Good News. Indian Government modifies Article 13 of DTAA for FTS.

This is relating to Royalties and Fees for Technical Services with Spain

The Central Government has modified the Article 13 of Double Taxation Avoidance Agreement ( DTAA )  relating to the royalties and fees for technical services with Spain by invoking Section 90 of the Income Tax Act, 1961.

Tax rate has been cut on FTS to 10%. ( from old DTAA rate 20%)

The DTAA amendment, is effective from the assessment year 2024-25. ( FY 23-24 )

Under the newly amended provision, royalties and fees for technical services, while being subject to taxation in the Contracting State where they arise and in accordance with its laws, will now carry a Max tax rate of 10% instead of 20% earlier.

Old para was

However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the law of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services the tax so charged shall not exceed :

and new para is

“2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the law of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed ten per cent of the gross amount of royalties or fees for technical services.”

This has been notified on 19-3-2024, Wednesday.

The Government of India (GoI) has issued Notification No. 33/2024 dated 19 March 2024 (Notification), by exercising its powers under the Indian Tax Laws (ITL), conferring lower tax rate benefit of 10% under the India-Spain Double Taxation Avoidance Agreement (DTAA) in accordance with the most favored nation (MFN).

Source 1: https://studycafe.in/cbdt-amends-fts-clause-in-india-spain-dtaa-298852.html

Source 2 : https://www.taxmann.com/research/income-tax/top-story/104010000000106534/govt-notifies-reduced-tax-rates-on-royalty-and-fts-with-spain-by-invoking-mfn-clause-cirnot

So, now it is flat rate : 10% for all FTS

There is no change in the Personal independent services by Artists, Teachers etc ( That is Article 15 )

The paragraph 2 of Article 13 of the said Convention, as amended by this notification, shall be applicable with effect from the assessment year 2024-25.

Why is this Good News ? for whom ?

This is Nice for Indian companies with consultants in Spain. This reduces the cost. ( if the consultant pushes for grossing up).

Questions to be solved 

1. Whether Income tax return to be filed by that Entity in India ? Yes.
2. As per the current law, income tax return is exempt, if Full Normal TDS rate is applied and deducted.
3. if an entity takes the benefit of DTAA, then it has to compulsarily file its ITR in India.
4. What will be the income shown in that ITR ? If an entity takes the benefit of DTAA, then it has to compulsarily file its ITR in India.
5. What about PAN in India ? That is also required
6. What about 10F online filing in India ? Yes Required
7. Can a 10F be filed now ? Yes
8. but this 10F will help in the past 11 month transactions ??? To be discussed.

Source of Government Notification : https://incometaxindia.gov.in/communications/notification/notification-33-2024.pdf

Last few days left.. Be Alert … Some ideas and Tips in MSME 43B(h) -Income Tax

dated 21st-March-2024 : 9 am

1. Try to pay all MSME vendors bills of 28-2-2024, by 28th March 2024….. (Just to be safe)…

2. See this yourself.

3. Nobody can save your company from accidental tax later

4. This is a benefit Govt is giving to MSME’s and if you are a MSME take this benefit from your customers….
5. Almost 4 Crores MSME are already registered and are claiming this benefit… are you taking this Benefit ???

6. Next, try to pay MSME invoices of March 2024 by 30th April 2024, or max by 14th May 2024….. Dont forget…else… again big loss of tax possible

7. Have you made your Financial Budget to pay all eligible MSME vendor’s : Arrange Funds as soon as possible. Keep Buffer for new creditors, new invoices of this period.

8. Sent letters to all creditors ? Kept evidence ? Two rounds of emails is a must evidence.

9. Do you have letters or MOU with each MSME vendor, … with overriding clause for 45 days, irrespective of the PO’s and Invoices. ( get the format in the Google drive link below )
10. Reduce your advance tax ? Pay MSME in Advance. …. yes possible ( most likely.) But conditions apply. Risk involved. But likely due to a past Supreme Court Judgement
11. 

12. Sales Idea.. if you have power to do more sales, and have sufficient funds : Deregister in MSMED Act…. give affidavit to your Potential Customers… “Get More Sales” and “Get more Margin”

    

13. Non Registered MSME Vendors ….? The Udhyam Adhar is compulsory. No need to see the Balance Sheet, or take a CA Certificate. Not relevant and not required.

14. Past or Future ? Future bills only ( old bills prior to 1-4-2023 are not in problem in this section.. they are problem in section 41 .. with bigger consequences

    

15. Three year MSME category Rule notification dt 18-10-2022.. Change of category upwards… you can take the benefit of previous classification for three long years. Yes you can. ( see notification in the Google drive link below )

1. Cheque Hand over   ( Cheque in Transit ?)……….? This idea can work only if you have 100% clear balance in your bank account… Else… It will not be acceptable

   

2. Towards a New INDIA

3. Faster business cycles.

4. Money is coming automatically to most MSME’s .. every day… Congratulations.

5. Hope the PSU’s also start paying in the same way. The PSU chief will be shocked with huge tax if he does not organise the payments to all the MSME vendors in time… this will create a new culture.

Ideas, Tips, things to take care of… MSME act related 43B(h) income tax topic . Good ideas you can work around with and make more money.

Google Drive link for the Powerpoint presentation of the Session by Mr Sangeet Kr Gupta. in the last Zoom seminar

MLG team at your service

Contact us page

Ideas for better CSR compliance. Useful for Small and Medium Companies,

Good & “Practical” ideas.

CSR – Do’s and Dont’s – latest Notifications, guidelines , shot by Finsys Team at Hotel Marriot, Jaipur.

Prevent the risk of Penalty of 200% . Making you safer.

Did you know about this
200% Penalty… for just mistakes / non compliances

Wishing you More Profits
From 5 to 10 to 20 to 50 to 100 Crores per annum

CSR Tax

THIS IS LIKE A CSR TAX

Detailed checklist
Bill to you, & Ship-to Recipients
One of the best ways of protecting and complying…
Direct payment to Vendor
and Direct delivery of the Actual Goods / Services

Take a Thank you Letter
after delivery of the Actual Goods / Services

Photo also helps
But… direct delivery and direct payment is very important, preferable
CONTACT YOUR CA
YOUR CS / AUDITOR
TAKE PROFESSIONAL ADVICE
FINSYS TEAM , AT YOUR SERVICE

• This is now Year to Year – so, no need to pay CSR,if last year profit was below 5 Crores ( WOW )
• Do not give donation to any NGO that has not filed the form CSR-1 and does not have a MCA’s CSR number
• Do not entertain an NGO that does not have 80G + Take a copy from him of 80G registration
• Do not entertain an NGO that does not have 10A registration ( income tax exemption) + Take a copy
• Don’t use the funds to create an movable or immovable asset / any fixed asset… if you do, it must not be in your own company name. It mut be in name of the NGO, not yours
• Your website must have a separate Page for CSR with required details. Like committee,policy etc
• 100% of the CSR must be spent by you preferably by 28th February of that year… reason : else risk of “chq in transit” or risk of end user not spending it, and hence 200% penalty
• if you pay to any NGO… Must get a Utilisation certificate from the NGO in correct format ( contact us for format )
• CSR committee minutes required on record… 4 meetings in a year.. Minutes required.. Showing that progress was seen
  a four page CSR annexure II to the Directors Report.. Is mandatory. ( contact us for format )
• CFO certificate to the Board is mandatory… (contact us for format)
• Try to spend directly, that is the best, example : Spend on purchase of Aata / Food material / Winter clothing etc directy and handover on the Delivery challan of your company… with a thank you letter from any NGO . If possible

Take Guidance of your CA / CS team / Auditors regularly. Monitor this every month / three months.

Finsys is. an ERP Software that helps you Make more money from your men, machines, materials and existing money. This is by implementing the best methods.

Learned out of last 32 years intenstive work with the industry . From India to USA, From Nepal to Nigeria. From Ambala to Angola, From Gujarat to Goa. From Assam to Saudi Arabia, from UAE to UP,

Better ERP, More Profit … and More Profits More CSR Payments

ERP definition in detail ? ERP stands for enterprise resource planning, but what does ERP mean? The simplest way to define ERP is to think about all the core business processes needed to run a company: finance, HR, manufacturing, supply chain, services, procurement, and others…..  

Somebody else would say… a ERP means a single software which help runs all departments.. from Purchase, Sales, Stores, Accounts, Production,  Quality … From Gate to Gate.

Youtube – CSR – Do’s and Dont’s – latest Notifications, guidelines Hotel Marriot, Jaipur

What are the CSR guidelines in simple language ? How to prevent penalty ? Simple Audit checklist for CSR. Simple excel

ICSI CSR Guidelines on ICSI page

ICAI Handbook on Audit on CSR . Click here

Contact us at Contact us page

So, you have reached the end of the page ? . ….Now you can see the Nice video below….

Nice Location, Nice Topic. Presented in an Interesting way.

Tips in MSME 43B(h) -Income Tax

dated 2-March-2024 : 9 am

1. Have you made your Financial Budget to pay all eligible MSME vendor’s : Arrange Funds as soon as possible. Keep Buffer for new creditors, new invoices of this period.

2. Sent letters to all creditors ? Kept evidence ?

3. Do you have letters or MOU with each MSME vendor, … with overriding clause for 45 days, irrespective of the PO’s and Invoices. ( get the format in the Google drive link below )
4. Reduce your advance tax ? Pay MSME in Advance. …. yes possible ( most likely.) But conditions apply. Risk involved. But likely due to a past Supreme Court Judgement
5. 

6. Sales Idea.. if you have power to do more sales, and have sufficient funds : Deregister in MSMED Act…. give affidavit to your Potential Customers… “Get More Sales” and “Get more Margin”

   

7. Non Registered MSME Vendors ….? The Udhyam Adhar is compulsory. No need to see the Balance Sheet, or take a CA Certificate. Not relevant and not required.

8. Past or Future ? Future bills only ( 1-4-2023 are not in problem in this section.. they are problem in section 41 .. with bigger consequences

   

9. Three year MSME category Rule notification dt 18-10-2022.. Change of category upwards… you can take the benefit of previous classification for three long years. Yes you can. ( see notification in the Google drive link below )

10. Cheque Hand over ?? This idea can work only if you have 100% clear balance in your bank account… Else… It will not be acceptable

    

11. Towards a New INDIA
12. Faster business cycles. Money is coming automatically to most MSME’s .. every day… Congratulations.

13. Hope the PSU’s also start paying in the same way. The PSU chief will be shocked with huge tax if he does not organise the payments to all the MSME vendors in time… this will create a new culture.

Ideas, Tips, things to take care of… MSME act related 43B(h) income tax topic . Good ideas you can work around with and make more money.

Google Drive link for the Powerpoint presentation of the Session by Mr Sangeet Kr Gupta. in the last Zoom seminar

Partnership Deed : Things to remember in documentation

Partnership Deed Printing and Signatures points to remember