Ethical Solutions
Enduring Relations

We are a Firm of Chartered Accountants,
based out of Cochin, India.

We service a largely corporate clientele, assisting them in setting up business and dealing with their statutory, internal & due diligence audits. We also provide Companies Act related secretarial services as well as Tax Planning, Statutory Filing & related work.

Our team consists of dynamic professionals, who work in a stimulating environment and whose remuneration & career development opportunities are linked in a large way to performance.

As part of the Firm’s commitment to provide top of the line professional advice to its clients, the partners & the audit staff constantly undergo training , both internal and those conducted by professional bodies.

Korah & Korah partners with other Chartered Accountancy Firms, located in the major cities of India. This helps the Firm, in offering services across a larger geographical area.

Reflections

Ethical Solutions
Enduring Relations

Ethical Solutions
Enduring Relations

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Turnover of 0-rated supply of goods = 

 

Turnover of 0-rated supply of goods =

 

Value of 0-rated supplies of goods
under LUT during the relevant period

All receipts during the relevant period
(+)
value of 0-rated supplies for which advances received previously
(-)
all advance receipts during the relevant period for future supplies

RFD-01

Refund Application + Documentary Evidence

RFD-02

Acknowledgment (ARN) 15 days from Application

Process

60
Days

RFD-03

Deficiency
Memo

RFD-04

Order for Provisional Refund 7 days from ARN

RFD-08

Final Sanction
Order

RFD-05

Payment order
(earlier “advice”)

RFD-08

SCN – Liable for Rejection
 

RFD-09

Reply to SCN 15days
from SCN

GST Refunds

KORAH AND KORAH, CHARTERED ACCOUNTANTS

 

What we will discuss?
  • Brushing up of the refund provisions
  • Requirements for filing a Refund Application
  • Practical scenario using a Show-Cause Notice
    • (Limiting the scope of our discussion to only Zero-Rated Supplies of Goods / Services / Both!)
“Work” IncludesS.54 –> R.89 –>97 (CGST ACT)

Starting with S. 49(9) – you have to prove that you have not passed the burden of GST to get refund

Refund of ?

  • IGST on Exports
  • Unutilized ITC – 0 Rated & Inverted Duty Structure
  • Balance in E Cash Ledger
  • Excess Payment due to a Mistake
  • Others

 

Refund of tax in case of Zero-Rated Supplies
Time Limits (“Relevant Date”)

Explanation under S. 54(14)

Zero-Rated Supplies on payment of IGSTZero-Rated Supplies under LUT

Goods

  • Sea / Air – when it leaves India
  • Land – custom frontiers
  • Post – dispatch

Goods & Services

  • Due-date for furnishing GSTR 3B for the month in which such refund claim
    arises 2 YEARS from the relevant
    date

Services

  • If Advance – date of invoice
  • If receipt later – date of receipt
 
Amount of Refund Claim
Refund Amount in case of Zero-Rated Supplies under LUT (Net ITC)
Breaking up the Formula
Adjusted Total Turnover
Procedure in Brief (In Rules)
EL 1.0 – with effect from 1st July 2016

● @ 6%

●  charge on specified services

●  on the amount of consideration
received or receivable by a NR from

● not chargeable

    • aggregate < 1 Lakh;
    • NR having PE in India and specified services connected to PE;
    • payment not for business purposes
services connected to PE;

online ads / digital adv space

a resident + having business income in India

a NR having a PE in India

Refund Amount in case of Zero-Rated Supplies under LUT (Net ITC)
Breaking up the Formula
Adjusted Total Turnover

RFD-01

Refund Application + Documentary Evidence

RFD-02

Acknowledgment (ARN) 15 days from Application

Process

60
Days

RFD-03

Deficiency
Memo

RFD-04

Order for Provisional Refund 7 days from ARN

RFD-08

Final Sanction
Order

RFD-05

Payment order
(earlier “advice”)

RFD-08

SCN – Liable for Rejection
 

RFD-09

Reply to SCN 15days
from SCN

Master Circular 125/44/2019-GST dated 18/11/2019

Application to all refund claims after 26/9/2019

Deficiency Memos
➞RFD-03 also within 15 days
➞Fresh Refund Application
➞2 years from original application

Disbursements
➞Application and Sanction by one authority
➞Disbursed through PFMS to Bank Account
➞Interest @ 6% if not refunded within 60 days

MITIGATING FACTOR

Capital expenditure reduction

 

 

Provisional Refunds
➞90% of amount claimed
➞RFD-06 before RFD-04

Unutilized ITC
➞Upload copy of GSTR 2A
➞Self-certified purchase invoices not in 2A
➞Rule 36(4) – 5% restriction – taken care by FA’21
Master Circular 125/44/2019-GST dated 18/11/2019
Sl NoNature of PaymentTDS Rate of PAN Available
1Payment / Credit to resident individual or HUF1%
2Payment / Credit to any resident person other than individual/HUF2%
3Payment / Credit to transportersNIL

*If PAN not available? 
TDS RATE = 20%

Non applicability of TDS u/s 194 C
  • No deduction is required to be made from any sum credited or paid or likely to be credited or paid during the PY to the account of a contractor ,
  • During the course of the business of plying, hiring, or leasing goods carriages,
  • If the following conditions are fulfilled :

Digital Tax not just a click away

KORAH AND KORAH, CHARTERED ACCOUNTANTS

 

Session Structure
  • Brushing up of the refund provisions
  • Requirements for filing a Refund Application
  • Practical scenario using a Show-Cause Notice
    • (Limiting the scope of our discussion to only Zero-Rated Supplies of Goods / Services / Both!)
S.54 ➞ R.89 ➞97 (CGST ACT)

Starting with S. 49(9) – you have to prove that you have not passed the burden of GST to get refund

Refund of ?

  • IGST on Exports
  • Unutilized ITC – 0 Rated & Inverted Duty Structure
  • Balance in E Cash Ledger
  • Excess Payment due to a Mistake
  • Others

 

Refund of tax in case of Zero-Rated Supplies
Time Limits (“Relevant Date”)

Explanation under S. 54(14)

Zero-Rated Supplies on payment of IGSTZero-Rated Supplies under LUT

Goods

  • Sea / Air – when it leaves India
  • Land – custom frontiers
  • Post – dispatch

Goods & Services

  • Due-date for furnishing GSTR 3B for the month in which such refund claim
    arises 2 YEARS from the relevant
    date

Services

  • If Advance – date of invoice
  • If receipt later – date of receipt
 
Amount of Refund Claim

Digital Tax not just a click away

KORAH AND KORAH, CHARTERED ACCOUNTANTS

 

Session Structure
  • Brushing up of the refund provisions
  • Requirements for filing a Refund Application
  • Practical scenario using a Show-Cause Notice
    • (Limiting the scope of our discussion to only Zero-Rated Supplies of Goods / Services / Both!)
S.54 ➞ R.89 ➞97 (CGST ACT)

Starting with S. 49(9) – you have to prove that you have not passed the burden of GST to get refund

Refund of ?

  • IGST on Exports
  • Unutilized ITC – 0 Rated & Inverted Duty Structure
  • Balance in E Cash Ledger
  • Excess Payment due to a Mistake
  • Others

 

Refund of tax in case of Zero-Rated Supplies
Time Limits (“Relevant Date”)

Explanation under S. 54(14)

Zero-Rated Supplies on payment of IGSTZero-Rated Supplies under LUT

Goods

  • Sea / Air – when it leaves India
  • Land – custom frontiers
  • Post – dispatch

Goods & Services

  • Due-date for furnishing GSTR 3B for the month in which such refund claim
    arises 2 YEARS from the relevant
    date

Services

  • If Advance – date of invoice
  • If receipt later – date of receipt
 
Amount of Refund Claim
Refund Amount in case of Zero-Rated Supplies under LUT (Net ITC)
Breaking up the Formula
Adjusted Total Turnover
Procedure in Brief (In Rules)

Digital Economy & its Challenges

Today’s
Scenario

Equalization
Levy

Significant Economic Presence

TDS
Provisions

GST
Provisions

RFD-01

Refund Application + Documentary Evidence

RFD-02

Acknowledgment (ARN) 15 days from Application

Process

60
Days

RFD-03

Deficiency
Memo

RFD-04

Order for Provisional Refund 7 days from ARN

RFD-06

Final Sanction
Order

RFD-05

Payment order
(earlier “advice”)

RFD-08

SCN – Liable for Rejection
 

RFD-09

Reply to SCN 15days
from SCN

RFD-01

Refund Application + Documentary Evidence

RFD-02

Acknowledgment (ARN) 15 days from Application

Process

60
Days

RFD-03

Deficiency
Memo

RFD-04

Order for Provisional Refund 7 days from ARN

RFD-06

Final Sanction
Order

RFD-05

Payment order
(earlier “advice”)

RFD-08

SCN – Liable for Rejection
 

RFD-09

Reply to SCN 15days
from SCN

Master Circular 125/44/2019-GST dated 18/11/2019

Application to all refund claims after 26/9/2019

Deficiency Memos
➞RFD-03 also within 15 days
➞Fresh Refund Application
➞2 years from original application

Disbursements
➞Application and Sanction by one authority
➞Disbursed through PFMS to Bank Account
➞Interest @ 6% if not refunded within 60 days

 

 

Provisional Refunds
➞90% of amount claimed
➞RFD-06 before RFD-04

Unutilized ITC
➞Upload copy of GSTR 2A
➞Self-certified purchase invoices not in 2A
➞Rule 36(4) – 5% restriction – taken care by FA’21

 

 

How does the portal calculate maximum refund amount?

Balance in E Credit Ledger at the end of tax period after filing GSTR 3B or;

As per Formula or;

Balance in E Credit Ledger at the time of refund claim

Zero-Rated Supplies
➞Procedural delay in filing LUT
➞No need proof of realization in case of export of goods
➞Terms and Conditions in LUT

If liable to pay GST, then when?
List of Documents Prescribed

Case 1 : Zero-Rated on payment of IGST

Outside IndiaTo SEZ
  • Declaration that no export duty is liable on goods and no duty drawback claimed (+) FIRCs (services
  • Undertaking that all conditions of ITC availment are fulfilled (+) Copy of GSTR 2A*
  • Statement containing details of invoices vis-vis FIRC details* (+) Annexure B (Purchase invoice details)*
  • Self-certified copies of invoices not in GSTR 2A (+) Self-declaration of no offences committed for Provisional Refund
  • Declaration that no export duty is liable on goods and no duty drawback claimed (+) Endorsement from SEZ officer regarding receipt for authorized operations
  • Declaration that tax has not been collected from the SEZ Unit (+) Self-certified copies of invoices not in GSTR 2A
  • Statement containing details of invoices vis-vis receipt details* (+) undertaking that all conditions of ITC availment are fulfilled
  • Self-declation (,2 Lakhs or CA Certification (>= 2 Lakhs

 

Case 2 : Zero-Rated Under LUT

Outside IndiaTo SEZ
  • Declaration that no export duty is liable on goods and no duty drawback claimed (+) Copy of GSTR 2A*
  • Undertaking that all conditions of ITC availment are fulfilled (+) Annexure B (Purchase invoice details)*
  • Statement containing details of invoices vis-vis FIRC details*
  • FIRC Copies (Services) / Shipping Bill (Goods)
  • Declaration that no export duty is liable on goods and no duty drawback claimed (+) Copy of GSTR 2A*
  • Statement containing details of invoices vis-vis receipt details (+) Annexure B (Purchase invoice details)*
  • Self-certified copies of invoices not in GSTR 2A (+) Endorsement from SEZ officer regarding receipt for authorized operations
  • Undertaking that all conditions of ITC availment are fulfilled
  • Self-declation (,2 Lakhs or CA Certification (>= 2 Lakhs

 

Other Issues faced at the time of Refund Application
  • Invoice copies for high value purchases
  • Claim of ITC should match with details in GSTR 2A
  • Turnover mismatch b/w GSTR 1 & 3B
  • Category of refund Vs Invoice Format
  • 2 Years from the Relevant Date
  • Self-Declarations
  • Annexure B – Correct format including column for HSN/SAC
  • Correct address in FIRC Copies
  • Invoice Vs FIRC Details

Digital Tax not just a click away

KORAH AND KORAH, CHARTERED ACCOUNTANTS

 

Session Structure

Digital Economy & its Challenges

Equalization Levy

Today’s Scenario

Equalization Levy

Significant Economic Presence

TDS Provisions

What is a Digital Economy?
  • The economy that is based on digital computing technologies
  • Conducting business through markets based on internet & WWW

Hyperconnectivity between people, organizations and machines

 

Some Statistics – Still behind China
Before COVIDAfter covid
  • 577 Million Internet Users (36.8% of Population)
  • 370 Million Social Media Users (11.1% of Population)
  • 624 Million Internet Users (45% of Population)
  • 448 Million Social Media Users (32.3% of Population)
 
Change due to COVID-19
01) Social Media Websites
02) Work from Home

Target Advertising

Computing Power

“Physically Absent but Fiscally Present”

1 Second = 127 Devices

The Challenges

Where?

In the absence of any physical presence, there is a lack of nexus between the income recipient and the ultimate parent company

How Much?

Categorization of income from transactions involving data for tax purposes and how to determine the quantum of income?

EQUALIZATION LEVY

Digital Economy & its Challenges

Equalization Levy

Today’s Scenario

Equalization Levy

Significant Economic Presence

TDS Provisions

Refund Amount in case of Zero-Rated Supplies under LUT (Net ITC)
Breaking up the Formula
Adjusted Total Turnover

RFD-01

Refund Application + Documentary Evidence

RFD-02

Acknowledgment (ARN) 15 days from Application

Process

60
Days

RFD-03

Deficiency
Memo

RFD-04

Order for Provisional Refund 7 days from ARN

RFD-06

Final Sanction
Order

RFD-05

Payment order
(earlier “advice”)

RFD-08

SCN – Liable for Rejection
 

RFD-09

Reply to SCN 15days
from SCN

RFD-02

Acknowledgment (ARN) 15 days from Application

Process

60
Days

RFD-03

Deficiency
Memo

RFD-04

Order for Provisional Refund 7 days from ARN

RFD-06

Final Sanction
Order

RFD-05

Payment order
(earlier “advice”)

RFD-08

SCN – Liable for Rejection
 

RFD-09

Reply to SCN 15days
from SCN

Master Circular 125/44/2019-GST dated 18/11/2019

Application to all refund claims after 26/9/2019

Deficiency Memos
➞RFD-03 also within 15 days
➞Fresh Refund Application
➞2 years from original application

Disbursements
➞Application and Sanction by one authority
➞Disbursed through PFMS to Bank Account
➞Interest @ 6% if not refunded within 60 days

 

 

Provisional Refunds
➞90% of amount claimed
➞RFD-06 before RFD-04

Unutilized ITC
➞Upload copy of GSTR 2A
➞Self-certified purchase invoices not in 2A
➞Rule 36(4) – 5% restriction – taken care by FA’21

 

 

How does the portal calculate maximum refund amount?

Balance in E Credit Ledger at the end of tax period after filing GSTR 3B or;

As per Formula or;

Balance in E Credit Ledger at the time of refund claim

Case Studies

  1. Apple Inc. running iphone ads to target Indian users on Alibaba platform and pays INR 3 Crs – Yes, EL
  2. Alibaba buys data from Facebook India for INR 1 Cr and sells it to Apple Inc. for INR 6 Crs – Yes, EL on INR 6 Crs
  3. Amazon Music providing services to Indian customers – No, EL
  4. Only order placed online for goods through platform, rest all functions done offline – EL only on the consideration from online service
  5. NR e-com. sells good to a resident for INR 100 which is listed on its platform by another resident from whom commission of INR 30 is received – EL on INR 130
Case Studies

  1. Apple Inc. running iphone ads to target Indian users on Alibaba platform and pays INR 3 Crs – Yes, EL
  2. Alibaba buys data from Facebook India for INR 1 Cr and sells it to Apple Inc. for INR 6 Crs – Yes, EL on INR 6 Crs
  3. Amazon Music providing services to Indian customers – No, EL
  4. Only order placed online for goods through platform, rest all functions done offline – EL only on the consideration from online service
  5. NR e-com. sells good to a resident for INR 100 which is listed on its platform by another resident from whom commission of INR 30 is received – EL on INR 130

TDS under 194-O – with effect from 1st Oct 2020

Scope?

When the sale of goods/provision of services by an e-com. participant (resident) is facilitated through any digital / e-facility or any platform of an e-com. operator (resident/NR)

When?

At the time of credit or payment to e.com participant whichever is earlier

Rate?

@ 1% (0.75% from Oct’20 to Mar’21) of the gross amount of such sales or services or both

No Deduction?

When such e.com participant is an individual/HUF + gross amount <= INR 5 Lakhs + PAN/Aadhaar furnished

 

More points for clarification
  1. Payments made directly to e.com participants shall be deemed to be amount credited / paid by e.com operator – customers directly paying to Ola / Swiggy
  2. No TDS under any section if the transaction attracts 194-O – Cleartax making payment to CA’s (no 194J)
  3. If no PAN furnished, then rate shall be 5% under S. 206AA
  4. The e.com participant shall be a resident

 

GST Provisions
  • Liability to pay GST under RCM by e.com operator under S.9(5) of CGST Act, 2017
  • Taxability and POS Rules for OIDARS providers under S.14 of IGST Act, 2017
  • Tax to be collected (TCS) by e.com operator on supplies through it before making payments to e.com participants under S.52 of CGST Act, 2017
Some points relating to TCS
  1. The e.com. operator should not be an agent
  2. TCS shall be on the “net value” of “taxable supplies””
  3. The e-com. operator should get the consideration from the end-customer
  4. Sale of goods/services from own website – not attracting TCS
  5. Applies to NR e-com. operators also
  6. Credit available to the e.com participants / suppliers
Today’s Scenario

Explained : US investigation into digital services tax, and what is the case against India?

What us global minimum tax and what will it mean?

Amazon, Facebook Lobby Groups urge Digital-Tax End, OECD Deal

 

Challenges to EL 1.0 & 2.0

FY 19-20 – INR 1136.5 Crs
FY 2020-21 – INR 1492.7 Crs

Digital Tax not just a click away

KORAH AND KORAH, CHARTERED ACCOUNTANTS

 

Session Structure
What is a Digital Economy?
  • The economy that is based on digital computing technologies
  • Conducting business through markets based on internet & WWW

Hyperconnectivity between people, organizations and machines

 

Some Statistics – Still behind China
Before COVIDAfter covid
  • 577 Million Internet Users (36.8% of Population)
  • 370 Million Social Media Users (11.1% of Population)
  • 624 Million Internet Users (45% of Population)
  • 448 Million Social Media Users (32.3% of Population)
 
Change due to COVID-19
01) Social Media Websites
02) Work from Home

Target Advertising

Computing Power

“Physically Absent but Fiscally Present”

1 Second = 127 Devices

Where?

In the absence of any physical presence, there is a lack of nexus between the income recipient and the ultimate parent company

How Much?

Categorization of income from transactions involving data for tax purposes and how to determine the quantum of income?

Case Studies

  1. Apple Inc. running iphone ads to target Indian users on Alibaba platform and pays INR 3 Crs – Yes, EL
  2. Alibaba buys data from Facebook India for INR 1 Cr and sells it to Apple Inc. for INR 6 Crs – Yes, EL on INR 6 Crs
  3. Amazon Music providing services to Indian customers – No, EL
  4. Only order placed online for goods through platform, rest all functions done offline – EL only on the consideration from online service
  5. NR e-com. sells good to a resident for INR 100 which is listed on its platform by another resident from whom commission of INR 30 is received – EL on INR 130

Challenges to EL 1.0 & 2.0

FY 19-20 – INR 1136.5 Crs
FY 2020-21 – INR 1492.7 Crs

TDS under 194-O – with effect from 1st Oct 2020

Scope?

When the sale of goods/provision of services by an e-com. participant (resident) is facilitated through any digital / e-facility or any platform of an e-com. operator (resident/NR)

When?

At the time of credit or payment to e.com participant whichever is earlier

Rate?

@ 1% (0.75% from Oct’20 to Mar’21) of the gross amount of such sales or services or both

No Deduction?

When such e.com participant is an individual/HUF + gross amount <= INR 5 Lakhs + PAN/Aadhaar furnished

 

More points for clarification
  1. Payments made directly to e.com participants shall be deemed to be amount credited / paid by e.com operator – customers directly paying to Ola / Swiggy
  2. No TDS under any section if the transaction attracts 194-O – Cleartax making payment to CA’s (no 194J)
  3. If no PAN furnished, then rate shall be 5% under S. 206AA
  4. The e.com participant shall be a resident

 

GST Provisions
  • Liability to pay GST under RCM by e.com operator under S.9(5) of CGST Act, 2017
  • Taxability and POS Rules for OIDARS providers under S.14 of IGST Act, 2017
  • Tax to be collected (TCS) by e.com operator on supplies through it before making payments to e.com participants under S.52 of CGST Act, 2017
Some points relating to TCS
  1. The e.com. operator should not be an agent
  2. TCS shall be on the “net value” of “taxable supplies””
  3. The e-com. operator should get the consideration from the end-customer
  4. Sale of goods/services from own website – not attracting TCS
  5. Applies to NR e-com. operators also
  6. Credit available to the e.com participants / suppliers
OIDARS – S.14 of IGST ACT, 2017

Services whose delivery is mediated by IT where there is automatic supply | Minimal human interference | impossible without IT

 

Includes:Excludes: POS
  • Ads
  • Cloud services
  • e-books
  • online gaming
  • Mailed PDFs
  • CA/lawyer services through mail
  • Supply of goods
  • Transfer of movies

POS

location of recipient (deeming provisions)

 
Today’s Scenario

Explained : US investigation into digital services tax, and what is the case against India?

What us global minimum tax and what will it mean?

Amazon, Facebook Lobby Groups urge Digital-Tax End, OECD Deal

 

Relevance of Internal Audit

Need for surprise audits

As tax authorities demand more data

Whether FORM-1 of EL has been filed on time?
Indicate the high & low risks that the Boards and Senior Executives should be aware

Checks in place to find if e.comm operators are meeting compliance requirements