Is it compulsory to take gst registration in case of export of service? 'OR' I am a freelancer/professional and also a blogger, I recently setup my adsense account and started earnings in $. Do I need to get GST registration compulsorily?

 

Provision of Law:- 

As per section 24(i) of cgst Act,2017 Every Person making any interstate taxable supply of service is compulsorily liable to take GST registration.

As per Section 22 of cgst Act, 2017 Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds Rs. 20 Lacs.

Is there any contradiction? 

Yes, As per section 24(i) if a person of Maharashtra supplies services in Madhya Pradesh, he has to compulsorily gets registered under GST.

Whereas, as per section 22 only if aggregate turnover exceeds Rs 20Lacs, a person has to take GST registration.

This issue was partially resolved by the notification issued on 13-10-2017.

Through this notification Government has given relief to persons making interstate taxable supply  of services (not Goods) if aggregate turnover is upto Rs. 20 Lacs to take compulsory GST registration.

Ans

No its not compulsory to take GST registration in case of export of service if your aggregate turnover is less than Rs 20 Lacs.

Even if you are a Blogger and a Professional, check your aggregate turnover to take GST registration(if crosses Rs 20 Lacs).

You are out of ambit of compulsory GST registration under GST Act. 

Pain Point for Supplier of Goods.

Even if you are small trader, turnover below Rs 40 Lacs(earlier Rs 20 Lacs) and you wish to make sale in other states you have to compulsorily take GST registration.

Important Pointers:-

Every Export of service is considered as interstate supply of service, so IGST will be charged and not CGST or SGST in invoice.

Before GST Law, there was no need to take registration in case of 100% export of services, unless you need to claim export benefit under any scheme from government.

Google is a giant and has many companies incorporated under different countries. Generally for Indian Bloggers Google deals via Singapore based company Google Singapore PTE Ltd. 

For Services to be classified as Export of service, following conditions needs to be satisfied:-

Place of Supply- Outside India

Location of supplier - In India

Payment to be received in convertible foreign exchange

Enjoy Reading!!!

 

For any suggestion or queries you can reach out to me at caakshatmodi@gmail.com or at 9028912025.

Disclaimer :- This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting Advice. You should consult your own tax, legal and accounting Advisors before engaging in any transaction.

HOW BLACK MONEY IS USED IN PROPERTY TRANSACTIONS?

 

Hello everyone..

 

Today’s topic is of very keen interest for everyone, reason is quite simple it involves the hot topic of discussion in every get together or social gatherings i.e. Black Money and Property.

By this article i will try to unfold in simple language the modus operandi by which people route their black money to purchase property.

 

Let’s understand this by a hypothetical example..

Mr. Malhotra is a renowned business man dealing in trading of readymade garments. His turnover is Rs. 1 crore p.a. for past 10 years. His actual profit margin is 20% but in his income tax return he declared only 5 % (by claiming some dummy expenses).

In absolute terms instead of showing actual income of Rs. 20 Lacs and paying roughly Rs. 4 Lacs as income tax, Mr. Malhotra suppressed his income and declared only Rs. 5 Lacs as income and hence paid Rs. 0 as income taxes.(after claiming rebate of Rs. 12500 under section 87A. Upto Rs. 2,50,000 there is no income tax liability from 2,50,000 to 5,00,000 there is 5% tax liability but with rebate under section 87A).

 

Q) Why did Mr. Malhotra suppressed his income to Rs. 5 Lacs instead of declaring Rs. 20 Lacs?

 

Ans) To save income tax worth Rs. 4 Lacs per anum.

 

Moving forward, now in 10 years. Mr Malhotra has generated Rs.1.5 crore (20 Lacs-5 Lacs*10 years.) worth black money/ undisclosed income.(income on which income tax is not paid).

This has to kept in cash form, since it’s a black money it cannot be deposited in bank account.

Assuming personal expenses worth Rs. 5 Lacs every year, over the period of 10 years Mr. Malhotra should have saved Rs. 1 crore in cash.

 

In many states it is generally found that stamp duty value of property is far less than market value of property.

Meaning for a plot of land in richest area of a city, Government stamp duty value/Market value as per Government might be Rs.. 40 Lacs only but actual market price prevailing in market can be as high as Rs. 1 crore.

 What happens next is Mr. Malhotra approaches a broker to buy a property where stamp duty value is far less than the market value like we have seen in above example.

Broker shows him the property where stamp duty value is Rs. 30 Lacs and market value is Rs. 1.1 crore. The property was located in a premium location and the deal was locked.

(Mr. Malhotra was overwhelmed, thinking now life is set)

Let’s try to find out why Mr Malhotra is so happy getting this deal.

Q) how this deal will take place on record?

Ans) Since total price of the land is Rs. 1.1 crore, and stamp duty value of land is only Rs. 30 Lacs. The registry will take place at Rs. 30 Lacs only, meaning Mr. Malhotra will give Rs. 30 Lacs through banking channel either cheque, DD, neft, rtgs etc and rest 80 Lacs he will pay in cash. Stamp duty @ 6% will be paid on 30 Lacs only.

(Stamp duty is to be paid on every exchange of hand in property transaction.)

Remember on this 80 Lacs Mr. Malhotra didn’t paid any income tax and this black money which he can’t deposit in his bank account is now routed in economy through this deal.

So now on paper he is owner of land worth Rs. 30 Lacs only but actually he is owner of property worth Rs. 1.1 crore.

His unaccounted cash/undisclosed income is utilized and is now part of the economy.

 

Enjoy Reading!!!

 

For any suggestion or queries you can reach out to me at caakshatmodi@gmail.com or at 9028912025.

 

You can follow me on other social media handles from below links :-

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https://www.facebook.com/akshat.modi.372

 

https://www.instagram.com/akshat3636

 

https://twitter.com/ModiAkshat?t=k5aO4-AqiuUKUXfnu4Fsdg&s=08

 

https://t.me/fcaakshatmodi

 

https://g.page/r/Caz8pLU7ya9SEA0

 

 

 

 

 

Disclaimer :- This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisor before engaging in any transaction.

SECTION 44AB vis a vis 44AD Queries Unfolded

 

Hello everyone

 

There was always a lot of confusion about applicability of income tax audit for certain class of person, those people who declare profit less than 6/8% of their turnover (6% in case of turnover done through banking channel and 8% in case of turnover done in cash mode) or in case of person declaring losses.

Currently also there is a lot of buzz about the same topic and this prevails in every tax audit season.

By this article I will try to unfold all the relevant provisions and hope by the end of this article everyone gets a bit more clarity relating to section 44AB/44AD .

I will draft this article in QNA pattern so that maximum doubts can be covered and that too in easy to understand language. In the end of the article will be sharing extremely easy flowchart to find out applicability of audit, so stay tuned and read till last.

Also for businesses having turnover above Rs 1 crore, there is not much ambiguity regarding applicability of audit. An analysis of cash transactions both receipt and payment would help in determining applicability of Tax audit. If cash transactions are less than 5% of total receipt AND payment, than even if your turnover is more than Rs 1 crore but upto Rs 10 crore tax audit is not required.(Applicable from assessment year 2021-2022)

So here goes the questions for businesses having turnover below Rs 1 crore :-

 

 

1.My turnover is less than Rs1 crore and  Profit is less than Rs 2.5 lacs but Total income is more than Rs 2.5 lacs whether I need to get my books of account audited?

Ø  The audit limit under section 44AB (a) of Rs 1 crore is not crossed, hence under section 44AB(a) audit is not applicable.

Now check whether in previous year you have opted to file return under section 44AD (irrespective of turnover).

If not opted for section 44AD, books of account maintained, income tax return filed with proper balance sheet and profit and loss account then no need for audit, prepare balance sheet and profit and loss account of current year and file return.

But if opted for section 44AD in previous year and this time opting out i.e. not showing 6/8% profit of the turnover then, you cannot opt for section 44AD for 5 successive year.(section 44AD(4)).

Now Section 44AD(5) comes into play which says, if Section 44AD(4) is applicable

 “AND”

 Total income is more than Rs 2.5 Lacs then you have to maintain books of account and get them audited.

In this case although profit is less than Rs 2.5 Lacs but Total income is more than Rs 2.5 Lacs audit under section 44AB(e) is applicable.

 

 

2. My Turnover is less than Rs 1 crore and  Loss is Rs 5 lacs and I do not have any other income whether i need to get my books of account audited?

Ø The audit limit under section 44AB (a) of Rs 1 crore is not crossed, hence under  section 44AB(a) audit is not applicable.

Now check whether in previous year you have opted to file return under section 44AD (irrespective of turnover).

If not opted for section 44AD, books of account maintained, income tax return filed with proper balance sheet and profit and loss account then no need for audit, prepare balance sheet and profit and loss account of current year and file return.

But if opted for section 44AD in previous year and this time opting out i.e. not showing 6/8% profit of the turnover then, you cannot opt for section 44AD for 5 successive year.(section 44AD(4)).

Now Section 44AD(5) comes into play which says, if Section 44AD(4) is applicable

“AND”

Total income is more than Rs 2.5 Lacs then you have to maintain books of account and get them audited.

In this case since there is loss of Rs 5 Lacs so Total income is less than Rs 2.5 Lacs, hence audit under section 44AB(e) is not applicable.

 

 

3.My turnover is Rs 99 lacs  all through banking channel and profit is 4 lacs whether i need to get my books of account audited?(since profit is less than 6%) I had opted for section 44AD in previous year.

Ø  The audit limit under section 44AB (a) of Rs 1 crore is not crossed, hence under  section 44AB(a) audit is not applicable.

Now check whether in previous year you have opted to file return under section 44AD (irrespective of turnover).

Yes opted 44AD in previous year and this time opting out i.e. not showing 6/8% profit of the turnover then, you cannot opt for section 44AD for 5 successive year.(section 44AD(4)).

Now Section 44AD(5) comes into play which says, if Section 44AD(4) is applicable

“AND”

Total income is more than Rs 2.5 Lacs then you have to maintain books of account and get them audited.

In this case since Total income is more than Rs 2.5 Lacs audit under section 44AB(e) is applicable.

 

The legislative intent behind this section, may be to act as deterrent for the assessee from misusing the provisions of presumptive taxation by frequently shifting from presumptive taxation to non-presumptive taxation and vice-versa.

 

Lets understand the legislative intent behind this clause by an example:-

In previous year Mr. Gupta had a business turnover of Rs. 90 lacs all through banking channel. He opted for  section 44AD in that year and declared profit @ 6% of turnover which comes to Rs 5,40,000/-. After claiming the deductions under section 80C of Rs 50,000/-, his total income comes out to be Rs. 4,90,000/-. He does not have any other deduction under the income tax act. Thus after claiming rebate under section 87A(since Total income does not exceed Rs 5,00,000/- eligible for rebate), his  tax liability was nil.

He has opted to file under old tax regime and not under section 115BAC.

Now in current year on Rs. 99 lacs turnover all through banking channel his

Net Profit (6% of Rs 99 lacs) is Rs       5,94,000/-

Gross Total income is Rs                    5,94,000/-

Section 80 C deduction Rs                    50,000/-

Total income is Rs                              5,44,000/-

Income tax on above income is Rs         22,152/-

5%   on Rs 2,50,000/- i.e. Rs                12,500/-

 20% on Rs    44,000/- i.e. Rs                 8,800/-

Total tax                             Rs              21,300/-

4% Cess on Rs 21,300/-i.e. Rs                   852/-

Total tax including cess       Rs              22,152/-

 

Now with an intention to evade tax worth Rs 22,152, Mr gupta wants to file return of income with balance sheet and profit and loss account so as to claim some dummy expenses worth Rs 45,000/- and ultimately reducing total income to Rs 4,99,000/- i.e below Rs 5,00,000/-. This will make him eligible for rebate under section 87A and thus in current year also his tax liability will be nil.

In order to curb these illegitimate switches between section 44AD and normal return filing with financial statements the government has enacted section 44AD(4) and 44AD(5).

 

4. I am opting for section 44AD since last 5 years, my turnover in previous  financial year crossed Rs 2 crore so I got my books of account audited for that year. Now in current financial year my turnover is only Rs 1.90 crore, do I need to get my books of account audit for this year or I can opt for filing under section 44AD?

Ø As per section 44AD(4) if a person opts for section 44AD in previous year and this time opting out i.e. not showing 6/8% profit of the turnover then, you cannot opt for section 44AD for 5 successive year.

In previous financial year, you were mandatorily required to get books of account audited since turnover crossed Rs 2 crore and you do not have the option to opt for section 44 AD for return filing. Since you have not opted out voluntarily for illegitimate tax evasion but to comply with the law you can opt for section 44AD in current financial year and audit is not compulsory.

 

FEW IMPORTANT POINTS :-

1. Only Individuals, Huf And   Partnership Firm excluding LLP Can Opt For Section 44AD.

2. A Person earning Commision Income Cannot Opt For Section 44AD.

3.A Person Can Opt For Section 44AD Only If Turnover Does Not Cross Rs 2 Crore In A Year.

Attaching herewith pdf of FAQ issued by income tax department which covers various queries relating to this topic.

 

https://www.incometaxindia.gov.in/Tutorials/13.%20Tax%20on%20presumptive%20basis%20in%20case%20of%20certain%20eligible%20businesses.pdf

 

Enjoy Reading!!!

 

For any suggestion or queries you can reach out to me at caakshatmodi@gmail.com or at 9028912025.

You can follow me on other social media handles from below links :-

https://www.linkedin.com/in/akshat-modi-2ba297a0

 

https://www.facebook.com/akshat.modi.372

 

https://www.instagram.com/akshat3636

 

https://twitter.com/ModiAkshat?t=k5aO4-AqiuUKUXfnu4Fsdg&s=08

 

https://t.me/fcaakshatmodi

 

https://g.page/r/Caz8pLU7ya9SEA0

 

  

Disclaimer :- This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

  

MY IPO EARNINGS, WHAT YOU SHOULD DO TO BENEFIT FURTHER

 

  

Hello everyone

I think IPO is one of the best way for a novice who wish to start his journey to invest in equity market. Reason being:-

Low Capital Requirement – For purchasing 1 lot of equity shares issued by the companies generally the investment requirement is below Rs 15,000.

Reading Material Available – When the companies go for public listing, a red herring prospectus is filed with SEBI wherein the company discloses information such as purpose of the issue; disclosure of any option agreement; under writer's commissions and discounts; promotion expenses; net proceeds to the issuing company (issuer); balance sheet; earning statements for last 3 years; names and address of all officers, directors, underwriters and stockholders owning 10% or more of the current outstanding stock; copy of the underwriting agreement; legal opinion on the issue etc

Further a lot of news, details about the company ipo floats in internet 15-20 days before IPO.

So Investor has a lot of information available after due understanding of which, he can take further investment decision whether to invest or not.

SAFEST WAY TO ENTER- Among the various forms of transactions like intraday trading, derivatives trading, short term trading and Long term investing, IPOs helps in developing habit of Long term investing .

Many people have made their fortunes by investing for long term and many have lost their whole wealth in intraday and derivatives trading.

So sincere request for every newbie to stay away from derivatives and intraday trading with excess margins provided by brokers and rather start with small capital and opt for long term investing or swing trading.

 

Now coming back to the topic about my ipo journey and its earnings.

I opened my demat account in 2016, my first ipo allotment was in 2018 and the company name was Cochin Shipyard Ltd. This IPO gave me a listing gain of 36.80% and in absolute terms profit was Rs 4537. My investment was Rs 12,330 and sold it on listing day for Rs 16,867, time period approx. 15 days.

So from here onwards my journey for investing in ipo started.

How does IPO works :- Lets take example of this recently listed company where within 12 days it completed the whole process from opening IPO for public, finalizing allotment to finally crediting share to demat account of applicant.

Harsha Engineers IPO Opening Date for subscription	Sep 14, 2022
Harsha Engineers IPO Closing Date for subscription	Sep 16, 2022
Basis of Allotment	Sep 21, 2022
Initiation of Refunds	Sep 22, 2022
Credit of Shares to Demat	Sep 23, 2022
Harsha Engineers IPO Listing Date	Sep 26, 2022

 

 

 

 

Company went for IPO to issue Rs 755 crore worth shares out of which Rs 300 crore would go to bank account of existing promoters(offer for sale) and Rs 455 crore would go the bank account of the company(Fresh issue).

There are certain quota reserved for NII, RII and QIB investors. The quota reserved for NII, RII and QIB are as follows:

NII- 15% of the issue (113.25 crores) oversubscribed  by 71.32 times

RII -35% of the issue (264.25 crores) oversubscribed  by 17.63 times

QIB-50% of the issue (375.50 crores) oversubscribed  by 178.26 times

 By oversubscription it means for every 1 share under respective category investors has applied for 71, 17 and 178 shares. This means investors are pretty much confident about the future prospects of the company and willing to invest their capital.

Also the GMP of the share is Rs 165 which is 50% at cmp of Rs 330 per share.

This means the share might list at Rs495 (330+165).

 

Modus Operandi To Benefit Further :-

1. Open Demat account for all the family members in your family.

2. Recommended to have internet banking in all the savings account of family members.

3. By applying through internet banking, one can use ASBA feature to block the amount from saving account and the amount gets deducted from bank account only if allotment is made to the applicant.

4. Search upcoming ipos in Google, and have a list of IPOs coming in near future.

5. Check company history, business background, future prospects, and financial statements then take a wise decision whether to invest or not.

6. Check Grey market premium of the issue from https://www.chittorgarh.com/ipo/ipo_dashboard.asp . Grey market premium changes everyday.

7.  I prefer this website before applying any ipo.

On last day of subscription I check the GMP and oversubscription in retail category to finalise my decision to invest in a particular ipo.

8. Currently I am applying through 8 different demat accounts including HUF. I will be sharing a separate article regarding benefits of HUF.

It’s not always a rosy picture to buy shares through ipo and book profits. Sterling and Wilson was my worst buy in IPO in the past still I am holding the same and hesitant to book loss.

This is the normal tendency of traders, they book small profits and hold larger loss making stocks.

Attaching herewith my profit/ loss in past 4 years, so that you can get an idea of my earnings and plan your future investments in Equity Market through IPO.

 

NAME OF SHARE	PURCHASE DATE	BUY VALUE	SALE DATE	SALE VALUE	PROFIT/ LOSS	ABSOLUTE RETURN IN %
COCHIN SHIPYARD	11-08-2017	12,330.00	12-08-2017	16,867.00	4,537.00	36.80
ICICI GENERAL INSURANCE	27-09-2017	14,542.00	28-09-2017	14,840.00	298.00	2.05
ROUTE MOBILE	17-09-2020	14,000.00	17-09-2020	28,516.00	14,516.00	103.69
GENERAL INSURANCE CORP	24-01-2018	13,872.00	31-01-2018	13,659.00	-213.00	-1.54
HDFC AMC	03-08-2018	14,300.00	06-08-2018	23,335.00	9,035.00	63.18
RVNL	10-04-2019	14,820.00	16-04-2019	19,719.00	4,899.00	33.06
HERANBA	03-03-2021	14,421.00	05-03-2021	19,745.00	5,324.00	36.92
RAILTEL	25-02-2021	14,570.00	26-02-2021	17,900.00	3,330.00	22.86
ROUTE MOBILE	17-09-2020	14,000.00	17-09-2020	28,668.00	14,668.00	104.77
SBI CARD	12-03-2020	14,350.00	06-07-2020	13,028.00	-1,322.00	-9.21
ABSLAMC	07-01-2021	14,240.00	11-01-2021	14,187.71	-52.29	-0.37
CLEAN	15-07-2021	14,400.00	19-07-2021	25,518.24	11,118.24	77.21
SHYAMMETL	22-06-2021	13,770.00	29-06-2021	16,253.43	2,483.43	18.04
GENERAL INSURANCE CORP	24-01-2018	13,837.00	31-01-2018	13,872.00	35.00	0.25
HDFC AMC	03-08-2018	14,300.00	06-08-2018	23,295.87	8,995.87	62.91
POLYCAB	15-04-2019	13,450.00	16-04-2019	16,161.00	2,711.00	20.16
HAL	26-03-2018	14,880.00	06-07-2020	9,989.00	-4,891.00	-32.87
CHEMCON	30-09-2020	14,960.00	01-10-2020	26,578.00	11,618.00	77.66
NAZARA TECHNOLOGIES	25-03-2021	14,313.00	01/04/2021	21,288.80	6,975.80	48.74
SHYAM METALLICS	23-06-2021	13,770.00	29/06/2021	16,429.50	2,659.50	19.31
VIJAYA DIAGNOSTICS	23-06-2021	14,868.00	14/09/2021	16,282.00	1,414.00	9.51
SBI CARD LTD	12-03-2020	14,345.00	06-07-2020	11,545.00	-2,800.00	-19.52
SW SOLAR (UNREALISED LOSS)	06-08-2019	14,820.00	NA	5,949.00	-8,871.00	-59.86
SW SOLAR (UNREALISED LOSS)	06-08-2019	14,820.00	NA	5,949.00	-8,871.00	-59.86
HARSHA ENGINEERS	24-09-2022	14,850.00	26-09-2022	21,870.00	7,020.00	47.27
TOTAL		3,65,418.00		4,54,075.55	88,657.55

To sum up this article, I would like to add that I had applied for many IPO’s but got allotment only in few. The ratio might come around 80 : 20 despite applying from all accounts. So getting allotment is the key and that is done on pro rata   basis in case of oversubscription. I usually sell shares on listing day and book listing gains.

 

ENHANCE YOUR VOCABULARY :-

NOVICE :- A person who is new and without experience in a certain job, situation, etc

SWING TRADING:- Swing trading involves taking trades that last a couple of days up to several months in order to profit from an anticipated price move.

GREY MARKET PREMIUM :- The premium at which the IPO shares are traded in the grey market.

 

NII :- Non Institutional Investors

RII :- Retail Individual Investors

QIB :- Qualified Institutional Buyers

 

Reading material :-

1.https://www.chittorgarh.com/faq/how_grey_market_works/78/

2. https://www.chittorgarh.com/report/ipo-in-india-list-main-board-sme/82/

 For any suggestion or queries you can reach out to me at caakshatmodi@gmail.com or at 9028912025.

You can follow me on other social media handles from below links :-

https://www.linkedin.com/in/akshat-modi-2ba297a0

https://www.facebook.com/akshat.modi.372

https://www.instagram.com/akshat3636

https://twitter.com/ModiAkshat?t=k5aO4-AqiuUKUXfnu4Fsdg&s=08

https://t.me/fcaakshatmodi

https://g.page/r/Caz8pLU7ya9SEA0

 

Disclaimer :- This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.