

Step 2 – Final ITC attributable to exempt

supplies :

Common ITC attributableto a project x

result in step 1/Aggregate carpet area of

the apartments in the project

Challenges in real estate due to GST:

Multiplicity of tax slabs Complex structure Ambiguity in real estate Non inclusion of GST Delayed payment of IT Infrastructure

HIGHLIGHTS OF WICASA EVENTS

CA Students’ Conference

MANZAR 2019

Particulars Due Dates

TDS/TCS Liability Deposit 7th Jan

GSTR3B 20th Jan

GSTR1- Monthly (Taxpayer exceeds 1.5Crore)

11th Jan

GST Audit for FY 17-18 31 Jan

PF Payment 15th Jan

ESIC PAYMENT 21ST Jan

INDUSTRIAL VISIT

Kaun Banega CA