New Tax Regime or Old – What should you choose?

The budget 2020 saw the finance minister Nirmala Sitraman announce a new tax regime with more tax slabs and lower tax rates. This was long demanded by most taxpayers, but it came with the catch of removal of all the deductions and exemptions available.

To add to this confusion, the finance minister gave taxpayers a choice between the new regime and existing one, leaving it to them to decide which they would like to opt for. All these factors acting together, instead of tax laws getting simpler, they are now more complex.

And if you are wondering how to go about figuring out which regime you should opt for, this blog answers that question for you. We look at the new regime in detail, its benefits and compare it to the existing tax system. So let’s start.

Current Tax System – high rates but lot of options to reduce taxes 

The current tax system is complicated to say the least. While the tax rates are high, there are a lot of ways to reduce your tax liability.

Over the years the government, through addition of clauses to the Income Tax Act, has given Indian taxpayers over 70 exemptions and deduction options through which they can bring down their taxable income and hence pay less. 

While exemptions are part of your salary, like the House Rent Allowance (HRA) and Leave Travel Allowance (LTA), deductions allow you to lower your tax amount by investing, saving or spending on specific items. The biggest section for deduction is Section 80c through which you can bring down your taxable income by Rs.1.5 lakh.  Apart from this, there are several other sections that let you take tax deductions on things ranging from interest on your loans (home and education) to premiums you pay for health insurance.

Most common exemptions and deductions availed by Indian taxpayers

Exemptions	Deductions
House Rent Allowance	Public Provident Fund
Leave Travel Allowance	ELSS (Equity Linked Saving Scheme)
Mobile and Internet Reimbursement	Employee Provident Fund
Food Coupons or Vouchers	Life Insurance Premium
Company Leased Car	Principal and Interest component of Home Loan
Standard Deduction	Children Tuition Fees
Uniform Allowance	Health Insurance Premiums
Leave Encashment	Investment in NPS
	Tuition fee for Children
	Saving Account Interest

The combination of exemptions and deductions can bring down your taxable income by lakhs. However, it also means every year you have to find ways to optimise your salary and savings/investments so as to keep you taxable income to the minimum. 

Enter new tax regime – More slabs, lower tax rate but no way to reduce taxes

The new tax regime is different from the existing system in two aspects. 

One, in the new regime, the tax slabs have increased, accompanied by lowering of rates in the sub-Rs 15 lakh range. Two, all the exemptions and deductions that were being used by taxpayers in the existing regime won’t be available in the new regime.

Here is a comparison between the old and new tax slabs

Tax Slab(₹)	Old Tax Rates	New Tax Rates
0 – 2,50,000	0%	0%
2,50,000 – 5,00,000	5%	5%
5,00,000 – 7,50,000	20%	10%
7,50,000 – 10,00,000	20%	15%
10,00,000 – 12,50,000	30%	20%
12,50,000 – 15,00,000	30%	25%
15,00,000 & above	30%	30%

As you can see under the new system, income between Rs 5 lakh and 7.5 lakh would be taxed at 10 percent, while income between Rs 7.5 lakh to Rs 10 lakh would be taxed at 15 percent. This was 20 percent flat on the entire range for the existing regime. The earlier Rs 10 lakh+ slab where you paid 30 percent, has been broken into three parts with rates of 20 percent for Rs 10-12.5 lakh, 25 percent for Rs 12.5 lakh-15 lakh and then 30 percent for Rs 15 lakh and above. 

So, which regime should one pick?

Unfortunately, there is no single answer to this. And the culprit again is the complexity of the Indian tax rules. 

Although looking at the reduction in the tax rates, the first reaction would be that the new system looks better. However, with these cuts, someone with Rs 7.5 lakh income will have to pay Rs 25,000 and for those who are earning Rs 10 lakh income, the tax saving will be Rs 37,500. But as they say, the devil lies in the detail. For these savings, you will have to let go all the exemptions and deductions which might nullify these gains.

While figuring out what option to go for might look complicated, if you approach it in a systematic way, it is not that difficult to figure out. 

Here is what you need to do –

1. Calculate all the exemptions that you are availing: If you are living on rent, you would be claiming HRA which is the biggest salary exemption one enjoys. Apart from that, other tax-free components include LTA, Food Bill, Phone Bills, etc. All these will become taxable if you choose to shift to the new tax regime.
2. Look at the deductions that you claim: As a salaried employee, two deductions that you automatically get are standard deduction of Rs 50,000 and your contribution towards your Employee Provident Fund (EPF). In the new regime, you won’t be able to claim these deductions even though you will continue to contribute to EPF. Over and above, you cannot claim deductions against your home loan (if you have one) or insurance policies, which till now has helped to reduce your taxable income.

Now, combine these exemptions and deductions and minus them from your salary to see what is your taxable income and what it would be if you let go of these deductions. This should be the deciding factor for which regime you should go for.

Let’s take three examples with different scenarios to see how deductions and exemptions or lack of them will impact taxes in both regimes.

Scenario 1: Someone claiming few exemptions and deductions

Ramit is a bank employee who earns Rs 8 lakh a year. Being salaried, he contributes towards EPF and also gets HRA benefits in his salary as he is living on rent. Apart from this, he is eligible for LTA and this year, he incurred Rs 25,000 on his travelling and will be claiming it. Due to his family obligations, he is not able to save anything beyond his EPF contribution.

Let’s see which tax regime will save more taxes for him.

Income Tax Calculation
	Old Tax Regime (₹)	New Tax Regime (₹)
a) Annual Income	8,00,000	8,00,000
b) Standard Deduction	-50,000
c) EPF Contribution (Section 80C)	-25,000
d) HRA	-30,000
e) Leave Travel Allowance	-25,000
f) Total (Deduction & Exemption)	1,30,000
Net Taxable Income (a-f)	₹6,70,000	₹8,00,000

Tax Slab	Old Rates	New Rates	Tax (Old)	Tax (New)
0 – 2,50,000	0%	0%
2,50,000 – 5,00,000	5%	5%	12,500	12,500
5,00,000 – 7,50,000	20%	10%	34,000	25,000
7,50,000 – 10,00,000	20%	15%		7,500
10,00,000-12,50,000	30%	20%
12,50,000 – 15,00,000	30%	25%
15,00,000 & above	30%	30%
Total taxes			46,500	45,000
Cess			1,860	1,800
Total tax need to pay			48,360	46,800

As you can see, Ramit will save more taxes in the new tax system, with tax burden going down by Rs 1,560.

Scenario 2: Someone claiming all major exemptions and few deductions

Amit, an IT professional, earns Rs 13 lakh a year. Being salaried, he contributes towards the EPF. Also, he has invested Rs 40,000 in tax saving mutual fund (ELSS) and purchased a term life insurance with a coverage of Rs 1 crore. For this, he has paid a premium of Rs 10,000. Moreover, he is also eligible to claim tax exemption for Rs 30,000 in HRA , Rs. 20,000 in LTA, and Rs 26,400 for Sodexo meal coupons respectively in his taxable income.

Now, let’s see how his tax liability changes in either of the tax structures

Income Tax Calculation
	Old Tax Regime (₹)	New Tax Regime (₹)
a) Annual Income	13,00,000	13,00,000
b) Standard Deduction	-50,000
c) Section 80C	-75,000
d) HRA	-30,000
e) Sodexo (Meal Coupons- 2200*12)	-26,400
f) Leave Travel Allowance	-20,000
g) Total (Deduction & Exemption)	2,01,400
Net Taxable Income (a-g)	₹10,98,600	₹13,00,000

Tax Slab	Old Rates	New Rates	Tax (Old)	Tax (New)
0 – 2,50,000	0%	0%
2,50,000 – 5,00,000	5%	5%	12,500	12,500
5,00,000 – 7,50,000	20%	10%	50,000	25,000
7,50,000 – 10,00,000	20%	15%	50,000	37,500
10,00,000-12,50,000	30%	20%	29,580	50,000
12,50,000 – 15,00,000	30%	25%		12,500
15,00,000 & above	30%	30%
Total taxes			1,42,080	1,37,500
Cess			5,683	5,500
Total tax need to pay			1,47,763	1,43,000

As you can see, in this case too, the new tax system works better. In fact, in the old tax regime, Amit will end up paying  Rs 4,763 more in taxes. However, that doesn’t mean he should stop investing or stop his term insurance policy. Tax benefits should not be seen as an advantage and the primary reason to invest or buy insurance.

Scenario 3: Someone availing all major exemptions and deductions 

For this instance, let’s take an example of Sumit, who earns Rs 20 lakh annually. He avails the full Rs. 1.5 lakh limit of Section 80C through a combination of contribution to EPF and ELSS mutual funds. Besides this, he bought health insurance, for which he paid a premium of Rs 25,000 that he claims as tax deduction under Section 80D. Also, to save more taxes from his salary, he made additional investments of Rs 30,000 in NPS. Similar to Ramit, he also claimed a LTA amount of Rs 25,000, which is tax exempted.

Now let’s see which tax regime will give more money in his hand.

Income Tax Calculation
	Old Tax Regime (₹)	New Tax Regime (₹)
a) Annual Income	20,00,000	20,00,000
b) Standard Deduction	-50,000
c) Section 80C (EPF +ELSS Mutual fund)	-1,50,000
d) HRA	-50,000
e) Health Insurance	-25,000
e) Leave Travel Allowance	-25,000
e) NPS 80CCD (1B)	-30,000
f) Total (Deduction & Exemption)	3,30,000
Net Taxable Income (a-f)	₹16,70,000	₹20,00,000

Tax Slab	Old Rates	New Rates	Tax (Old)	Tax (New)
0 – 2,50,000	0%	0%
2,50,000 – 5,00,000	5%	5%	12,500	12,500
5,00,000 – 7,50,000	20%	10%	50,000	25,000
7,50,000 – 10,00,000	20%	15%	50,000	37,500
10,00,000-12,50,000	30%	20%	75,000	50,000
12,50,000 – 15,00,000	30%	25%	75,000	62,500
15,00,000 & above	30%	30%	51,000	1,50,000
Total taxes			3,13,000	3,37,500
Cess			12,540	13,500
Total tax need to pay			3,26,040	3,51,000

In this case, the old tax slab works better. It will result in lower taxes with the difference of Rs 24,960

from ETMoney.com 

SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019

SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019

Objectives:One time measure for liquidation of past disputes of Central Excise and Service Tax and To provide an opportunity of voluntary disclosure to non-compliant taxpayers.

Cases covered under the Scheme 

• A show cause notice or appeals arising out of a show cause notice pending as on the 30th day of June, 2019
• An amount in arrears
• An enquiry, investigation or audit where the amount is quantified on or before the 30th day of June, 2019
• A voluntary disclosure.

Exclusions from the Scheme

• Cases in respect of excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944 (this includes tobacco and specified petroleum products)
• Cases for which the taxpayer has been convicted under the Central Excise Act, 1944 or the Finance Act, 1944
• Cases involving erroneous refunds
• Cases pending before the Settlement Commission.

Benefits under the Scheme 

• Total waiver of interest, penalty and fine
• Immunity from prosecution
• Cases pending in adjudication or appeal, a relief of 70% from the duty demand if it is ₹ 50 Lakh or less and 50% if it is more than ₹ 50 Lakh
• The same relief for cases under investigation and audit where the duty involved is quantified on or before 30th June, 2019
• In case of an amount in arrears, the relief offered is 60% of the confirmed duty amount if the same is ₹ 50 Lakh or less and it is 40% in other cases
• In cases of voluntary disclosure, the declarant will have to pay full amount of disclosed duty.

Other features of the Scheme

• Facility for adjustment of any deposits of duty already made
• Settlement dues to be paid in cash electronically only and cannot be availed as input tax credit later
• A full and final closure of the proceedings in question. The only exception is that in case of voluntary disclosure of liability, there is provision to reopen a false declaration within a period of one year
• Proceedings under the Scheme shall not treated as a precedent for past and future liabilities
• Final decision to be communicated within 60 days of application
• No final decision without an opportunity for personal hearing in case of any disagreement
• Proceedings under the Scheme will be fully automated.

FAQs SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019

Q 1. Who is eligible to file declaration under the SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019?

Ans. Any person falling under the following categories is eligible, subject to other conditions under the Scheme, to file a declaration:

(a) Who has a show cause notice for duty or one or more appeals arising out of such notice pending and where the final hearing has not taken place as on 30.06.2019.

(b) Who has been issued show cause notice for penalty and late fee only and where the final hearing has not taken place as on 30.06.2019.

(c) Who has recoverable arrears pending.

(d) Who has cases under investigation and audit where the duty involved has been quantified and communicated to party or admitted by him in a statement on or before 30th June, 2019.

(e) Who want to make a voluntary disclosure.

Q 2. What are the statutes covered under the Scheme?

Ans. This Scheme is applicable to the following enactments, namely:—

(a) The Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or Chapter V of the Finance Act, 1994 and the rules made thereunder;

(b) The following Acts, namely:—

(i) The Agricultural Produce Cess Act,1940;

(ii) The Coffee Act, 1942;

(iii) The Mica Mines Labour Welfare Fund Act, 1946;

(iv) The Rubber Act, 1947;

(v) The Salt Cess Act, 1953;

(vi) The Medicinal and Toilet Preparations (Excise Duties) Act, 1955;

(vii) The Additional Duties of Excise (Goods of Special Importance) Act, 1957;

(viii) The Mineral Products (Additional Duties of Excise and Customs) Act, 1958;

(ix) The Sugar (Special Excise Duty) Act, 1959;

(x) The Textiles Committee Act, 1963;

(xi) The Produce Cess Act, 1966;

(xii) The Limestone and Dolomite Mines Labour Welfare Fund Act, 1972;

(xiii) The Coal Mines (Conservation and Development) Act, 1974;

(xiv) The Oil Industry (Development) Act, 1974;

(xv) The Tobacco Cess Act, 1975;

(xvi) The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Cess Act, 1976;

(xvii) The Bidi Workers Welfare Cess Act, 1976;

(xviii) The Additional Duties of Excise (Textiles and Textile Articles) Act, 1978;

(xix) The Sugar Cess Act, 1982;

(xx) The Jute Manufacturers Cess Act, 1983;

(xxi) The Agricultural and Processed Food Products Export Cess Act, 1985;

(xxii) The Spices Cess Act, 1986;

(xxiii) The Finance Act, 2004;

(xxiv) The Finance Act, 2007;

(xxv) The Finance Act, 2015;

(xxvi) The Finance Act, 2016;

(c) Any other Act, as the Central Government may, by notification in the Official Gazette, specify.

Q.3 If an enquiry or investigation or audit has started but the tax dues have not been quantified whether the person is eligible to opt for the Scheme?

Ans. No. If an audit, enquiry or investigation has started, and the amount of duty/duty payable has not been quantified on or before 30th June, 2019, the person shall not be eligible to opt for the Scheme.

Q.4 If a SCN covers multiple issues, whether the person can file an application under the Scheme for only few issues covered in the SCN?

Ans. No. A person cannot opt to avail benefit of the Scheme in respect of selected matters. He must file a declaration in respect of all the matters concerning duty/tax liability covered under the SCN.

Q 5. What is the scope of duty/tax relief covered under section 124(1)(b) with respect to SCN for late fee and penalty only where the amount of duty/tax in the said notice has been paid or is nil?

Ans. The relief shall be of the entire amount of late fee or penalty.

Q.6 I have filed an appeal before the appellate forum [Commissioner (Appeals) /CESTAT] and such appeal has been heard finally on or before the 30th day of June, 2019. Am I eligible for the Scheme?

Ans. No, you are not eligible in view of section 125(1)(a).

Q.7 What is the scope under the Scheme when adjudication order determining the duty/tax liability is passed and received prior to 30.06.2019, but the appeal is filed on or after 01.07.2019?

Ans. Such a person shall not be eligible to file a declaration under the Scheme.

Q.8 I have been convicted for an offence punishable under a provision of the indirect tax enactment. Am I eligible for the Scheme?

Ans. If the conviction is for the same matter and time period for which the declaration is proposed to be filed, then you are not eligible to avail the Scheme.

Q.9 I have been issued a SCN and the final hearing has taken place on or before 30.06.2019. Am I eligible for the Scheme?

Ans. No, you are not eligible as per section 125(1)(c).

Q.10 I have been issued a SCN for an erroneous refund or refund. Am I eligible for the Scheme?

Ans. No, as per section 125(1)(d) you are not eligible to make a declaration under the Scheme in respect of an SCN issued for an erroneous refund or refund.

Q.11 I have been subjected to an enquiry or investigation or audit and the amount of duty/tax involved therein has not been quantified on or before 30.06. 2019. Am I eligible for the Scheme?

Ans. No, as per section 125(1)(e) you are not eligible to file a declaration in respect of such an enquiry or investigation or audit.

Q.12 I have been subjected to an enquiry or investigation or audit under indirect tax enactment and I want to make a voluntary disclosure regarding the same. Am I eligible for the Scheme?

Ans. No, you are not eligible to make a declaration under the voluntary disclosure category as per section 125(1)(f)(i).

Q.13 There is an apparent contradiction between the provisions of section 125(1)(f)(ii) and section 124(1)(c)(iii). Can you elaborate?

Ans. Section 125(1)(f)(ii) is an exception to voluntary disclosure category. In other words, a person having filed a return but has not deposited the duty/tax cannot make a voluntary disclosure in respect of the same since the liability already stands disclosed to the Department. On the other hand, section 124(1)(c)(iii) is a sub-set of the ‘arrears’ category, meaning thereby that in respect of such return a declaration can only be filed under the arrears category. As such, there is no contradiction between the two provisions.

Q.14 I have filed an application in the Settlement Commission for settlement of the case. Am I eligible for the Scheme?

Ans. No, you are not eligible to file a declaration for a case which is still pending with the Settlement Commission.

Q.15 I deal with the goods which are presently under Central Excise and are mentioned in the Fourth Schedule to the Central Excise Act, 1944. I want to make declarations with respect to these excisable goods. Am I eligible for the Scheme?

Ans. No, you are not eligible to avail the benefits under the Scheme.

Q 16. How will I apply for the said Scheme?

Ans. All eligible persons are required to file an electronic declaration at the portal https://cbic-gst.gov.in in Form SVLDRS 1.

Q 17. Will I get an acknowledgement for filing a declaration electronically?

Ans. Yes, on receipt of your declaration, an auto acknowledgement bearing a unique reference number will be generated by the system and sent to you. This unique number will be useful for all future references. The declaration will automatically be routed to the Designated Committee that will finalize your case.

Q.18 How will I come to know about the final decision taken by the designated committee on my declaration?

Ans. Within sixty days of filing of a declaration, you will be informed electronically about the final decision taken in the matter.

Q.19 What is the difference between ‘Tax Dues’ and ‘Tax Relief’?

Ans. ‘Tax Dues’ is the total outstanding duty/tax demand. ‘Tax Relief’ is the concession the Scheme offers from the total outstanding duty demand.

Q.20 A SCN has been issued to me for an amount of duty of Rs.1000 and an amount of penalty of Rs.100. In the Order in Original (OIO) the duty confirmed is of Rs.1000 and an amount of Rs.100 has been imposed as penalty. I have filed an appeal against this order before the Appellate Authority. What will be the tax dues for me?

Ans. The amount of duty which is being disputed is Rs.1000 and hence the tax dues will be Rs.1000.

Q 21. A SCN has been issued to me for an amount of duty of Rs.1000 and an amount of penalty of Rs.100. In the OIO the duty confirmed is of Rs.900 and penalty imposed is Rs.90. I have filed an appeal against this order. The department has not filed any appeal in the matter. What would be the tax dues?

Ans. The amount of duty which is being disputed is Rs.900 and hence the tax dues are Rs.900.

Q 22. A SCN has been issued for an amount of duty of Rs.1000 and an amount of penalty of Rs.100. In the OIO the duty confirmed is of Rs.900 and penalty imposed is Rs.90. I have filed an appeal against this order before the Appellate Authority. Further, Department has also filed an appeal before the Appellate Authority for an amount of duty of Rs.100 and penalty of Rs.10. What would be the tax dues?

Ans. The amount of duty which is being disputed is Rs.900 plus Rs.100 i.e. Rs.1000 and hence tax dues are Rs.1000.

Q 23. A SCN has been issued for an amount of duty of Rs.1000. The Adjudicating Authority confirmed the duty of Rs.1000. I have filed an appeal against this order. The first appellate authority Commissioner Appeals/CESTAT reduced the amount of duty to Rs.900. I have filed a second appeal (before CESTAT/High Court. The department has not filed any appeal. What will be the tax dues for me?

Ans. The amount of duty which is being disputed is Rs.900 and hence the tax dues are Rs.900.

Q 24. I have been issued a SCN under any of the indirect tax enactment on or before 30.06.2019, what will be the tax dues?

Ans. As per section 123(b), the tax dues will be the amount of duty/tax/cess stated to be payable in the SCN.

Q 25. What is the coverage of SCNs under the Scheme with respect to main noticee vis-à-vis co-noticee particularly when the tax amount has already been paid by the main notices outside the Scheme?

Ans. In case of a SCN issued to an assessee demanding duty/tax and also proposing penal action against him as well as separate penal action against the co-noticee/s specified therein, if the main noticee has settled the tax dues, the co-noticee/s can opt for the Scheme for the waiver of penalty. For instance, the main noticee has settled the matter before the Settlement Commission and paid the dues and the co-noticees were not a party to the proceedings. In such a case, the co-noticees can file a declaration under the Scheme.

Q 26. What is the scope of coverage of periodical SCNs under the Scheme?

Ans. Any SCN issued whether main or periodical, where the final hearing has not taken place on or before 30.06.2019 is eligible under the Scheme.

Q 27. What are the benefits available under the Scheme?

Ans. The various benefits available under the Scheme are:

• Total waiver of interest and penalty
• Immunity from prosecution
• In cases pending in adjudication or appeal, a relief of 70% from the duty/tax demand if it is Rs. 50 lakhs or less and of 50%, if it is more than Rs. 50 lakhs. The same relief is available for cases under enquiry, investigation and audit where the duty involved is quantified on or before 30.06.2019.
• In case of an amount in arrears, the relief is 60% of the confirmed duty/tax amount if the same is Rs. 50 lakhs or less and it is 40% in other cases.
• In cases of voluntary disclosure, the declarant will have to pay full amount of disclosed duty/tax.

Q 28. Shall the pre-deposit paid at any stage of appellate proceedings and deposit paid during enquiry, investigation or audit be taken into account for calculating relief under the Scheme?

Ans. Yes, any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be adjusted while issuing the statement indicating the amount payable by the declarant.

Q 29. Whether the declarant will be given an opportunity of being heard or not?

Ans. Yes, as per section 127(2) and (3), after the issue of the estimate, the Designated Committee shall give an opportunity of being heard to the declarant, if he so desires, in case of a disagreement.

Q 30. What will be procedure and time period of payment to be made by the declarant?

Ans. The declarant shall pay electronically within 30 days of the statement issued by the Designated Committee, the amount payable as indicated therein.

Q 31. What procedure will be followed for withdrawal of appeals where the person has filed a declaration under the Scheme?

Ans. Where the declarant has filed an appeal or reference against any order or notice giving rise to the tax dues, before the appellate forum, other than the Supreme Court or the High Court, then, such appeal or reference or reply shall be deemed to have been withdrawn.

In case of a writ petition or appeal or reference before any High Court or the Supreme Court, the declarant shall file an application before such High Court or the Supreme Court for withdrawing the writ petition, appeal or reference and after its withdrawal with the leave of the Court, he shall furnish proof of such withdrawal to the Designated Committee.

Q 32. Whether any certificate will be provided to declarant as proof to payment of dues?

Ans. Yes, on payment of the amount indicated in the statement and production of proof of withdrawal of appeal, wherever applicable, the Designated Committee shall issue a discharge certificate in electronic form, within 30 days of the said payment and production of proof, whichever is later.

Q 33. Whether a calculation error in statement may be rectified or not?

Ans. Yes, within 30 days of the date of issue of a statement indicating the amount payable by the declarant, the Designated Committee may modify its order only to correct an arithmetical error or clerical error, which is apparent on the face of record, on such error being pointed out by the declarant or suo-motu.

Q 34. What will be the benefits of discharge certificate issued under the Scheme?

Ans. Every discharge certificate issued under section 127 with respect to the amount payable under the Scheme shall be conclusive as to the matter and time period stated therein, and:

(a) the declarant shall not be liable to pay any further duty/tax, interest, or penalty with respect to the matter and time period covered in the declaration;

(b) the declarant shall not be liable to be prosecuted under the indirect tax enactment with respect to the matter and time period covered in the declaration; and

(c) no matter and time period covered by such declaration shall be reopened in any other proceeding under the indirect tax enactment.

Q 35. Can I take input tax credit for any amount paid under the Scheme?

Ans. No.

Q 36. Can I pay any amount under the Scheme through the input tax credit account under the indirect tax enactment or any other Act?

Ans. No.

Q 37. Can I take a refund of an amount deposited under the Scheme?

Ans. No.

Q 38. In cases where pre-deposit or other deposit already paid exceeds the amount payable as indicated in the statement of the designated committee, the difference shall be refunded or not?

Ans. No, it shall not be refunded.

Q 39. Is there any benefit, concession or immunity for the declarant in any proceedings other than those in relation to the matter and time period to which the declaration has been made?

Ans. No.

Q 40. Whether the discharge certificate under the Scheme would serve as immunity against issuance of any further SCN (i) for the same matter for a subsequent time period; or (ii) for a different matter for the same time period?

Ans. No, as per section 129 (2)(b), the issue of the discharge certificate with respect to a matter for a time period shall not preclude the issue of a SCN, (i) for the same matter for a subsequent time period; or (ii) for a different matter for the same time period.

Q 41. What action would be taken against a declarant who makes false voluntary disclosure under the Scheme?

Ans. As per section 129(2)(c), in cases of voluntary disclosure, where any material particular furnished in the declaration is subsequently found to be false, within a period of one year of issue of the discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted.

Q.42 Does intimation for audit received by the taxpayer prior to 30.06.2019 seeking details qualify for the Scheme?

Ans. No, if the duty/tax payable has not been quantified as on 30.06.2019 the taxpayer is not eligible to make a declaration regarding this audit under the Scheme.

Q 43. I have received an intimation for audit, enquiry or investigation on or before 30.06.2019. Can I make a voluntary disclosure of my liability?

Ans. No.

Q 44. Can taxpayer opt for the benefit under the Scheme in case of periodical notices without opting for it in respect of the main notice?

Ans. Yes.

Q 45. If the main noticee avails benefit of the Scheme whether Directors whose appeals are pending in respect of penalty only get a waiver of the penalty?

Ans. Yes. Co-noticees cannot avail the benefits of the Scheme only till such time that the duty/tax demand has not been settled. Once the main noticee discharges the duty/tax demand, the co-noticees can apply under the Scheme.

Q 46. If a person has been issued a SCN for a refund/ erroneous refund and, at the same time, he also has other outstanding disputes which are covered under this Scheme, then, will he be eligible to file a declaration(s) for the other case(s)?

Ans. Yes. The exception from eligibility is for ‘the case’ and not ‘the person’.

Q 47. If I file a declaration under the Scheme, will it be assumed that I have admitted to the position and agree with the allegations made in the show cause notice?

Ans. No. A declaration under the Scheme will not be a basis for assuming that the declarant has admitted the position and no fresh show cause notice will be issued merely on that basis.

Q 48. With respect to penalty/late fee matters, whether only SCNs for late fee or penalty are covered under this Scheme or also such cases under appellate proceedings?

Ans. The Scheme is applicable to any SCN for penalty/late fee, irrespective of whether it is under adjudication or appeal.

Q 49. I had made an application to the Settlement Commission for settlement of my case. However these proceedings abated due to rejection of the application by the Settlement Commission or other reason/s and the case went back to the adjudicating authority for further action. Can I avail the benefit of the Scheme with respect to this case?

Ans. Yes. A declaration under the Scheme can be made for a case which is no longer with the Settlement Commission if other conditions of the Scheme are satisfied.

Q 50. I have filed a writ petition challenging the order of the Settlement Commission. Can I make a declaration under the Scheme with respect to this case?

Ans. Yes. A declaration can be filed under the Scheme if no application is pending before the Settlement Commission and the Writ Petition has not been heard finally on or before 30.06.2019.

Q 51. With respect to cases under enquiry, investigation or audit what is meant by ‘written communication’ quantifying demand?

Ans. Written communication will include a letter intimating duty/tax demand or duty/tax liability admitted by the person during enquiry, investigation or audit or audit report etc.

Q 52. I have already paid duty/tax by utilising the input credit, and the matter is under dispute. Will this duty/tax already paid through input credit be adjusted against my duty/tax liability calculated under the Scheme?

Ans. Yes. In such cases, duty/tax already paid through input credit shall be adjusted by the Designated Committee at the time of determination of final amount payable under the Scheme.

Q 53. Which is the Form through which I can make a declaration under the Scheme?

Ans. Form SVLDRS1 is the form that has to be filled for making a declaration.The form is required to be filled and submitted electronically and shall be available at the portal https://cbic-gst.gov.in

Q 54. I do not agree with the estimate of the Designated Committee. Will I be given a personal hearing?

Ans. Yes. A date of personal hearing is intimated alongwith the estimate issued by the Designated Committee in Form SVLDRS2. Written submissions can be made, personal hearing can be waived, and one adjournment of the personal hearing can also be sought through Form SVLDRS 2A. These forms are available at the portal https://cbic-gst.gov.in and are submitted electronically.

Q 55. I have received a communication of the amount payable in Form SVLDRS3. How do I make the duty/tax payment?

Ans. A challan can be generated by a link provided in the Form SVLDRS3 issued by the department. Once the challan is generated, payment against the same can be made by the taxpayer.

Q 56. How do I intimate the department about withdrawal of appeal by me?

Ans. Form SVLDRS3 provides a document upload facility for furnishing proof of withdrawal.

Q 57. Are disputes pertaining to Cenvat credit covered under the Scheme?

Ans. Yes, they are included unless covered by a specific exclusion.

Q 58. What happens if I do not make the payment of the amount specified in the statement within 30 days of its issue?

Ans. The declaration shall be treated as lapsed and benefits of the Scheme will no longer be available.

Q 59. The amount quantified under an enquiry, investigation or audit on or before 30.06.2019 gets modified subsequently due to any reason. Will I still be eligible to file a declaration under the Scheme?

Ans. Only such cases of enquiry, investigation or audit are covered under the Scheme where the duty/tax demand has been worked out on or before 30.06.2019 but SCN has not been issued.

Q 60. The duty demand in an SCN issued to me was dropped by the adjudicating authority. However, the department has filed an appeal. I have not filed any appeal in the matter. Will this case by eligible under the Scheme.

Ans. Yes.

[Note: The ‘sections’ referred above are those of the Finance (No.2) Act, 2019.]

Source- CBIC

CA Anand Mutha 

8275019423

Status of Reverse Charge Mechanism 2019

Reverse charge mechanism law with respect to goods or services or both received from an unregistered person by a registered person was never simple since the time it were introduced. The basic provision of reverse charge mechanism with respect to goods or services or both received from an unregistered person by a registered person is contained under section 9 (4) of the Central Goods and Service Tax Act, 2017. Recently the Government has changed the reverse charge mechanism applicability vide notification no. 02/2019 – Central Tax dated 29th January 2019. In this post, we look at the applicability of GST reverse charge mechanism in the year 2019.

GST Reverse Charge

Reverse charge Provisions Till 31St January 2019

Section 9 (4) of the Central Goods and Service Tax Act, 2017 requires the central tax to be paid by the registered person, on a reverse charge basis, in as much as they have received taxable goods or service or both from an unregistered person.

That means, as per the basic provision, the tax would be payable by the registered person on reverse charge basis without any consideration to the quantum or value of the transaction. On every single rupee transaction of taxable goods or services or both received by the registered person from the unregistered person reverse charge was applicable.

The above said provisions obviously have a very wide impact and would hinder the business of the unregistered person to a large extent. Seeing the complexity of the same, the Central Board of Indirect Taxes and Customs, vide notification no. 8/2017 – Central Tax (Rate) dated 28th June 2017 exempted transactions up to an amount of aggregate value of INR 5,000 per day.

But still considering complexity of reverse charge and hindrances faced by tax payers,  another notification no. 38/2017 – Central Tax (Rate) dated 13th October 2017, was issued and entire central tax payable by the registered person, on a reverse charge basis, on receipt of taxable goods or services or both from the unregistered person was exempted till 31st March 2018.

The said deadline of exemption till 31st March 2018 was extended various times and vide last notification no. 22/2018 – Central Tax (Rate) dated 6th August 2018 the exemption date was extended till 30th September 2019.

Applicable Provisions Effective from 1St February 2019

Recently, through notification no. 02/2019 – Central Tax dated 29th January 2019, the Central Goods and Service Tax (Amendment) Act, 2018 was made effective from 1st February 2019.

With the introduction of the Central Goods and Service Tax (Amendment) Act, 2018, the entire provisions of section 9 (4) was substituted. The provisions of the substituted section 9 (4) are being narrated hereunder –

• As per the new provisions, instead of coverage of all the registered person, now, the Government shall specify the class of the registered person who shall be liable to pay tax under reverse charge basis;
• As per the new provisions, instead of coverage of all the taxable supply of goods or services or both, the Government shall specify categories of goods or services or both on which reverse charge provisions are applicable when such goods or services or both is received from the unregistered person.

Conclusion of the New Provisions

With the introduction of the new provisions, the scope of section 9 (4) of the CGST Act, 2017 has been restricted. From now, only on the specified categories of a taxable supply of goods or services or both from the unregistered person by only the specified category of a registered person shall be liable to pay the tax on a reverse charge basis.

After the introduction of the new provisions of section 9(4) till now, the Government has neither specified the class of registered person to whom to provisions are applicable nor has provided the specified categories of a taxable supply of goods or services or both.

What is Advance Tax

Advance tax means income tax should be paid in advance instead of lump sum payment at the end of the year end. It is also known as ‘pay as you earn tax’. You need to pay them in installments as per due dates provided by the income tax department.

If your total tax liability is Rs 10,000 or more in a financial year, you have to pay advance tax. Advance tax applies to all taxpayers, salaried, freelancers, and businesses. Senior citizens, who are 60 years or older but do not run a business, are exempt from paying advance tax.

The taxpayers who have opted for presumptive taxation scheme have to pay the whole amount of their advance tax in one instalment on or before 15 March. They also have an option to pay all of their tax dues by 31 March. 

Due Dates for payment of Advance Tax

FY 2021 - 2022 ( AY  2022 - 2023 )

Due Date	Advance Tax Payable
On or before 15th June	15% of advance tax less advance tax already paid
On or before 15th September	45% of advance tax less advance tax already paid
On or before 15th December	75% of advance tax less advance tax already paid
On or before 15th March	100% of advance tax less advance tax already paid

Non payment of advance tax will result in levy of interest under 234B and 234C of the Income tax Act, 1961.