Tax INFORM- March 2022

The fifteenth issue of our monthly tax newsletter – Tax Inform is out. Through these newsletters, we provide a compilation of key tax-related case laws, circulars, notifications, etc. issued by the authorities in the previous month impacting entities & individuals operating in India.

The highlights of the current issue are:

Direct Tax – 

Domestic Tax Rulings:

•  SC: Expenses incurred by pharmaceutical
  companies towards distribution of freebies
  to medical practitioners cannot be allowed as
  business expenditure under Section 37(1) of
  the Act.
  • Revenue cannot reject an application for
  compounding of an offence when accused’s
  conviction is already set aside.
  • Mumbai Tribunal: Difference between
  income appearing in Form 26AS vis-à-vis
  income recorded in books of account must
  be added back while computing book profits
  under section 115JB.

International Tax Rulings:

•  Delhi Tribunal: No additions can be made
  under section 68 of the Act where such
  investment is confirmed by Mauritius tax
  authorities and is in compliance with RBI
  Guidelines.
  • Resident and Ordinarily Resident eligible to
  claim treaty benefit with respect to salary
  income earned in the USA.
  • No requirement to deduct tax at source on
  payment made for transponder charges to
  foreign entities.

Notifications/Circulars:

•  CBDT issues circular on Income-tax
  deduction from Salaries during FY 2021-22
  under section 192 of the Act.

 

Indirect Tax – 

GOODS AND SERVICES TAX

Case Laws:

• AAAR: “Supply of goods” includes shifting
  business from one state to another.
  • AAAR: “Mango Pulp/Puree” is taxable at the
  rate of 18%.
  • AAAR: Flavoured milk was to be classified as
  “beverage containing milk” and not “milk”.
  • AAAR: Only affiliate coaching centres of
  ICAI/ICMAI are eligible for exemption as an
  Educational Institution.
  • AAAR: GST at the rate of 18% is applicable
  for toys consisting of electric components.
  • AAR: Guest lectures incomes are taxable at
  18%.
  • AAR: No exemption is available for paid
  educational content used by healthcare
  professionals to fulfil the mandate of the
  professional body.
  • AAR: Law schools are not eligible for a “Nil”
  rate for subscription services of “online textbased information.
  • AAR: Yoga courses are taxable at the rate of
  18% due to the absence of specific
  registration under Income Tax.
  • AAAR: Demo Vehicles are not eligible for ITC
  as it is not received with the intention of
  “further supply”.
  • AAR: By-products of alcohol brewing are
  taxable at 5%.

Circulars

• The Central Government vide Notification
  No.1/2022 – Central Tax has revised the
  limit from “fifty crore rupees” to “twenty
  crore rupees” for the preparation of invoice
  in terms of Sub-Rule 4 to Rule 48 of the
  Central Goods and Service Tax Rules, 2017