TEXTILE JOB WORK, WORKS CONTRACT, GTA,REN, AND CAB GST RATE CHANGED

TEXTILE JOB WORK, WORKS CONTRACT, GTA,REN, AND CAB GST RATE CHANGED

GST Council Changes Rates at 20th GST Council Meeting

1. Textile job works* reduced to 5%
2. *Government works contract* reduced to 12% with ITC
3. *Job work for printing books* and newspapers etc will be 12% (if only content provided by publisher and all input of paper etc belongs to printer)
4. *Job work for printing books* and newspapers will be 5% (if Input used belongs to publisher and not Printer)
5. *Agriculture Services* of post Harvest and storage reduced to 12%
6. *Entry to Planetarium* - rate reduced to 18%
7. *Rent a Cab Operator*-Allowed option of 12% GST with full ITC. 5% GST with no ITC will also continue
8. *GTA*- Allowed option of 12% GST with full ITC under forward charge. 5% GST with no ITC will also continue (However, the GTA has to give an option at the beginning of financial year)
9. *Tractor parts* would attract the Goods and Services Tax (GST) rate of 18 % instead of 28 % previously.
10. *Margin/commission* payable to Fair Price Shop Dealers by Central/ State Governments- 0%
11. In case of *housekeeping services* such as plumbers through E-commerce Operator, it is the liability of the aggregator to pay GST
12. Goods and services used specifically for the purposes *FIFA Youth World Cup* later this year in India has been exempted from GST.

S. No.		Description of service		From	To
1.		Job  work  services  in  respect  of  the  textiles  and  textile   products  (including MMF yarn, garments, made-ups, etc. falling in Chapters 50 to 63)		18%/5%	5%
2		Services by way of printing of newspapers, books (including Braille books), journals and periodicals where only content is supplied by the publisher   and the physical inputs including paper used for printing belongs to the printer		18% with full ITC	12%  with  full ITC
3		Services by way of printing of newspapers, books (including Braille books), journals and periodicals using physical inputs owned by others (including an unregistered publisher/supplier)		18% with full ITC	5%   with   full ITC
4		Works   contract   services   provided   to   Government,   local   authority   or governmental  authority  and in  respect  of   post-harvest storage infrastructure for agricultural produce, mechanized food grain handling system		18% with full ITC	12%  with  full ITC
5		Margin/commission  payable  to  Fair  Price  Shop  Dealers  by  Central/  State Governments		18% with full ITC	Nil
6		Admission to planetarium		28% with full ITC	18%  with  full ITC
7		Rent-a-cab service		Allowed   option   of  12%   GST with full ITC. 5% GST with no ITC will also continue
8		Goods Transport Agency Service (GTA)		Allowed   option   of  12%   GST with   full   ITC   under   forward charge.  5%  GST  with  no  ITC will   also   continue.   (However, the GTA has to give an option atthe beginning of financial year)
	9		In case of   small house-keeping service providers (plumbers/carpenters) providing services through Electronic Commerce Operators (ECO), liability to pay GST placed on ECO
	10		Partnership  firm  or  a  firm  includes  LLP  (  Limited  liability  Partnership)  for  the  purposes  of  levy   (including exemption therefrom) of GST on legal services.
	11		To clarify that legal services (including representational services)  provided by an individual advocate or a senior advocate or a firm of advocates (including LLP)  provided to a business entity in taxable territory are covered under reverse charge mechanism
	12		Goods required by FIFA and Services provided by and to FIFA and its subsidiaries in connection with FIFA U- 17 World Cup to be hosted in India in 2017 shall be exempted from GST
	13		New crop insurance schemes  Pradhan Mantri Fasal Bima Yojana (PMFBY)  introduced from Kharif  2016- 17 in place  of  National  Agricultural  Insurance  Scheme  (NAIS)  and  Modified  National  Agricultural  Insurance Scheme (MNAIS), and Restructured Weather Based Crop Insurance Scheme (RWCIS) introduced  in place of Weather Based Crop Insurance Schemes , shall be extended exemption from GST.

Company to have Board of Directors (Section 149)

Company to have Board of Directors (Section 149)

Company to have Board of Directors (Section 149)

This section provides for the provisions for companies to have a duly constituted Board of Directors. According to this section:

Number of Directors

According to section 149 of the Companies Act, 2013, every company shall have a Board of Directors consisting of individuals as director and shall have:

(a)   Minimum number of directors (Not Applicable to Section 8 Company)

(i)                 Public Company – 3

(ii)               Private Company – 2, and

(iii)             One Person Company -1

(b)   Maximum number of directors

Company can appoint maximum number of 15 directors according to Companies, Act 2013.

Note: Provided that a company may appoint more than fifteen directors after passing a special resolution [Special resolution is required to be field in form No. MGT – 14 as per section 177(3)(a)].

As per the Notification G.S.R. 463(E) dated 5th June, 2015, the limit of maximum of 15 directors and their increase in limit by special resolution shall not apply to Government Company.

Further, as per the Notification G.S.R. 466(E) dated 5th June, 2015, the minimum and maximum limit of number of directors and their increase in limit by special resolution shall not apply to Section 8 companies.

(c)    Women Director [Section 149(1)]

At least one woman director shall be on the Board of such class or classes of companies as may be prescribed. [Second proviso to section 149(1)]

Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014 provides that the following class of companies shall appoint at least one woman director:

(1) every listed company.

(2) every other public company having:

a) paid–up share capital of one hundred crore rupees or more; or

b) turnover of three hundred crore rupees or more.

A company, which has been incorporated under the Act and is covered under provisions of second proviso to sub-section (1) of section 149 shall comply with such provisions within a period of six months from the date of its incorporation.

Further, any intermittent vacancy of a woman director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy whichever is later.

E.g. In ‘Z’ Ltd., an intermittent vacancy of the women director arises on 15th June, 2015. Thus, the vacancy shall be filled-up by the Board at the earliest but not later than the date of the next Board meeting or three months from the date of such vacancy whichever is later.

If after the vacancy, the immediate Board meeting was held on 14th August, 2015, then the vacancy shall be filled-up by 14th August, 2015 or by 14th September, 2015 (3 months from the date of such vacancy) whichever is later. In this case it shall be filled up by 14th September, 2015.

If after the vacancy, the immediate Board meeting was held on 14th October, 2015 then the vacancy shall be filled-up by 14th October, 2015 or by 14th September, 2015 whichever is later. In this case it shall be filled up by 14th October, 2015.

Explanation: For the purposes of this rule (woman director on board), it is clarified that the paid up share capital or turnover, as the case may be, as on the last date of latest audited financial statements shall be taken into account.

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Section 36(1)(vii) Bad Debts allowable under IT Act

Allowed as deduction subject to the following conditions:

(a) The debts or loans should be in respect of a business which was carried on by the assessee during the relevant previous year.

(b) The debt should have been taken into account in computing the income of the assessee of the previous year in which such debt is written off or of an earlier previous year or should represent money lent by the assessee in the ordinary course of his business of banking or money lending.

(i.e point(b) simply means that the debtors must be recognized in the books before w/off either in PY or earlier PYs) 

Provision for Doubtful debts banks and financial institutions etc.:[Sec 36(1)(viia):

Banks & financial institutions are allowed deduction in respect of provsion made for doubtful debts.Other assessees are not allowed deduction for the same.

Limits within which deduction allowed in respect of provision for doubtful debts
Bank  Type	Deduction	Remarks
1.Indian Banks	7.5% of adjusted total  income       + 10% of aggregate average  advances made by rural  branches	-Indian bank means any bank other than foreign banks, i.e. banking company incorporated in India. -Adjusted Total income means – Gross total Income before deduction under this section[i.e. Sec 36(1)(viia)]. -Average aggregate advances(See Note-1)
2.Foreign banks	5% of adjusted total  income	-Adjusted Total income means – Gross total Income before deduction under this section[i.e. Sec 36(1)(viia)]
3.Public Financial  institutions, State  Financial Corporation	5% of adjusted total  income	-Adjusted Total income  means – Gross total Income before deduction under this section[i.e. Sec 36(1)(viia)]

Note-1 Average aggregate advances is worked out as under:

Step-1 Separately take advances made by every rural branches.

Step-2 Calculate average advances of a branch i.e. Advances made divided by no. of months o/standing.

Step-3 Sum up the average advances by every branch.   

Proviso & explanation to Sec 36(1)(vii)

- Under section 36(1)(vii), bad debt actually written off as irrecoverable in the books of account of the assessee is deductible.

- Proviso to Sec 36(1)(vii) provides that  in the case of entities for which provision for bad and doubtful debts is allowable under section 36(1)(viia), deduction for bad debts written off under said clause (vii) shall be limited to the amount by which the bad debt written off exceeds the credit balance in the provision for bad and doubtful debts account made under section 36(1)(viia).

- Further, no deduction shall be allowed unless the assessee has debited the amount of such debt or part of such debt in that previous year to the provision for bad and doubtful debts account made under section 36(1) (viia).

- In the case of an assessee to which section 36(1)(viia) applies, the amount of deduction in respect of the bad debts actually written off under section 36(1)(vii) shall be limited to the amount by which such bad debts exceeds the credit balance in the provision for bad and doubtful debts account made under section 36(1)(viia) without any distinction between rural advances and other advances.

[Explanation to Sec 36(1)(viia)]

Example:

S.no.	Particulars	Amount(in lacs)
1.	Provision for bad and doubtful debts under section 36(1)(viia) upto A.Y.2014-15	100
2.	Gross Total Income of A.Y.2015-16 [before deduction under section 36(1)(viia)]	800
3.	Aggregate average advances made by rural branches of the bank	300
4.	Bad debts written off (for the first time) in the books of account (in respect of urban advances only) during the previous year 2014-15	210

Compute the deduction allowable under section 36(1)(vii) for the A.Y.2015-16.

Solution     

Computation of Bad debts allowed u/s 36(1)(vii)

	Particulars	Amount
	Bad Debts w/off for FY 14-15	210
Less:	Balance in Provision for doubtful debts u/s 36(1)(viia)	190
	Bad debts allowed u/s 36(1)(vii)	20

Note-1

Calculation of provision for doubtful debts

	Particulars	Amt.(in lacs)
1	Balance in Provision for doubtful debts u/s 36(1)(viia)
	Opening Balance in Provision for doubtful debts A/c	100
Add:	Provision for FY 14-15(deduction allowable for FY 14-15)
	7.5% of gross total income	60
	10% of aggregate average advances by rural branches	30
	Balance in Provision for doubtful debts u/s 36(1)(viia)	190

Recovery of bad debt subsequently taxed as deemed income[Sec 41(4)]-

- If a deduction has been allowed in respect of a bad debt under section 36(1)(vii), and subsequently the same is  recovered in part or full then the amount so recovered is taxable as deemed income under the business income head.

- Such deemed income  same  will be chargeable as  business income of the previous year in which it is recovered, whether or not the business or profession in respect of which the deduction has been allowed is in existence at the time.