Restructuring of Business – Conversion partnership firm/ to Private Limited Company
After the introduction of section 115BAA and 115BAB (Only for manufacturing) of the Income-tax Act, 1961 which allows Companies to pay tax at the rate of 22% and 15% respectively as against 30% for partnership Firms and LLP’s, business houses are looking for conversion of their firms into Companies. This can be initiated in 2 ways as[…]
Flipkart VS Revenue : Analysis on Capital vs Revenue Expenditure
Overview: It has been reported that e-commerce giant Flipkart (“Tax Payer”) has lost an appeal against Income-tax department (“Tax Authority”) for issue regarding classification of marketing expenditure and discounts. The First appellate authority (Commissioner of Income-tax) opined that such marketing expenditure and deep discounts cannot be treated as revenue expenditure as it was incurred to build brand[…]
ITAT Bangalore, ruled in favour of Flipkart on the issue of discounts offered by e-commerce company
In a relief to Flipkart the Income Tax Appellate Tribunal rejected the Income-tax department’s argument that, discounts offered by the flipkart should be reclassified as capital expenditure. This ruling is very important from the perspective that, product discounting, advertisement and marketing expenses constitute a major portion of expenses of e-commerce companies/ start-up companies. Click here to view[…]
Rate of GST on restaurant services
Query: Can restaurants avail input tax credit (‘ITC’) if they charge GST at the rate of 12% (Non – AC) 18% (AC) instead 5% on the sales made by them? Service tax regime: In earlier tax regime abatement of 70% was given on service tax levied on restaurant services by amending the notification No. 1/ 2006-ST, dated[…]
GST on employee reimbursements
Introduction Authority for Advance Ruling, Kerala has recently clarified that recovery of food expenses from the employees for the canteen services provided by company would come under the definition of outward supply defined in section 2(83) of the Act, 2017 and, therefore, would be taxable as a supply of service under GST. The interpretations done by the[…]
Thought on restricting GST input tax credit to 110%
Restricting of input tax credit to the extent of 110% of the input appearing on GSTIN portal (GSTR 2A) will have negative impact on small and medium scale enterprises (“MSME”). Since there is an option to file GST Return 1 quarterly for the taxpayers having turnover less than 1.5 crore, input credit on the goods/services received from[…]