LWF Labour Welfare Fund Haryana –
Due Date of LWF Haryana
and Benefits of Labour Welfare Fund Haryana
LWF Labour Welfare Fund Haryana –
Due Date of LWF Haryana
and Benefits of Labour Welfare Fund Haryana
Helpful tips are at the end ( bottom ) of this writeup
In the Income Tax Act there is no clear definition about the word”put to use” and is therefore to be considered in a wider sense.Steps taken to set building into gear are ‘putting it to use’ – After arranging for the building, any steps taken by the entrepreneur to set the building into gear for running the unit, would be nothing but putting it to ‘use’ – CIT v. O.P. Khanna & Sons [1983] 140 ITR 558 (Punj. & Har.).
In the case of leases also it is seen that the lessor generally leases out the newly purchased buildings to the lesses without taking any certificates and can easily claim depreciation.For them giving out the assets on lease is itself pertaing to put to use.Thye definition “put to use is to be used with reference to the context of the situation.Also in the above mentioned case reliance is placed on the decision of Sarabhai Management Corporation Ltd. v. CIT [1976] 102 ITR 25 (Guj) with respect to leases.
6.l Fixed asset is an asset held with the intention of being used for
the purpose of producing or providing goods or services and is not held for sale in the normal course of business.
Depreciation is an allowance on capital assets acquired and put to use and not an expenditure unlike repairs to machinery, plant or furniture. It need not be incurred by the assessee during the previous year. The depreciation allowance has to be calculated on the assets of the assesee as per the methods and rates prescribed under the income tax law.
Depreciation allowance is one of the deductions allowed from business or professional income chargeable under section 28 or other income chargeable under section 56(2)(ii) or 56(2)(iii) of the Income Tax Act, 1961.
As per section 32 of the Income Tax Act, 1961, depreciation is allowed on tangible assets and intangible assets owned, wholly or partly, by the assesse and used for the purposes of business or profession.
As per section 57(ii) depreciation deduction is available from the income from hire of machinery, plant or furniture [Section 56(ii)] or income from buildings (in case of the building is inseparable from the letting of the said machinery, plant or furniture) [Section 56(iii)].
On new plant or machinery, apart from depreciation allowance under section 32(1) and Section 32(2), investment allowance is also available additionally as per the provisions of sections 32AC and 32AD.
Depreciation under the Income Tax Act is allowed as a deduction, as a percentage on the written down value (WDV) of the block of assets as per the rates prescribed in New Appendix I to the Income Tax Rules, 1962.
In case of assets of an undertaking engaged in generation or generation and distribution if power, the depreciation is allowed as deduction on the actual cost i.e. straight-line method (SLM) individually on each asset at depreciation rates prescribed in Appendix IA to the Income Tax Rules, 1962 or on WDV of the block of assets. These categories of undertakings shall opt for charging depreciation either on SLM or WDV method. As per Rule 5(1A) of the Income Tax Rules, 1962 the option shall be exercised before the due date for furnishing the return of income under section 139(1) of the Income Tax Act, 1961. As per the proviso to Rule 5(1A), the option once exercised shall be final and shall apply to all the subsequent assessment years.
As per section 2(11) of the Income Tax Act, 1961, “block of asset” means a group of assets falling within a class of assets comprising –
a. Tangible assets, being buildings, machinery, plant or furniture,
b. Intangible assets, being know-how, patents, copyrights, trademarks, licenses, franchises, or any other business or commercial rights of similar nature, in respect of which the same percentage of depreciation is prescribed.
For the purpose of classification of assets into blocks, the percentage of depreciation within the class of assets needs to be considered. Each such class of asset with the same percentage of depreciation will be identified as a block of the asset.
In case of an asset acquired during the previous year and is put to use for the purpose of business or profession for a period less than 180 days in that previous year, the deduction as depreciation allowance shall be restricted to 50% of the amount of such depreciation in case of:
i. SLM depreciation on assets of an undertaking engaged in generation or generation and distribution of power;
ii. WDV method of depreciation on block of assets method on both tangible and intangible assets;
iii. Additional depreciation.
Notes:
1. In case of additional depreciation allowance, the balance 50% (out of 20% or 35% as the case may on actual cost) shall be allowed in the immediately succeeding previous year;
2. The restriction of 50% of normal depreciation is not applicable to the assets acquired prior to the previous year and put to use in the previous year for a period of less than 180 days;
Preamble
This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of account.
In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.
1. This Income Computation and Disclosure Standard deals with the treatment of tangible fixed assets.
2(1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:
| (a) | “Tangible fixed asset” is an asset being land, building, machinery, plant or furniture held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business. | |
| (b) | “Fair value” of an asset is the amount for which that asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. |
(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meanings assigned to them in that Act.
3. The definition in clause (a) of sub-paragraph (1) of paragraph 2 provides criteria for determining whether an item is to be classified as a tangible fixed asset.
4. Stand-by equipment and servicing equipment are to be capitalised. Machinery spares shall be charged to the revenue as and when consumed. When such spares can be used only in connection with an item of tangible fixed asset and their use is expected to be irregular, they shall be capitalised.
5. The actual cost of an acquired tangible fixed asset shall comprise its purchase price, import duties and other taxes, excluding those subsequently recoverable, and any directly attributable expenditure on making the asset ready for its intended use. Any trade discounts and rebates shall be deducted in arriving at the actual cost.
6. The cost of a tangible fixed asset may undergo changes subsequent to its acquisition or construction on account of
| (i) | price adjustment, changes in duties or similar factors; or | |
| (ii) | exchange fluctuation as specified in Income Computation and Disclosure Standard on the effects of changes in foreign exchange rates. |
7. Administration and other general overhead expenses are to be excluded from the cost of tangible fixed assets if they do not relate to a specific tangible fixed asset.
Expenses which are specifically attributable to construction of a project or to the acquisition of a tangible fixed asset or bringing it to its working condition, shall be included as a part of the cost of the project or as a part of the cost of the tangible fixed asset.
8. The expenditure incurred on start-up and commissioning of the project, including the expenditure incurred on test runs and experimental production, shall be capitalised.
The expenditure incurred after the plant has begun commercial production, that is, production intended for sale or captive consumption, shall be treated as revenue expenditure.
9. In arriving at the actual cost of self-constructed tangible fixed assets, the same principles shall apply as those described in paragraphs 5 to 8. Cost of construction that relate directly to the specific tangible fixed asset and costs that are attributable to the construction activity in general and can be allocated to the specific tangible fixed asset shall be included in actual cost. Any internal profits shall be eliminated in arriving at such costs.
10. When a tangible fixed asset is acquired in exchange for another asset, the fair value of the tangible fixed asset so acquired shall be its actual cost.
11. When a tangible fixed asset is acquired in exchange for shares or other securities, the fair value of the tangible fixed asset so acquired shall be its actual cost.
12. An Expenditure that increases the future benefits from the existing asset beyond its previously assessed standard of performance is added to the actual cost.
13. The cost of an addition or extension to an existing tangible fixed asset which is of a capital nature and which becomes an integral part of the existing tangible fixed asset is to be added to its actual cost. Any addition or extension, which has a separate identity and is capable of being used after the existing tangible fixed asset is disposed of, shall be treated as separate asset.
Valuation of Tangible Fixed Assets in Special Cases
14. Where a person owns tangible fixed assets jointly with others, the proportion in the actual cost, accumulated depreciation and written down value is grouped together with similar fully owned tangible fixed assets.
15. Where several assets are purchased for a consolidated price, the consideration shall be apportioned to the various assets on a fair basis.
Transitional Provisions
16. The actual cost of tangible fixed assets, acquisition or construction of which commenced on or before the 31st day of March, 2016 but not completed by the said date, shall be recognised in accordance with the provisions of this standard. The amount of actual cost, if any, recognised for the said assets for any previous year commencing on or before the 1st day of April, 2015 shall be taken into account for recognising actual cost of the said assets for the previous year commencing on the 1st day of April, 2016 and subsequent previous years.
17. Depreciation on a tangible fixed asset shall be computed in accordance with the provisions of the Act.
18. Income arising on transfer of a tangible fixed asset shall be computed in accordance with the provisions of the Act.
19. Following disclosure shall be made in respect of tangible fixed assets, namely:—
| (a) | description of asset or block of assets; | |
| (b) | rate of depreciation; | |
| (c) | actual cost or written down value, as the case may be; | |
| (d) | additions or deductions during the year with dates; in the case of any addition of an asset, date put to use; including adjustments on account of— |
| (i) | Central Value Added Tax credit claimed and allowed under the CENVAT Credit Rules, 2004; | |
| (ii) | change in rate of exchange of currency; | |
| (iii) | subsidy or grant or reimbursement, by whatever name called; |
| (e) | depreciation Allowable; and | |
| (f) | written down value at the end of year. |
in Simple words
Sales have started ( The Biggest Evidence ) ( with proper invoices, E way bill, E invoice, Truck GR copy, Weighment slip, etc )
Purchases have started ( with proper invoices, E way bill, E invoice, Truck GR copy, Weighment slip, etc )
Machines have arrived ( with proper invoices, E way bill, E invoice, Truck GR copy, Weighment slip, etc )
Electricity expense is happening ( with proper Meter reading etc)
Workers have been appointed ( with Proper ESI, EPF, Welfare Fund / Professional tax records etc)
Other consumables that are required to manufactur, apart from the Raw Material, ( as per the Bill of Material, of the product being produced )
For additional case specific guidance, please contact your own Friendly Chartered Accountant, Lawyer, Counsel.
For any additional guidance you can always contact us : Contact us
Things to Remember… things to cross check…. Important Tip. Important Guidelines…. use any Software of the world. even in manual production and PPC….
What to do
Pros
Cons
Important focus
Income tax
GST
TDS
TCS
ERP
All points
GST says…manufacturing process, logically sell it
Since GST Department wants GST on that
Income tax needs TCS on Scrap sale
3 people to sign why this rejection happened
From x to y
Printed boards lost, why
Root cause ?
Making cooler, AC, paint..anything… why lost, why scrap ?
Offer Qnty out from WIP and offer Qnty inward of scrap
If you dont seek
You might face big losses, if these precautions are not taken
Like cash ka hisaab
Whether production RM or other Material
Youtube link for Scrap ? How to control how much Raw material ….. sold off at Scrap in your company ? Safety steps
It is important that you are Entrepreneurs, as CFO, as Stores / Materials Manager, as Auditor, cross check the system of Scrap Accounting
This circular was authored by Mr Sangeet Kr Gupta , our Co Founder… This was dated 23-12-2024, for the GST Council meeting dt 21-12-24
Some Recommendations of the 55th Meeting of the GST Council ( As relevant to our IamSMEof India members)
Click the link above to see / Download the Circular
Published for the internal usage for the members and clients of M/s. Finsys Infotech Limited and M/s. MLG Associates
Integrated Association of Micro, Small & Medium Enterprises of India
E-mail: info@iamsmeofindia.com, +91-9711123111 (Executive Secretary)
| Rajive Chawla
Chairman, IamSMEofIndia |
|
Sangeet Kr Gupta
Hon. Consultant, IamSMEofIndia |
Dear Members,
Some Recommendations of the 55th Meeting of the GST Council ( As relevant to our members )
Note : Detailed notifications are yet to be released. The above is based on the Press Release dt 22-12-24. The meanings may change, after the actual Circulars / Notifications are released
Now in Detail… first for Sale of Used Cars
To bring supply of the sponsorship services provided by the body corporates under Forward
Charge Mechanism.
GST Council recommends no GST on transaction of vouchers as they are neither supply of goods nor supply of services.
The provisions related to vouchers is also being simplified. GST Council clarifies that no GST is payable on ‘penal charges’ levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms
GST on Old and Used Vehicles
Old Position
| Smaller Vehicles | 12% on the Gain portion only |
| Larger Vehicles | 18% on the Gain portion only |
Cess taken at Zero
New position
| All Passenger Vehicles , all types | 18% on the Gain portion only |
Benefit : No confusion to MSME himself, and no confusion to the Government
Note
Source for old position : Notification 8/2018 dt 25-1-2018 – Central Tax (Rate )
Meaning : Law is same for all now
| If Sold Below WDV | If sold above WDV | ||
| Size of Vehicles..4000 mm, 3000 mm. | Any Size | No GST applicable | Yes, GST on “profit portion” only |
| Sports SUV or non SUV | Anything | No GST applicable | Yes, GST on “profit portion” only |
| Ground Clearance Rules…170mm | Anything | No GST applicable | Yes, GST on “profit portion” only |
| Engine Capacity… 1200cc…1500cc..1600cc | Anything | No GST applicable | Yes, GST on “profit portion” only |
| All Size of Vehicles All Size of Vehicles All Size of Vehicles | Same Rate, Same Rules | ||
| Category | GST ? | |
| Normal employees, without registration in GST | No GST | |
| Normal Residents, without registration in GST | No GST | |
| Doctors , or any exempt category | No GST | |
| Sale of old Motorcycle by any user ( salaried or business, except Auto dealers themselves ) | No GST | |
| Any Regd person selling a old car at a loss | Usually Motor Vehicles are sold at a Loss only | No GST |
| Any Regd Person, selling an old Car at Profit over WDV | This is very rare… that Income tax depreciation is 15%.. and actual value reduction is less than this | Yes, GST on the Gain portion only |
Calculation examples
| Car | Purchase Cost | Written down value after 15% annual income tax Depreciation | Sold for | Gain or Loss Value | GST | |
| A | 20,00,000 | 14,00,000 | 13,99,000 | (1,000) | Nil | |
| B | 20,00,000 | 14,00,000 | 10,00,000 | (4,00,000) | Nil | |
| C | 20,00,000 | 14,00,000 | 18,00,000 | 4,00,000 | 18% on 4 lakh | But looks very rare |
| D | 20,00,000 | 5,00,000 | 4,99,000 | (1,000) | Nil | |
| E | 20,00,000 | 5,00,000 | 4,00,000 | (1,00,000) | Nil | |
| F | 20,00,000 | 5,00,000 | 7,50,000 | 2,50,000 | 18% on 2.5 lakh | But usually rare, since cars have a limited life of 10/15 years now |
Note : Detailed notifications are yet to be released
No GST on the Penal Charges by Banks, and NBFC’s
GST 55th council meeting , agreed and clarified that no GST is payable on the ‘penal charges’ levied and collected by banks and NBFCs, from borrowers for non-compliance with loan terms.
This is good
This used to be a PAIN
Already some penal charge levied
And on the top of it its GST….. Now no more
The council has agreed.. that the essence of this is of “Interest”, hence probably GST council smiled and let this go.
Note : Detailed notifications are yet to be released
| Topic | Current Position | New Position |
| Sponsorship considered | Reverse Charge GST only | Forward Charge GST if done by Corporates ( example Section 8 company ) |
| Loss of GST | The Service provider Association cannot take ITC input of GST on its input services…. and leads to loss , Need to absorb that GST as loss / Cost | No such loss in future |
| Doubling of GST | Yes, Double GST, first paid to vendors of the association by the association, then Again, as RCM by the Sponsor to the Govt. | This Double loss is removed |
In Short, the Government is Making Business Better
For queries, suggestions and feedback , you can e-mail us
Please send your details, and request e-mail to info@iamsmeofindia.com / skgupta[at]finsys.in
To discontinue receipt of e-mails from the author, please reply mentioning “Discontinue” in the Subject.
The contents of this circular are for Private circulation & intended for the addressee/s only. We do not warrant that this email is free of mistakes, errors or any other defect. Care has been taken to provide authentic information, but it is advisable to confirm/verify with qualified legal practitioners, professionals before implementing any suggestions. The views expressed are not necessarily those of the Association. We encourage readers, our Members to write to us their opinions, suggestions, ideas, comments, thoughts and bring to our knowledge mistakes, omissions etc. which we’d be pleased to correct/implement.
For personalised suggestions, and solutions, contact our I am SME of India Team and Consultants
Regular Monthly Stock Audit Facilities from Finsys ERP Team
How will you know the correct material accountability,
if your stock is inaccurate and haywire ?
The “Surprise” “Friendly” Stock Audit helps energise your team
That yes, Keeping Stock Correct is important
It is mandatory for GST, Income tax, Bank and yourself
It helps in Better ERP implementation too.
Excellent Web Based ERP Software Facilities from Finsys ERP Team
|
https://www.iamsmeofindia.com/
|
This is a Big News. First Time Ever. Govt has started 2% TDS on Purchase of Metal Scrap from Registered Persons.. + Also RCM GST on Purchase from URP
Note there are TWO separate NEW ITEMS…. they are related but NOT SAME.
We start with the First one : RCM
Date of Notification: October 8, 2024
Notification No.: 06/2024-Central Tax (Rate)
Effective Date: October 10, 2024
Issued by: Ministry of Finance (Department of Revenue), Government of India
| Event | Date |
|---|---|
| Notification Date | October 8, 2024 |
| Effective Date | October 10, 2024 |
| Deadline for Compliance | Ongoing from October 10, 2024 |
The metal scrap industry often involves transactions between unregistered suppliers and registered businesses. By mandating that registered recipients must pay the GST under RCM, the government aims to bring more transparency and compliance to this sector, preventing revenue leakages.
The source of this is the Recommendation of the GST council in 54th Meeting
The 54th GST ( Goods and Services Tax ) council meeting held on 9th September 2024 has recommended 2% TDS on the supply of metal scrap by registered persons in B to B supply. It had provided the clarifications on the RCM. The meeting was presided by the Finance minister Nirmala Sitharaman.
The Council has recommended the introduction of the Reverse Charge Mechanism (RCM) on metal scrap transactions
Under this new provision, when a metal scrap supplier is unregistered AND HE supplies to a registered entity, the recipient (buyer) will be liable to pay tax under RCM.
This is to bring these transactions in GST Net…. Since the unregistered Scrap dealers were slightly a GREY AREA
New Accounts required in your Finsys ERP / Tally / any Accounting package
Either create Three new accounts to create in your books
CGST RCM Payable ( Scrap )
SGST RCM Payable ( Scrap )
IGST RCM Payable ( Scrap )
CGST RCM ITC Receivable ( Scrap )
SGST RCM ITC Receivable ( Scrap )
IGST RCM ITC Receivable ( Scrap )
or you can continue with your current generalised RCM Accounts also… if you can manage with them
Specifically, under the new amendment, unregistered persons selling metal scrap (falling under categories 72, 73, or 81) will be subject to the reverse charge, meaning the registered buyer will be responsible for paying the GST instead of the seller.
Read more at: https://taxguru.in/goods-and-service-tax/gst-reverse-charge-mechanism-rcm-metal-scrap.html
Copyright © Taxguru.in
Source Links
Link 1 : Govt GST Site : https://taxinformation.cbic.gov.in/view-pdf/1010100/ENG/Notifications
Link 2 : https://taxguru.in/goods-and-service-tax/gst-reverse-charge-mechanism-rcm-metal-scrap.html
Notification No. 06/2024-Central Tax (Rate) | Dated: 8th October, 2024 G.S.R. 614(E).— In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, Ministry of Finance (Department of Revenue), notification No. 4/2017-Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R. 676(E), dated the 28th June, 2017, namely:-
In the said notification, in the Table, after S. No. 7 and the entries relating thereto, the following S. No. and entries shall be inserted, namely: – 2. This notification shall come into force on the 10th day of October, 2024. (1) (2) (3) (4) (5)
“S No 8.
Chapters 72, 73, 74, 75, 76, 77, 79, 80 or 81 Metal scrap
Seller = Any unregistered person
Buyer = Any registered person.
The CBIC has issued notification to provide that any registered person receiving supplies of metal scrap shall deduct TDS of 2% on B2B transaction. This notification shall be applicable from 10th October, 2024.
GST is in the eighth year of its implementation. When the CGST Act was enacted in 2017, Section 51 contained the provisions of TDS. But this section was made applicable only w.e.f 01.10.2018. Section 51 of the CGST Act causes obligation on the recipient of the supplies (deductor) to deduct some percentage as tax at source from the payments to be made to supplier (deductee) and pay it to the Government.
However, clause (d) of section 51(1) empowers the government to notify any other category for the purpose.
A TDS of 2% will be applicable on supply of metal scrap by registered person in B to B supply.
NOTIFICATION New Delhi, the 9th October, 2024. No. 25/2024-Central Tax G.S.R. 629(E).— In exercise of the powers conferred by sub-section (3) of section 1 read with section 51 of the Central Goods and Services Tax Act, 2017 (12 of 2017), hereafter in this notification referred to as the said Act, the Central Government, on the recommendations of the Council, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance, Department of Revenue No. 50/2018-Central Tax, published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i) vide number G.S.R 868 (E), dated 13th September, 2018, namely:– In the said notification, (i) after clause (c) and before the first proviso, the following clause shall be inserted,-
(ii) for the third proviso, the following proviso shall be substituted, namely- “Provided also that nothing in this notification shall apply to the supply of goods or services or both, which takes place between one person to another person specified under clauses (a), (b), (c) and (d) of sub-section (1) of Section 51 of the said Act, except the person referred to in clause (d) of this notification.”
>>>> means Registration is mandatory for the Supplier and he cannot take exemption under this 2017 notification
2. This notification shall come into force with effect from the 10th day of October, 2024. [F No. CBIC-190354/149/2024-TO(TRU-II)] AMREETA TITUS, Dy. Secy.
Note:- The principal notification no. 50/2018- Central Tax, was published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i) vide number G.S.R 868 (E), dated 13th September, 2018 and last amended vide notification no. 73/2018-Central Tax, number G.S.R 1250(E), dated 31st December, 2018.
Read more at: https://taxguru.in/goods-and-service-tax/gst-tds-applicable-metal-scrap-supplies.html#
Copyright © Taxguru.in
New Accounts required in your Finsys ERP / Tally / any Accounting package
Three new accounts to create in your books
CGST TDS Payable
SGST TDS Payable
IGST TDS Payable
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