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Friday, 28 June 2019

Get a Loan with Poor Credit Scores

Friday, June 28, 2019 0
get a loan with poor credit scores

A credit score is a numerical representation of your credit history. It contains every single detail of all the credit you have acquired over the years. A credit score represents your creditworthiness and banks look to your credit score before granting loans and credit cards. A good credit score not only ensures that you get approved credit cards and Loans but it also gives you the opportunity to avail the best rates and a bad credit score will send your application to the rejection pile.

What affects your credit score?

Let us look into some of the major factors that affect your credit score:

Payment History: Making a late payment might not seem like a serious offence but it can definitely harm your credit score. Making late payments or missing payments on your loans and credit cards can bring down your credit score dramatically. Every missed/late payment is recorded in your credit report and remains there for a period of up to 7 years.

Current Debts: Carrying a lot of debt can also decrease your credit score.

Types of Current Credit: It is important to have the right mix of credit products in order to keep your credit scores up. Having the right balance between credit cards and loans will ensure that your credit score is not affected.

Consequences of a poor credit score

Listed below are some of the major consequences of a poor credit score:

High interest rates on loans
Banks consider applicants with low credit score riskier than applicants who have a good credit score. They compensate for the risk by making you pay a higher rate of interest on loans and credit cards if you have a low credit score.

Rejection of loan applications
While some banks compensate for the risk factor with high interest rates, other banks will reject your application for a loan or credit card if you have a bad credit score.

High insurance premiums
Insurance companies check credit scores too. They connect a low credit score to high claims which in turn leads them to charging a higher premium.

Is it possible to get a loan with poor credit score?
Banks and financial institutions are cautious while granting loans to an applicant with a low credit score owing to the risk factor. But despite what many think, it is not impossible to avail loans with a low credit score. An applicant with a low credit score can still get approved for a loan. Read on to know how:

Secured Loans
Under the secured loan option, a loan is granted to the individual against a collateral security. The value of the collateral security should match the principal loan amount to an extent. Banks are less reluctant to offer secured loans to applicants with a bad credit score as they have something to fall back on in case the applicant fails to repay the loan. Secured loans are usually offered at a regular rate of interest regardless of whether the applicant has a high or low credit score.

Unsecured loans
Unsecured loans are best suited for individuals who are incapable of offering security to the lender. Banks and financial institutions offer unsecured loans to customers with a low credit score without requiring any security. These loans come at a higher rate of interest to make up for the risk factor. These kinds of loans will end up being very expensive owing to the high rate of interest.

Getting loans with poor credit score is definitely tough, but not impossible. It is important to read the fine print of the documents before signing a loan agreement. While these options might help you get a loan, it is best to improve your credit score so that you can get approved for regular loans without any hassle the next time you apply for it.

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Thursday, 20 June 2019

Top Countries Having the Highest Tax Rates

Thursday, June 20, 2019 1

Top Countries Having the Highest Tax Rates 

Top Countries Having the Highest Tax Rates

Where ever you choose to live in the world, you would surely like to know about the tax rates. Taxes in different counties vary and there are different tax rates for which you can always take the guidance and assistance from the best VATconsultants. There are countries with low tax rates and then there are countries with high tax countries. Every government levy taxes differently and the taxes vary. Below, we will throw some light on the top 10 countries with the highest tax rate globally. All the countries are well developed and the governments are helping in transforming the countries even more for the best of the citizens. But before that, we should see a variety of taxes which are applicable universally.

Type of Taxes:



Before discussing the highest tax rated countries, let us first know a little about the type of taxes:

    Income Tax
    VAT (Value Added Tax)
    Service Tax
    Corporate Tax
    Security Transaction Tax
    Capital Gains Tax
    Custom Duty

Above mentioned are just a few taxes which are commonly charged in countries globally. The list is quite long and few taxes are charged according to the laws of a particular country. Also, the tax rates applicable in different countries are also different. For example, in accordance with the latest tax laws in the UAE, the VAT consultants disclose that the VAT to be paid by business is 5 percent.

In this context, VAT is an indirect tax that is levied on any addition made in the business cycle starting from procurement of raw material to the final sales of the finished good.
Countries with the highest tax rates globally: Starting with the one on the 10th number, we will see the taxes increasing:

1.    Belgium:

Top Countries Having the Highest Tax Rates

A beautiful country which is being shared between Dutch-speaking Flemish and French-speaking Walloons, is a European country. The highest tax rate being charged in Western Europe is 53.7 percent. The tax collected in this country is utilized towards the welfare of the country as a whole.
2.    Austria:

Top Countries Having the Highest Tax Rates  


It is also amongst the highly developed countries in the world charging 55 percent tax from the residents here. Along with this high rate of tax, the government of Austria has a social security rate of 18 percent, payments being charged at a rate of 6 percent and lastly, capital gains tax rate is 25 percent.




3.    Denmark:

Top Countries Having the Highest Tax Rates  


In terms of GDP per capita, Denmark holds the 18th rank in the world. The tax rate hers is 55.8 percent per capita income which is used towards creating equality to give access to all the citizens to use a number of services being served through this tax income.



4.    Japan:

Top Countries Having the Highest Tax Rates  

The 3rd largest national economy in the world is Japan. A number of millionaires are residing in Japan than in any other country all across the globe. Japan has less population but despite the fact of less population the tax rate of the country is 55.95 percent. The taxes paid by you are utilized towards advancement in technological developments and automobiles.





5.    Portugal:

Top Countries Having the Highest Tax Rates  

It is a well-developed and a high-income country which is on the 45th position to hold as the largest economy. The tax that you will have to pay as a resident here is as much as 56.5 percent. The taxes that you pay are utilized towards bringing equality between high- income groups and low- income groups.

6. Sweden:

Top Countries Having the Highest Tax Rates  

It is the seventh richest country in the whole world. Sweden has shown tremendous growth with the help of the highest tax rate policy amongst all the countries in the world. The maximum income tax being charged by the Sweden government is as much as 57.1 percent.

Going on a vacation in the above-mentioned countries is so much fun but if you are in the mood of being a resident then you must think twice. The tax rates will surely make you think twice before you choose any of the above for immigration or migration purpose.




Author Bio

Name :                    Heena Khan
Qualification:      N.A.
Company:              N.A.
Location:                Sharjah, United Arab Emirates
Contact :            heenakhan2663@gmail.com

DISCLAIMER ******** This Post is merely a general guide meant for learning purposes only. All the instructions, references, content or documents are for educational purposes only and do not constitute a legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information contained in this post or for any conclusion of the information. Prior to acting upon this post, you're suggested to seek the advice of your financial, legal, tax or professional advisers as to the risks involved may be obtained and necessary due diligence, etc may be done at your end.


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Thursday, 13 June 2019

LLP Annual Filing in 2019: A Short Guide

Thursday, June 13, 2019 0

LLP Annual Filing in 2019: A Short Guide


Introduction
If you are running a Limited Liability partnership firm then it is important to know that every LLP Registration before 31st March 2019 shall have to comply with the compliances under the Registrar of Companies. All compliance for Private Limited Company and Limited Liability Partnership are done with the Registrar of Company (ROC). An LLP is required to submit their annual return, financial return to the ROC within the prescribed time period. This article talks about the LLP annual filing so after reading this you will get an idea about it.

Compliances of LLP
There are various types of compliances which need to be filed within the time period, in case failure of filing compliances, you may have to pay a huge fine for this or maybe your LLP shutdown by the Ministry of Corporate Affairs. After the incorporation of an LLP first compliance required to file is an LLP agreement which is important to file within 30 days of its incorporation. There are some annual compliances which need to be filed every financial year for e.g. Annual Return of LLP, financial reports, Filing of Income Tax Return to the Income tax departmentof India, etc. Here is the list of some important compliances which needs to file within time.


Annual Return – (Form no.11)
Annual Return is a statement of LLP which includes details of Partners, a contribution received by an LLP, the total number of Partners, a summary of Partners, etc. Every LLP is required to file their annual return within the prescribed time, it is annual compliance which needs to be file under ROC. You can file your Annual Return by filing form no. 11. Filing of form no. 11 is very easy, you can file this through online procedure for which you have to visit the official website of Ministry of corporate affairs and during filing of form you have to fill the all required details like name of LLP, LLP identification number, partners details and other things which are required then you have to attach the required documents. Last for filing an annual return of an LLP is 30th May 2019 so should file your annual return within time period because in case failure of filing an annual return, you have to pay fine so be careful.

Annual Accounts – (Form no.8)
Form no. 8 is an important form which needs to be filed within the prescribed time period. It needs to file in every financial year. All LLPs are required to maintain the accounts of their LLP as per double entry system and close their accounts until the 31st March of 2019 on this year for filing their annual account this year. Annual accounts include Profit and loss accounts and Balance sheet of an LLP. In case if your LLP’s annual turnover exceeds Rs.40 lakhs or if your LLP’s contribution exceeds Rs. 25 lakhs then you have to get done your accounts audited by a CA. The last date of filing annual accounts is 30th October of this year. You can file your form no.8 through the online procedure for which you have to visit the official website of Ministryof corporate affairs.

Filing of Income Tax Return–As per the rules and regulation of the Income-tax department of India, every LLP is required to file their incometax return every financial year. The last date of filing income tax return for an LLP is 31st July 2019, if the account of LLP not required to be audited. If an audit is required for an LLP then those LLP need to be file their income tax return before 30th September 2019. It is important to know whether your accounts need to be audited, an LLP is required to audit their account before filing an income tax return if their turnover is more than Rs. 100 lakhs.


LLP agreement – (it is one time filing, you don’t have to file this every year)
An Agreement of LLP signed by all the partners is required to be filed within 30 days of incorporation of LLP. It is one-time compliance which needs to be filed within 30 days of incorporation of LLP. This Agreement is a written agreement in which all partners mention their terms and condition and then signed it which means them consenting to start an LLP. It is one-time filing so don’t confuse.

Conclusion
As you can see in the above given article that most important annual compliances are filing of annual return, filing of accounts and Annual Income tax filing. Filing of above given forms needs to be filed within above given period otherwise you may have to pay fine for late fee charges. So if you are running an LLP then you should consider the above given points.

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Friday, 24 May 2019

CA Foundation Mock Test Papers for June 2019 exam. Latest Edition!!!

Friday, May 24, 2019 0

CA Foundation Mock Test Papers for June 2019 exam. Latest Edition!!!

CA Foundation Mock Test Papers


CA foundation exam is soon going to commence from 4th June 2019. The students appearing for this exam must be anxious to know the latest exam pattern and marking pattern for ICAI CA foundation exams.

Every year ICAI conducts Foundation exams in the month of May, but this year, the exam is postponed due to the election and will start from 4th June 2019.

ICAI has scheduled the CA Foundation Mock test for 2019 on 11th March 2019. With the help of Mock Test or Mock test Paper, you can understand the exam pattern and marking pattern of following exams.

If you are not able to appear for Mock test paper you can download the latest CA Foundation Mock test paper from these websites.
Icai.org
Mccjpr.com

Read this article further to know everything about the Mock test paper.
Why do we need to practice with mock test paper?
How can You download the Mock test paper?
When does ICAI schedule mock test paper?
What is the process of registering for the Mock test? and
What subjects are best to study with Mock Test paper?
are some questions that will be answered in the article below.

Why do we need to practice with mock test paper?

Mock test paper is an effective warm-up exercise before an exam
To understand the exam pattern set by ICAI.
To understand the marking scheme for the following subject.
To evaluate students preparation and knowledge.
To help students in making an effective strategy to  finish the complete paper with proper time management,
To help students in building confidence in their knowledge and comprehension of questions.



Here is How You Can Download Mock test paper?

Mock test paper is available of ICAI website and also on good websites who provide an extra set of questions asked from the latest and updated syllabus. The process to download the Mock test paper is very simple and easy.

Visit on ICAI website

Select BOS knowledge portal under Student Tab
Select  your CA level course
Select the subject for which you want to download the Mock test paper
Select Mock test paper among the list of resources available
Download Mock test from November and May series

When does ICAI schedule Mock test paper?

ICAI has set 4 branches,
East: www.eirc-icai.org
West: www.wirc-icai.org
North: www.nirc-icai.org
South: www.sirc-icai.org
That schedule Mock test Paper twice every year. The Mock test paper is scheduled 2 months prior to exams. The ICAI schedule 2 series for every subject of Foundation, Intermediate and final level.
This year the scheduled dates for CA foundation Mock test paper  for both series is

Date & Time Schedule of Mock Test Paper – Foundation, First series

 8th Mar’19 and
 9th Mar’19
Paper-1: Principles and Practice of Accounting ( 10 AM to 1 PM )
Paper-2: Business Laws and Business Correspondence and Reporting ( 10 AM to 1 PM )
Paper-3: Business Mathematics and Logical Reasoning & Statistics (2 PM – 4 PM )
Paper-4: Business Economics and Business and Commercial Knowledge(2 PM – 4 PM )

Date & Time Schedule of Mock Test Paper – Foundation, Second series

15th April ’19 and
16th April 19
Paper-1: Principles and Practice of Accounting ( 10 AM to 1 PM )
Paper-2: Business Laws and Business Correspondence and Reporting ( 10 AM to 1 PM )
Paper-3: Business Mathematics and Logical Reasoning & Statistics (2 PM – 4 PM )
Paper-4: Business Economics and Business and Commercial Knowledge(2 PM – 4 PM )

What is the process of registering for the Mock test?

There are three ways to give Mock test paper?
Registering to ICAI scheduled Mock test
Appearing for Mock test scheduled by Coaching Institute
Downloading Mock test series and solving problems at a personal level.

If you want to appear for ICAI schedule Mock test than you need to register with your regional branch and enrol yourself for mock test.
Fees of  Rs.400/- for All Subjects and Rs 100 Subjectwise is also submitted at the time of registration.
This is a written test.
You register for your seat on first come first serve basis.
Cheque should be drawn on in favour of the regional branch for eg for the west zone the cheque will be drawn in favour  “WIRC OF ICAI” payable at Mumbai.

Your coaching institute might also schedule Mock test before exams .you should positively appear for these exams according to the decorum of your institute.

If you are not able to appear for Mock test then you can even download the  Mock test series uploaded on ICAI and other websites and can solve all the problems with fair means.

According to us, it is important to complete the syllabus timely and revise continuously to have the best results. The Mock test paper, RTP, Sample Papers, Previous year question paper should only be practised at the time of revision but there are few things we need you to keep in mind while solving Mock test paper.

Points to consider while solving Mock test Paper

Please ensure you know the updated and latest syllabus and are aware of necessary amendments of laws and accounting standards.
Avoid solving questions from the old syllabus which is obsolete.
Please only try to solve the latest Mock test paper for 2019 exams.
Try to use calculators for solving numerical problems and get handy with the shortcuts
Try to be fair while solving Mock Test and do not use unfair means. It won't help you with your real exams.
If you are willing to appear for ICAI schedule mock Test then please register timely to ensure your seat.
Please be keen to evaluate your answer sheet and try to learn from the mistake and clear all your doubt before exams.

CA  Foundation is the first level of CA exam.CA Foundation has 4 subjects and the latest syllabus for June 2019 exams is as follows.

Latest CA foundation June 2019 Syllabus




1)  Latest Updation made in Principles and Practices of Accounting syllabus

New additions
Average due date and account current.
Departmental Accounts.

2) Latest update  made in  Business Law syllabus

New additions  in the Partnership Act and Companies Act
The Limited Liability Partnership Act, 2008: Introduction- covering nature and scope, Essential features, characteristics of LLP, Incorporation and differences with other forms of organizations.
The Companies Act, 2013 [section 1 to 22]: Important definitions, Introduction of company & corporate veil theory, Classes of companies, Conversion of company, Incorporation of company, Memorandum of Association, Articles of Association, Alteration of Memorandum and Articles, Doctrine of Indoor Management, Conversion of companies already registered, Promoters, Service of documents.

3) Latest update  made in Business Correspondence and Reporting syllabus

New additions:
Section A
Section B
Section C
Comprehension Passages and Note-Making
Developing Writing Skills
Basic English Grammar
Comprehension Passages
Note Making

Article Writing
Report Writing
Writing Formal Letters
Writing Mails
Resume Writing

Introduction to Basic Writing
Nouns, Pronouns and Verbs
Articles, Adjectives and Adverbs
Prepositions, Conjunctions and Interjections
Direct Indirect, Active-Passive Speech
Vocabulary, Root Words, Synonyms, Antonyms, Prefixes, Suffixes, Phrasal verbs, Collocations and Idioms

4) Latest Update made in  Business Mathematics and Logical Reasoning and statistics syllabus.

New addition
Logical reasoning as a new subject is introduced.
Algebra of Matrices, Inverse of a Matrix and determinants, solving system of equations using matrix method (Cramer’s rule) involving not more than 3 variables.
The nominal rate of return
Compound Annual growth rate (CAGR)

5)  Changes made in Business Economics syllabus

New addition
Introduction to Business Economics
Meaning of Business Economics
Business Cycles Meaning of Business Cycles, Phases of  Business Cycles, Features of Business Cycles, Causes behind these Cycles.
Objectives of Business Firm- Profit Maximization, Sales Maximization, Growth Maximization.
Topics removed from CA Foundation course.
Macro Economics
Indian Economy

We hope this article will let you know all the latest update related to CA Foundation Mock Test paper for June 2019.

Keep yourself healthy and organised.

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Tuesday, 14 May 2019

Accounting and its Importance

Tuesday, May 14, 2019 1

Introduction to Accounting and Its Importance

Accounting and its Importance on taxonline24

Accounting is a way to organize the finances of a business so that its financial transactions can be tracked accurately. Accounting is extremely significant to every business. Therefore, every individual involved in a business is required to have basic knowledge about accounting and its importance, which we have elaborated below.

The topics covered in this article are:
1.      What is accounting?
2.      Importance of Accounting
3.      Types of Accounting

What is accounting?

Accounting is an organized and systematic way of recording the financial transactions which are made by a business. It is a process which summarizes, analyses, and reports the business transactions to third parties like regulators, oversight agencies, and tax collectors.
Being a one of the most important functions of a business, accounting is carried out by a professional accountant or bookkeeper in small firms, and by financial departments at bigger companies. Accounting generates various important reports of cost accounting and managerial accounting which the management helps the business management in making informed decisions.

Bookkeepers may handle basic functions of accounting, but only qualified accountants who are designated by the central authorities (Chartered Accountant, etc.) are supposed to handle advanced accounting functions of a business.

Accounting helps in creating financial statements of a company. Financial statements of a business summarize its operations, cash flow, and financial position in the market for a said period of time. They concisely summarize several financial transactions which the business may have made and recorded in the particular time period.This helps investors and other entities to analyze the financial position of a business and make decisions accordingly.

While preparing financial statements of a business, accountants usually follow the Generally Accepted Accounting Principles (GAAP). GAAP is basically a set of accounting principles or standards which follows the double-entry system of accounting. It is used in identification of balance sheets, measuring outstanding shares, and other issues of accounting.



Importance of Accounting 

Accounting mainly helps in recording transactions in an organized manner and creating financial statements for a business. However, accurate and proper accounting can pose as a defense mechanism of a business. Accurate accounting helps in reducing the business exposure to fraudulent risks. If the accounting is done right, then the audits conducted by the government will not create any hurdle in the daily operations of the business.

Accounting allows the business to grow in a measured and planned manner. It helps in tracking the business assets, liabilities, expenses, and incomeso that the business can make informed financial decisions. Decisions made on the basis of present financial health and past performance of the business will help in molding a more financially stable future. This will propel the growth of the business and guide it to the path of attaining maximum profit.

Accounting done wisely will help the business in attracting and satisfying its customers. It helps the business to have knowledge of its financial position and understand its sources of revenue and expenses. This gives a better understanding of the business to the management and shows how the business can be grown while maintaining customer satisfaction.

Lastly, accounting informs the business what it owes and what it is owed. It helps in tracking loanand interest repayments, managing payroll records, maintaining a budget, attracting potential investors, and setting up accurate financial records for payment of business taxes.



Types of Accounting

There are three main categories of accounting: financial accounting, managerial accounting, and cost accounting. They are elaborated as follows:
·         Financial Accounting: Financial accounting involves those processes which are used by professional accountantsto generate the accounting and financial statements of a business, annually. These statements are then made public to be viewed by investors, creditors, customers, and regulatory bodies.It aims at providing the financial information of a business to its outsider parties. Financial accounting considers money to be a measure of the economic performance of a business.

·         Managerial Accounting: Managerial or Management accounting involves those processes which are used by professional accountants to generate monthly and quarterly reports, which can be used by the management of the business to make important business decisions. It aims at helping managers and supervisors of the company in making financial decisions.

·         Cost Accounting: Cost accounting involves those processes which take into account all the costs related to the manufacturing of a product. The information produced by cost accounting further helps managers, analysts, accountants, and business owners to do the costing of their products. Cost accounting considers money to be an economic factor of production.



Author Details
Name :- Anil Tanwar
Contact No. :- 9318353236
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Thursday, 25 April 2019

Important updates for GSTR4 and E-Way bill

Thursday, April 25, 2019 0
Important Update :

📍1. Now GSTR-4 is required to be filed annually & payment shall be made on Quarterly basis Vide notification no. 21/2019-Central Tax dated April 23, 2019, CBIC has notified that GSTR-4 is required to be filed on Annual basis by Composition Dealers & Service Providers paying GST @ 6% and the payment of self-assessed tax shall be made in Form GST CMP-08 on quarterly basis.
   
📍2. E-way bill can’t be generated if the registered person has not filed return for 2 consecutive tax periods
  Vide notification no. 22/2019-Central Tax dated April 23, 2019 CBIC announces June 21, 2019 to be the date from which no person (including a consignor, consignee, transporter, an e-commerce operator or a courier agency) shall be allowed to furnish the information in PART A of FORM GST EWB-01 in respect of a registered person, whether as a supplier or a recipient, if he has not furnished the returns for two consecutive tax periods.
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Tuesday, 23 April 2019

Delay GSTR-3B Return: Pay Interest on Gross liability HIGH COURT OF TELANGANA

Tuesday, April 23, 2019 0

Pay GST Interest on Cash and ITC (Gross Tax Liability) if delay in filing Returns : HC

Until a return is filed as self-assessed, no entitlement to credit and no actual entry of credit in the electronic credit ledger takes place. As a consequence, no payment can be made from out of such a credit entry. It is true that the tax paid on the inputs charged on any supply of goods and/services, is always available. But, it is available in the air or cloud. Just as information is available in the server and it gets displayed on the screens of our computers only after connectivity is established, the tax already paid on the inputs, is available in the cloud. Such tax becomes an in-put tax credit only when a claim is made in the returns filed as self-assessed. It is only after a claim is made in the return that the same gets credited in the electronic credit ledger. It is only after a credit is entered in the electronic credit ledger that payment could be made, even though the payment is only by way of paper entries.

the petitioner filed returns belatedly, for whatever reasons . the liability to pay interest under Section 50 (1) arose automatically.
Only when the payment is made, the Government gets a right over the money available in the ledger. Since ownership of such money is with the dealer till the time of actual payment, the Government become entitled to interest upto the date of their entitlement to appropriate it.

the claim made by the respondents for interest on the ITC portion of the tax cannot be found fault with. Hence, the Writ Petition is dismissed. However, in the circumstances, there shall be no order as to costs.

HIGH COURT OF TELANGANA

Megha Engineering & Infrastructures Ltd.

v.

Commissioner of Central Tax

V. RAMASUBRAMANIAN AND P. KESHAVA RAO, JJ.
WRIT PETITION NO. 44517 OF 2018

APRIL  18, 2019

Gandra Mohan Rao for the Petitioner. B. Narasimha Sarma, Sr. Standing Counsel for the Respondent.

ORDER




V. Ramasubramanian, J. – Aggrieved by a demand made by the respondent for payment of interest on the ITC portion of the tax paid for the months of July, 2017 to May, 2018, the petitioner has come up with the above writ petition.

2. Heard Mr. Gandra Mohan Rao, learned counsel for the petitioner and Mr. B. Narasimha Sarma, learned Senior Standing Counsel for the Department.

3. The petitioner is engaged in the manufacture of MS Pipes and in the execution of infrastructure projects. After the enactment of the Central Goods and Services Tax Act, 2017 (for short ‘CGST Act, 2017’), the petitioner registered themselves as a dealer under the Act and they claim to be regularly filing returns and paying taxes.

4. Under the CGST Act, 2017, the registration of dealers, input tax credit, filing of returns, payment of duty and issue of notices, all happen only on-line. All Assesses are required to log into the GST Portal for payment of duty and for filing of returns. The Assesses are required under the Act to file a return in Form GSTR – 3B on or before the 20th of every month, for the discharge of their liability of the previous month. The GST liability is permitted to be discharged by utilizing the ITC available. An electronic ledger is maintained, showing the amount available to the account of an assessee through the ITC.

5. The case of the petitioner is that the GST Portal is designed in such a manner that unless the entire tax liability is charged by the assessee, the system will not accept the return in GSTR – 3B Form. As a result, even if an Assessee was entitled to set off, to the extent of 95%, by utilizing the ITC, the return cannot be filed unless the remaining 5% is also paid.

6. It appears that there was a delay on the part of the petitioner in filing the returns in GSTR – 3B Forms, for the period from October, 2017 to May, 2018. This was due to the shortage of ITC, available to off-set the entire tax liability. According to the petitioner, the delay in filing the returns was also not huge. The returns for the months of October and November, 2017 and February and May, 2018 were filed with a delay of only one day. The return for December, 2017 was filed with a delay of three days. The return for January, 2018 was filed with a delay of seventeen days, the return for April, 2018 was filed with a delay of nineteen days and the return for March, 2018 was filed with a delay of twenty nine days.

7. According to the petitioner, the total tax liability of the petitioner for the period from July, 2017 to May, 2018 was Rs.1014,02,89,385/- and the ITC available to the credit of the petitioner during this period was Rs.968,58,86,133/-.

8. Thus, there was a short fall to the extent of 45,44,03,252/-, which the petitioner was obliged to pay by way of cash. According to the petitioner, they could not make payment and file the return within time due to certain constraints. However, the entire liability was wiped out in May, 2018.

9. After the petitioner discharged the entire tax liability, the Superintendent of Central Tax issued letters dated 29.06.2018 and 06.07.2018 demanding interest at 18%, in terms of Section 50 of the CGST Act, 2017. The Assistant Commissioner also issued a letter dated 04.10.2018 demanding payment of interest.

10. In response, the petitioner sent a letter dated 15.10.2018, pointing out that interest is to be calculated only on the net tax liability after deducting ITC from the total tax liability. The petitioner also paid an amount of Rs.30,92,522/- towards interest on their net tax liability.




11. However, the Department demanded interest on the total tax liability and hence the petitioner has come up with the above writ petition.

12. The respondents have filed a counter affidavit contending inter alia that under Section 39(7), every registered person, who is required to furnish a return, should have paid to the Government, the tax due as per such return, not later than the last date on which he is required to furnish such return; that Section 50 of the Act imposes a burden in the form of interest, upon every person who is liable to pay tax, but failed to pay the same; that the liability to pay interest under Section 50 (1), is a statutory obligation which the registered persons are obliged to comply on their own accord; that Section 50 (1) is not confined only to the cash component of the tax payable; that the claim of the petitioner is based upon the wrong presumption as though ITC amount was lying with the Government Treasury; and that since the liability under Section 50 is not penal in nature, the petitioner cannot escape liability.

13. From the pleadings, the only issue that arises for consideration is as to whether the liability to pay interest under Section 50 of the CGST Act, 2017 is confined only to the net tax liability or whether interest is payable on the total tax liability including a portion of which is liable to be set-off against ITC?

14. For finding an answer to the said question, we may have to look at (i) the procedure for filing of returns and payment of tax; (ii) the eligibility and conditions for taking input tax credit and (iii) the wording of Section 50.

FILING OF RETURNS:

15. Under Section 40 of the CGST Act, 2017, the procedure for filing of the first return, corresponding to the period between the date on which the dealer became liable to registration, till the date on which registration is granted, is prescribed.

16. Under Section 39, a detailed procedure is stipulated for the filing of the monthly returns. In brief, the Scheme of Section 39 is as follows:

(i)Every registered person should furnish for every Calendar Month or part thereof, a return, electronically, of inward and outward supplies of goods or services, ITC availed, tax payable, tax paid etc., on or before the 20th day of the succeeding calendar month;
(ii)The Commissioner is empowered to extend, by notification, for reasons to be recorded in writing, the time limit for furnishing the returns, for such Class of registered persons;
(iii)Every registered person, who is required to furnish a return, should pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return;
(iv)If a registered person discovers any omission or incorrect particulars in the return already filed by him, he shall rectify such omission or incorrect particulars in the return to be furnished.
17. We should point out that what we have indicated in the preceding paragraph as the essence of Section 39, are confined only to every registered person other than an input service distributor or a non-resident taxable person or a person paying tax under Section 10/51/52.

CLAIM OF ITC:

18. Section 41 deals with the claim of ITC and the provisional acceptance thereof. Under this provision, every registered person is entitled to take the credit of eligible input tax, as self-assessed in his return. The amount so claimed shall be credited on a provisional basis to his electronic credit ledger. But, this credit can be utilized only for payment of self-assessed out-put tax as per the return.

19. While Section 41 deals with the claim of ITC and provisional acceptance, Section 16 deals with the eligibility and conditions for taking ITC. Under Section 16 (1), every registered person shall be entitled to take credit of input tax charged on any supply of goods or services, which are used or intended to be used in the course of his business. The amount should be credited to the electronic credit ledger of such a person. But, the entitlement to take credit of input tax is subject to such conditions and restrictions as may be prescribed and in the manner specified in Section 49.

20. Sub-section (2) of Section 16 lays down four conditions subject to which a registered person will be entitled to the credit of any input tax. These conditions are (i) he should be in possession of a tax invoice or debit note issued by a supplier registered under the Act; (ii) he should have received the goods or services; (iii) the tax charged in respect of such supply should have been actually paid to the Government, either in cash or through utilisation of ITC; and (iv) he should have filed the return under Section 39.




21. Section 49 of the Act, which deals with payment of tax, also speaks about the manner in which ITC shall be credited. Sub-section (2) of Section 49 stipulates that the input tax credit as self-assessed in the return of a registered person should be credited to his electronic credit ledger in accordance with Section 41. The amount available in the electronic credit ledger may be used by virtue of Sub-section (4) of Section 49, for making any payment towards output tax under the Act.

22. Thus, the broad scheme of Section 39 which deals with the filing of returns, Section 41 which deals with the claim of ITC and its provisional acceptance, Section 16 which deals with the conditions and eligibility for taking ITC and Section 49 which deals with payment of tax, make it clear that the moment all the four conditions stipulated in Sub-section (2) of Section 16 are complied with, a person becomes entitle to take credit of ITC. Once a person takes credit of ITC, the amount gets credited on a provisional basis to his electronic credit ledger under Section 41 (1).

23. In other words, Section 16 (2) makes a registered person entitled to take credit of input tax. Section 41 (1) provides for a credit entry to be made on a provisional basis in the electronic credit ledger. But, the time at which this credit is made under Section 41 (1) is important. Section 41 reads as follows:

“41. Claim of input tax credit and provisional acceptance thereof .— (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to take the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited on a provisional basis to his electronic credit ledger.

(2) The credit referred to in sub-section (1) shall be utilized only for payment of self-assessed output tax as per the return referred to in the said sub-section.”

24. It is seen from Section 41 (1) that a person gets credited with the input tax, in his electronic credit ledger, only upon his filing of the return on self-assessment basis. Till a return is filed, no credit becomes available to his electronic credit ledger.

25. It is only after a credit becomes available in the electronic credit ledger that the utilization of the same for payment of self-assessed out-put tax, arises under Section 41 (2).

26. Thus, the scheme of the Act makes a distinction between (i) the entitlement to take credit which comes first; (ii) the actual entry of credit in the electronic credit ledger, which comes next; and (iii) the actual payment from out of the credit, which comes last.

27. There can be no doubt about the fact that even in respect of the input tax credit available in the electronic credit ledger, there is a necessity to make payment. Section 41(2) talks about utilization of the credit available in the electronic credit ledger, for payment of the self- assessed output tax. Section 49(2) also confirms the stage at which a credit entry is made and Section 49(4) enables a registered person to make payment from out of the credit so available in the electronic credit ledger. Therefore, for finding an answer to the dispute on hand, one must find out (i) when a credit entry is entered in the electronic credit ledger of the registered person; and (ii) when payment out of the same is made in lieu of cash. Once it is statutorily prescribed that payment can be made either by way of cash or from out of the credit available in the electronic credit ledger, the date of payment in respect of both assumes significance for determining the liability to pay interest.

Wording of section 50

28. Having thus seen the scheme of Sections 39, 41, 16 and 49, let us now take a look at Section 50 about which present dispute revolves, which reads as under:

50. Interest on delayed payment of tax.—(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made there under, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.

(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.

(3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council.”

29. It is seen from Sub-section (1) of Section 50 that the liability to pay interest arises automatically, when a person who is liable to pay tax, fails to pay the tax to the Government within the period prescribed. The liability to pay interest is in respect of the period for which the tax remains unpaid. In fact, the liability to pay interest under Section 50 (1) arises even without any assessment, as the person is required to pay such interest “on his own“.

30. While Sub-Section (1) of Section 50 speaks about the liability to pay interest under one contingency, viz., the failure to pay tax within the period prescribed, Sub-Section (3) of Section 50 speaks about the liability to pay interest under a different contingency. Whenever an undue or excess claim of ITC is made or whenever an undue or excess reduction in out-put tax liability is made, a liability to pay interest arises under Sub-section (3). The words “on his own” used in Sub-section (1), are not used in Sub-section (3) of Section 50.



31. Therefore, it is clear that the liability to pay interest under Section 50 (1) is self-imposed and also automatic, without any determination by any one. Hence, the stand taken by the department that the liability is compensatory in nature, appears to be correct.

32. Once it is clear that the liability to pay interest arises for non-payment within the period prescribed, we should see; (i) what is the period prescribed for payment of tax and (ii) the mode of such payment. Under Section 39 (7), every registered person (other than an Input Service Distributor or a Non-resident taxable person or a person paying tax under Sections 10/51/52) is obliged to pay to the Government, the tax due as per such return, not later than the date on which he is required to furnish such return. Sub-sections (1) and (7) of Section 39 read as follows:

“39. Furnishing of Returns.—(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form, manner as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars as may be prescribed on or before the twentieth day of the month succeeding such calendar month or part thereof.


(2) to (6)******
(7) Every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return.

(8) to (10)******”
33. Therefore, the period prescribed for payment of tax in respect of every month is on or before the 20th day of the succeeding calendar month.

34. The mode of payment is stipulated in Section 49. Section 49 reads as follows:

“49. Payment of tax, interest, penalty and other amounts.—(1) Every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode and subject to such conditions and restrictions as may be prescribed, shall be credited to the electronic cash ledger of such person to be maintained in such manner as may be prescribed.

(2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with section 41, to be maintained in such manner as may be prescribed.

(3) The amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or any other amount payable under the provisions of this Act or the rules made thereunder in such manner and subject to such conditions and within such time as may be prescribed.

(4) The amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act, 2017 (Act No.13 of 2017) in such manner and subject to such conditions and within such time as may be prescribed.

(5) The amount of input tax credit available in the electronic credit ledger of the registered person on account of,–

a)integrated tax shall first be utilised towards payment of integrated tax and the amount remaining, if any, may be utilised towards the payment of central tax and State tax, or as the case may be, Union Territory tax, in that order;
(b)the central tax shall first be utilised towards payment of central tax and the amount remaining, if any, may be utilised towards the payment of integrated tax;
(c)the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may be utilised towards payment of integrated tax;
(d)the Union territory tax shall first be utilised towards payment of Union territory tax and the amount remaining, if any, may be utilised towards payment of integrated tax;
(e)the central tax shall not be utilised towards payment of State tax or Union territory tax; and
(f)the State tax or Union territory tax shall not be utilised towards payment of central tax.
(6) The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount payable under this Act or the rules made thereunder may be refunded in accordance with the provisions of section 54.

(7) All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic liability register in such manner as may be prescribed.

(8) Every taxable person shall discharge his tax and other dues under this Act or the rules made thereunder in the following order, namely:–

a)self-assessed tax, and other dues related to returns of previous tax periods;
(b)self-assessed tax, and other dues related to the return of the current tax period;
(c)any other amount payable under this Act or the rules made thereunder including the demand determined under section 73 or section 74.
(9) Every person who has paid the tax on goods or services or both under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such tax to the recipient of such goods or services or both.

Explanation:- For the purposes of this section,-
(a)the date of credit to the account of the Government in the authorised bank shall be deemed to be the date of deposit in the electronic cash ledger;
(b)the expression,—
(i)“tax dues” means the tax payable under this Act and does not include interest, fee and penalty; and
(ii)“other dues” means interest, penalty, fee or any other amount payable under this Act or the rules made thereunder.”
35. It is seen from Sub-section (2) of Section 49 that a credit entry is made in the electronic credit ledger of a registered person, only when the ITC, as self-assessed, is found in the return of a registered person. After a credit entry is made in the electronic credit ledger, the same becomes available for making payment. This is clear from Sub-section (3) of Section 49. If after payment, a balance is still available in the electronic credit ledger, the same is liable to be refunded in accordance with Section 54.

36. Therefore, in the entire scheme of the Act three things are of importance. They are; (i) the entitlement of a person to take credit of eligible in-put tax, as assessed in his return; (ii) the credit of such eligible in-put tax in his electronic credit ledger on a provisional basis under Section 41 (1) and on a regular basis under Section 49 (2); and (iii) the utilization of credit so available in the electronic credit ledger for making payment of tax, interest and penalty etc., under Section 49 (3).

37. In other words, until a return is filed as self-assessed, no entitlement to credit and no actual entry of credit in the electronic credit ledger takes place. As a consequence, no payment can be made from out of such a credit entry. It is true that the tax paid on the inputs charged on any supply of goods and/services, is always available. But, it is available in the air or cloud. Just as information is available in the server and it gets displayed on the screens of our computers only after connectivity is established, the tax already paid on the inputs, is available in the cloud. Such tax becomes an in-put tax credit only when a claim is made in the returns filed as self-assessed. It is only after a claim is made in the return that the same gets credited in the electronic credit ledger. It is only after a credit is entered in the electronic credit ledger that payment could be made, even though the payment is only by way of paper entries.

38. If we take a common example of banking transactions, this can be illustrated much better. An amount available in the account of a person, though available with the bank itself, is not taken to be the money available for the benefit of the bank. Money available with the bank is different from money available for the bank till the bank is allowed to appropriate it to itself. Similarly, the tax already paid on the in-puts of supplies of goods or services, available somewhere in the air, should be tapped and brought in the form of a credit entry into the electronic credit ledger and payment has to be made from out of the same. If no payment is made, the mere availability of the same, there in the cloud, will not tantamount to actual payment.

39. Admittedly, the petitioner filed returns belatedly, for whatever reasons. As a consequence, the payment of the tax liability, partly in cash and partly in the form of claim for ITC was made beyond the period prescribed. Therefore, the liability to pay interest under Section 50 (1) arose automatically. The petitioner cannot, therefore, escape from this liability.

40. Let us look at it from another angle. Suppose a registered person under the Act purchases goods, which have suffered tax, to be used as inputs in the goods to be sold by him. Let us assume that the purchase is made in January and hence the same is reflected in the return filed by February 20. While filing the return in February, the dealer could have taken credit and it is possible that the credit is available in the electronic credit ledger for the month of February. If after some kind of processing, the goods are sold in March, the output tax becomes payable while filing the return by April 20. This payment can be either by way of cash or by way of adjustment against the claim for ITC. The payment is made by way of cheque in the case of the former and by way of a claim made in the return by way of an entry. Only when the payment is so made, the Government gets a right over the money available in the ledger. Since ownership of such money is with the dealer till the time of actual payment, the Government become entitled to interest upto the date of their entitlement to appropriate it.



41. Mr. Gandra Mohan Rao, learned counsel relied upon an approval made in principle by the GST Council for the amendment of the Act. The Press release of the Ministry of Finance in this regard reads as follows:

“The GST Council in its 31st meeting held today at New Delhi gave in principle approval to the following amendments in the GST Acts:

1.Creation of a Centralised Appellate Authority for Advance Ruling (AAAR) to deal with cases of conflicting decisions by two or more State Appellate Advance Ruling Authorities on the same issue.
2.Amendment of section 50 of the CGST Act to provide that interest should be charged only on the net tax liability of the taxpayer, after taking into account the admissible input tax credit, i.e., interest would be leviable only on the amount payable through the electronic cash ledger.
The above recommendations of the Council will be made effective only after the necessary amendments in the GST Acts are carried out.”

42. But, unfortunately, the recommendations of the GST Council are still on paper. Therefore, we cannot interpret Section 50 in the light of the proposed amendment.

43. The learned counsel for the petitioner relied upon two decisions of the Gujarat High Court, one in State of Gujarat v. Dashmesh Hydraulic Machinery, dated 19.01.2015, and another in State of Gujarat v. Nishi Communication, dated 29.01.2015.

44. But, both the above decisions arose out of Gujarat Value Added Tax Act. The VAT regime and the GST regime differ from each other substantially. Therefore, these decisions do not go to the rescue of the petitioner.

45. In view of the above, the claim made by the respondents for interest on the ITC portion of the tax cannot be found fault with. Hence, the Writ Petition is dismissed. However, in the circumstances, there shall be no order as to costs.

As a sequel thereto, miscellaneous petitions, if any, pending in the writ petition, shall stand closed.


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