Goods and services tax

ADVISORY ON DIFFERENCE IN VALUE OF TABLE 8A AND 8C In line with the recent amendments outlined in Notification No. 12/2024-Central Tax and Notification No. 20/2024-Central Tax, for FY 2023-24, the total credit available for inwards supplies will be auto-populated in Table 8A of Form GSTR 9 from GSTR-2B, whereas Table 8C must still be manually filled for ITC on inwards supplies received during the FY but availed in the following FY, within a specified period. This change has led to concerns over possible mismatches between the values in Tables 8A and 8C of GSTR 9. A key factor in this discrepancy lies in the shift from GSTR-2A to GSTR-2B as the data source for Table 8A, which may cause inflated values for FY 22-23 and understated values for FY 23-24. Several specific scenarios highlight how to manage such differences: For invoices from FY 23-24, which are reported in GSTR 1 after the due date of March 2024, taxpayers should report the ITC in Table 8C. If an ITC is claimed in FY 23-24 but reversed due to non-payment within 180 days, the reclaimed ITC should be reported in Table 6H of GSTR 9 for FY 24-25, not in FY 23-24. Similarly, for invoices where goods were not received in FY 23-24 but the ITC was later reclaimed in FY 24-25, the transaction should be recorded in Table 8C. The advisory also clarifies that ITC carried forward from FY 22-23 in Table 8A of GSTR 9 for FY 23-24 need not be reported again in Table 8C. Additionally, if ITC is claimed, reversed, and then reclaimed within FY 23-24, it should only be reported in Table 6H, without duplication in Table 7. These clarifications are provided to assist taxpayers in accurately reconciling the differences between the two tables. (Goods and Services Tax Network)

MANDATORY SEQUENTIAL FILING OF GSTR-7 RETURNS Effective from November 1, 2024, taxpayers are required to file GSTR-7 returns sequentially, as per Notification No. 17/2024-Central Tax, dated September 27, 2024. This means that GSTR-7 must be filed in chronological order, starting with the return for the October 2024 tax period. It is important to note that if no deductions have been made in a particular month, taxpayers are still required to file a Nil return for that month. This update addresses the confusion surrounding previous FAQs, which indicated that sequential filing was not mandatory. Taxpayers are advised to adhere to this new filing process to ensure compliance with the latest regulations. For further assistance, taxpayers may contact the GSTN helpdesk. (Goods and Services Tax Network)

GSTR-2B AND INVOICE MANAGEMENT SYSTEM Some taxpayers did not have their GSTR-2B generated for the October 2024 period on November 14, 2024. The issue arises from the design of the Invoice Management System (IMS), which restricts GSTR-2B generation under specific circumstances. Firstly, taxpayers who have opted for the QRMP (Quarterly Return Monthly Payment) scheme will only have their GSTR-2B generated for the last month of the quarter, not for the first two months. For example, in the quarter of October to December 2024, GSTR-2B will only be available for December, not for October or November. Secondly, if taxpayers have not filed their GSTR-3B for previous periods, their GSTR-2B will not be generated until the pending GSTR-3B is filed. For instance, if the GSTR-3B for September 2024 is pending, the GSTR-2B for October 2024 will not be generated until the September 2024 GSTR-3B is filed. Once the pending GSTR-3B is filed, taxpayers can generate their GSTR-2B for October 2024 by clicking the “Compute GSTR-2B (OCT 2024)” button on the IMS dashboard. (Goods and Services Tax Network)

REPORTING TDS DEDUCTED BY SCRAP DEALERS As per Notification No. 25/2024-Central Tax, effective from October 10, 2024, any registered person receiving supplies of metal scrap, classified under Chapters 72 to 81 of the Customs Tariff Act, 1975, from another registered person, is required to deduct TDS under Section 51 of the CGST Act, 2017. Several taxpayers have raised concerns about being unable to report TDS deducted in October 2024, as their GST registrations were only approved in November 2024. This issue arises because the existing GSTN system design does not allow returns for periods before the registration month to be filed. To resolve this, taxpayers who were granted registration in November 2024 but deducted TDS in October 2024 are advised to report the consolidated amount of TDS deducted from October 10, 2024, to November 30, 2024, in the GSTR-7 return for November 2024. This will ensure compliance with the new provisions under the Notification. (Goods and Services Tax Network)

TIME LIMIT FOR REPORTING E-INVOICE As per the earlier advisory dated September 13, 2023, a 30-day time limit for reporting e-invoices on the IRP portal was implemented for taxpayers with an Annual Aggregate Turnover (AATO) of 100 crores and above. This threshold has now been lowered, and from April 1, 2025, taxpayers with an AATO of 10 crores and above will also be required to comply with the 30-day reporting limit for e-invoices. This means that e-invoices, Credit Notes, and Debit Notes must be reported on the IRP portal within 30 days from the date of the invoice. For example, if an invoice is dated April 1, 2025, it must be reported by April 30, 2025, and the system will prevent reporting after 30 days. Taxpayers must ensure compliance with this new time frame to avoid any issues with e-invoice reporting. There will be no such restriction for taxpayers with an AATO of less than 10 crores as of now. This new reporting requirement will be effective from April 1, 2025, providing taxpayers with sufficient time to adjust their processes. (Goods and Services Tax Network)

AUTHORISED E-INVOICE VERIFICATION APPS GSTN has released a consolidated document listing authorized B2B e-invoice verification apps available for download. This document is designed to provide taxpayers with the latest information on approved apps for verifying e-Invoices. Taxpayers are encouraged to consult this reference to ensure they are using authorized tools for e-invoice verification. (Goods and Services Tax Network)

(For queries or more information about goods and services tax, contact our colleague Ashish at ashish.gandhi@greenvissage.com)

Income tax

CONDONATION OF DELAY IN FILING FORMS 9A, 10, 10B, AND 10BB The CBDT has issued Circular No. 16/2024 dated 18th November 2024, addressing the delay in filing Forms 9A, 10, 10B, and 10BB for trusts. These forms must be filed to claim exemptions or report income related to charitable and religious purposes, as well as institutions seeking exemption under Section 10(23C) of the Income Tax Act. In cases where these forms are filed late, the Income Tax Department often treats the receipt amount as income, leading to substantial tax liabilities. To mitigate this, taxpayers can either file an appeal with the Commissioner of Income Tax (Appeals) [CIT(A)] or submit a request for condonation of delay. The new application for condonation of delay must be filed within three years from the end of the assessment year (AY) in question. For instance, if applying for AY 2022-23, the application must be submitted by the end of AY 2025-26. The application will be handled by different authorities based on the delay duration. Key steps for applying include establishing valid grounds for the delay, providing supporting documents such as court judgments or relevant notifications, submitting a written explanation, and ensuring the transfer of PAN to the Exemption Wing of the Income Tax Department before applying. The competent authority must resolve the application within six months, though delays in disposal are not uncommon. (Central Board of Direct Taxes)

ADVANCE TAX PAYMENT DUE DATE As the deadline for the third instalment of advance tax payment for FY 2024-25 approaches, taxpayers are reminded that December 15, 2024, falls on a Sunday. According to tax regulations, if the deadline for any payment or compliance falls on a public holiday or non-working day, it is typically extended to the next working day. Therefore, taxpayers can make their third instalment payment of advance tax on Monday, December 16, 2024. Advance tax applies to individuals, companies, and other entities whose tax liability exceeds INR 10,000 in a financial year. For taxpayers, this third instalment covers the payments due for September, October, and November. Given the extended deadline, taxpayers are encouraged to make the payment promptly to avoid penalties or interest charges. For detailed information and updates, taxpayers are advised to check official announcements and use online payment systems for convenience. (Economic Times)

TAX NOTICES CANNOT BE ISSUED TO DEAD PERSON The Bombay High Court ruled on December 13, 2024, that the Income Tax Department cannot issue reassessment orders to deceased individuals. This decision arose from a case where a reassessment notice was issued to a woman who had died in 2020. The court emphasized that reassessment notices must provide the assessee with an opportunity to defend themselves, which is not possible after death. As such, reassessment orders issued posthumously are invalid, and legal heirs cannot be bound by such orders. This ruling upholds the principle of ensuring the right to a fair hearing in tax matters. (Hindustan Times)

NON-DISCLOSURE OF FOREIGN ASSETS The Income Tax (IT) Department has started issuing notices to Indian residents with undeclared foreign Employee Stock Options (ESOPs), foreign assets, and income, including dividends from shares, properties, and other financial assets. This marks a significant shift as it is the first time many taxpayers have been notified about their non-disclosure of foreign income and assets. For example, a case in Gujarat involves an individual working for a Bengaluru-based IT firm, holding ESOPs from their US parent company. The tax authorities are now receiving information about foreign assets from countries like the USA and UAE. The IT Department has warned that individuals who fail to disclose their foreign assets, including bank accounts, property, and investments, by December 31 may face penalties or prosecution under the Black Money Act. Tax professionals have highlighted the importance of filing revised returns that declare foreign assets, such as bank accounts, insurance contracts, immovable property, and interests in foreign equity, trusts, and custodial accounts. Failure to disclose foreign income can result in a penalty of up to 200% of the tax evaded, or a fine of Rs 10 lakh for non-disclosure. (Business Standard)

(For queries or more information about income tax, contact our colleague Sneha at sneha.halder@greenvissage.com)

Customs and foreign trade

INDIA’S TRADE DEFICIT HITS ALL-TIME HIGH India’s trade deficit reached a record high of USD 37.8 billion in November, exacerbated by a surge in imports, particularly from China and the UAE. This significant widening of the deficit highlights ongoing concerns regarding the country’s trade balance. Despite the continued growth of exports, which saw a year-on-year rise in sectors such as gems and jewellery, petroleum products, and engineering goods, the increase in imports outpaced the export growth. Imports were largely driven by rising crude oil prices and a surge in gold and electronic imports. In particular, imports from China and the UAE saw significant increases, contributing to the imbalance. China’s share in India’s imports has steadily risen, with goods ranging from machinery to chemicals, while the UAE remains a major trade partner due to the growing volume of oil and gold trade. This widening trade deficit puts pressure on India’s currency and its overall economic stability. The government is now focusing on measures to curtail this deficit, including boosting exports and reducing reliance on imports. However, despite these efforts, the current global economic situation, including rising commodity prices and geopolitical tensions, is complicating the issue, making it harder for India to reduce its trade gap in the short term. (Business Standard)

IMPORTS FROM UAE SURGE 109% IN NOVEMBER TO USD 6.12 BILLION In November, India saw a dramatic 109% surge in imports from the UAE, reaching USD 6.12 billion. This surge is attributed to the India-UAE Comprehensive Economic Partnership Agreement (CEPA), which was implemented in May 2022. The CEPA has facilitated an increase in the flow of goods and services between the two nations, driving up trade volumes. The UAE is a key supplier of oil and petroleum products to India, but it also plays a major role in the trade of gold, aluminium, and electronics. The CEPA, which aims to boost bilateral trade by eliminating tariffs on a range of products, has significantly expanded economic ties between India and the UAE. The agreement has also enhanced India’s access to the UAE’s rich markets for goods such as textiles, pharmaceuticals, and agricultural products. This trade surge is also reflective of India’s increasing reliance on the UAE for energy imports and its status as a hub for re-exporting goods to the rest of the world. As a result, India’s import bill has seen a steep rise, though it is hoped that the increased trade volume will eventually balance out through increased exports of Indian goods and services to the UAE. While the agreement has opened new trade avenues, the rising import volume has also contributed to India’s growing trade deficit, adding to the economic challenges faced by the country. (Ministry of External Affairs, UAE)

INDIA-UK BUSINESS BOOMS Bilateral business between India and the UK has been booming, fueled by ongoing negotiations for a free trade agreement (FTA) that is expected to significantly boost trade between the two nations. The two countries have set a target of reaching a USD 100 billion trade target by 2030, driven by a shared interest in expanding trade in sectors such as technology, pharmaceuticals, agriculture, and services. The UK has long been a key partner for India, both in terms of trade and investment. However, the potential FTA is seen as a game-changer in terms of deepening these economic ties. Indian businesses are optimistic that the deal will help to unlock new opportunities, particularly in the areas of digital trade, financial services, and education. Similarly, the UK stands to gain access to the rapidly growing Indian market, particularly in sectors such as green energy, infrastructure, and consumer goods. The negotiations for the FTA have gathered momentum since the UK’s exit from the European Union, with both countries keen on establishing more independent trade arrangements. The free trade agreement is expected to remove tariffs and increase market access for Indian goods and services, while also opening up new avenues for UK businesses to tap into India’s vast market. While challenges remain in terms of negotiating terms and tariffs, both India and the UK remain hopeful that a robust trade deal will soon be finalized, signalling the beginning of a new era in their bilateral economic relationship. (Economic Times)

GTRI SUGGESTS DIVERSIFYING IT EXPORTS The Global Trade Research Initiative (GTRI) has proposed several strategic measures to improve India’s trade balance, which has been under pressure due to rising imports and widening deficits. The GTRI’s key recommendation is to diversify India’s IT exports and reduce import duties to better manage the country’s trade imbalance. India’s IT sector has traditionally been a major driver of export revenues, but GTRI experts warn that overreliance on traditional IT services like business process outsourcing (BPO) and software solutions could limit future growth. The organization advocates for expanding into newer sectors, such as cybersecurity, artificial intelligence, and cloud computing, where India has a competitive advantage but remains underrepresented in global markets. By diversifying exports, India can reduce its vulnerability to global economic fluctuations and better align with the evolving digital economy. Additionally, GTRI has called for reducing import duties on key inputs for the manufacturing sector, particularly in high-tech industries. High import duties on raw materials and machinery make Indian products more expensive on the global market, limiting their competitiveness. Lowering these tariffs would help reduce costs for Indian manufacturers, making their exports more attractive and boosting industrial output. GTRI’s recommendations are aimed at balancing trade by boosting exports while also reducing dependency on high-cost imports, thus helping to ease India’s growing trade deficit. (Business Standard)

(For queries or more information about customs and foreign trade, contact our colleague Adnan at adnan.ginwala@greenvissage.com)

Corporate and allied laws

2X HIKE IN SME APPLICATION SIZE The Securities and Exchange Board of India (SEBI) has proposed stringent regulations for small and medium enterprises (SMEs) looking to list on stock exchanges, to bolster the credibility and integrity of the segment. The proposal includes doubling the minimum application value to INR 2 lakh for investors, as well as enhancing eligibility conditions for SME IPOs. Sebi intends to increase the minimum number of allottees required for a successful listing from 50 to 200. Additionally, there are new measures aimed at preventing fraudulent practices, such as the diversion of funds or the inflation of stock prices through circular transactions. The proposed changes also include stricter lock-in requirements for promoters, with a five-year lock-in for the minimum promoter contribution (MPC) and phased release of lock-ins on shares held more than MPC. Other measures include increasing the minimum issue size to INR 10 crore and mandating a minimum operating profit of INR 3 crore over the preceding three years. Sebi is also aiming to introduce higher disclosure norms, such as quarterly results, and more robust monitoring of related-party transactions, which have been a point of concern due to the high incidence of such transactions among listed SMEs. These regulations are seen as part of an effort to improve transparency and corporate governance on the SME platform, which has grown significantly in market capitalization, with Rs 2 trillion now being raised through SME IPOs. (Business Standard)

REVIEW OF CUSTODIAN NORMS TO EASE OPERATIONS The Securities and Exchange Board of India (SEBI) has proposed several measures aimed at easing operations and compliance for custodians, entities responsible for managing the assets of foreign portfolio investors (FPIs). The changes aim to update regulatory frameworks that have remained largely unchanged for nearly three decades. One of the key proposals is a review of the net worth criteria for custodians, which has been set at INR 50 crore since 1996. SEBI now plans to increase this requirement to INR 100 crore. Custodians who currently do not meet the new threshold will be granted three years to comply with the new norms. In addition to the net worth revision, SEBI is proposing the relaxation of certain operational procedures. This includes allowing local custodians and market participants to rely on Know Your Customer (KYC) documentation attested by global custodians. This would streamline the process, reducing the burden on local entities. SEBI is also considering increasing the monitoring and compliance responsibilities of custodians. These entities would be held to higher standards of governance, risk management, and technical capability, aligning their obligations with those of large stock brokers or brokers deemed systemically important. These additional requirements are aimed at ensuring the custodians can handle the growing complexity and scale of the financial market. A working group formed by SEBI has also recommended easing certain operational requirements for custodians, such as the storage of physical records and processes related to changes in control and the code of conduct. As of September 2024, custodians were managing around INR 278.5 trillion in assets, a significant increase from INR 2.7 trillion in 2002, highlighting the growing importance and scale of their role in India’s financial markets. (Business Standard)

(For queries or more information about corporate and allied laws, contact our colleague Adnan at adnan.ginwala@greenvissage.com)

Finance and banking

RBI KEEPS MPC RATES UNCHANGED In its latest monetary policy announcement on December 6, 2024, the Reserve Bank of India (RBI) kept the repo rate unchanged at 6.5%, marking the 11th consecutive meeting with no adjustments. The six-member Monetary Policy Committee (MPC), led by Governor Shaktikanta Das, voted by a 4-2 majority to maintain a “Neutral” policy stance. The key focus remains on balancing inflation and growth, with the RBI signalling its intent to use various policy tools to align inflation with the target while supporting economic expansion. In addition to the repo rate decision, the RBI reduced the Cash Reserve Ratio (CRR) by 50 basis points to 4%, which will release approximately INR 1.16 lakh crore into the banking system in two phases. As a result, the liquidity available for lending and investments is expected to increase, aiding economic activity. The RBI also revised its GDP growth forecast for FY25 downward, adjusting the estimate from 7.2% to 6.6%. Inflation projections for FY25 were raised from 4.5% to 4.8%, with the third-quarter forecast adjusted sharply higher to 5.7%. The central bank anticipates gradual moderation in inflation by FY26, with targets set at 4.6% in Q1FY26 and 4% in Q2FY26. Additional measures announced include linking the FX-Retail platform to the Bharat Connect platform, raising the collateral-free agriculture loan limit to INR 2 lakh, and launching an initiative to regulate Artificial Intelligence in the financial sector. These moves highlight the RBI’s ongoing efforts to enhance financial inclusivity and address emerging challenges in the banking sector. (Live Mint)

SANJAY MALHOTRA APPOINTED AS NEW RBI GOVERNOR The Government of India has appointed Sanjay Malhotra as the 26th Governor of the Reserve Bank of India (RBI). Malhotra, a seasoned Indian Administrative Service (IAS) officer, will assume office on December 11, 2024, following the conclusion of Shaktikanta Das’s tenure. At 56, Malhotra brings over three decades of experience in various sectors, including finance, taxation, power, and information technology. Notably, he has previously served as Secretary (Revenue) in the Ministry of Finance, where he was instrumental in shaping India’s tax policies. His leadership is expected to steer the RBI through complex economic challenges, continuing its pivotal role in managing monetary policy and supporting India’s economic growth. Malhotra replaces Shaktikanta Das, who held the position since December 2018 and was reappointed in 2021 for an extended term. Das’s tenure is credited with stabilizing the financial system and successfully navigating market uncertainties. With Malhotra now at the helm, there is anticipation that his extensive background in finance and governance will usher in fresh perspectives for the RBI’s policies and operations. (Financial Express)

CEILING ON REMUNERATION OF NON-EXECUTIVE DIRECTORS OF BANKS The Reserve Bank of India (RBI) has increased the annual remuneration ceiling for non-executive directors at banks to INR 30 lakh. This move aims to attract skilled professionals and align with the evolving needs of the banking sector. It applies to both private and public sector banks, ensuring that these roles remain competitive and appealing to experienced candidates. The revised cap is expected to improve the overall quality of governance within banks. (Economic Times)

(For queries and more information about banking and finance, contact our colleague Kethaan at ksparakh@greenvissage.com)

Accounting and management

NFRA PROPOSES EXTENDING AUDIT STANDARDS TO LLPS The National Financial Reporting Authority (NFRA) has proposed extending auditing standards for companies to limited liability partnerships (LLPs). During its 19th board meeting, the NFRA recommended that the 40 finalized standards on auditing (SA) and related quality management measures, which were developed for company audits, be applied to LLPs as well, with necessary adjustments. The proposal aims to improve auditing practices in LLPs, a hybrid business structure that combines elements of both companies and partnerships. Currently, LLPs are audited under the standards set by the Institute of Chartered Accountants of India (ICAI), but there are no specific auditing standards issued for them. This regulatory gap has prompted the NFRA to recommend that the proposed auditing norms, upon approval by the government, be implemented from April 2026. These standards would ensure more consistency and higher quality audits for LLPs, reflecting the growing importance of these entities in India’s business ecosystem. Despite broad support for the recommendations from NFRA members, including the Reserve Bank of India (RBI) and the Comptroller and Auditor General of India (CAG), the Institute of Chartered Accountants of India (ICAI) expressed reservations about certain aspects. In particular, ICAI raised concerns about proposals related to group and joint audits, fearing that these could lead to excessive concentration of work among a few large audit firms, as well as duplication of efforts. (Business Standard)

CMA EQUIVALENT TO CA IN KERALA GOVERNMENT JOBS The Kerala State Government has officially recognized the Institute of Cost Accountants of India’s (ICMAI) Cost and Management Accountant (CMA) qualification as equivalent to the Chartered Accountancy (CA) qualification for public sector job appointments. The Personnel and Administrative Reforms (Rules) Department issued the order stating that passing the final exams of ICMAI, leading to designations such as Associate Cost and Management Accountant (ACMA) or Fellow Cost and Management Accountant (FCMA), will now be treated on par with CA membership for recruitment in state government departments, public sector undertakings, and state-run institutions. It enables CMA professionals to compete for a broader range of financial roles, previously dominated by Chartered Accountants. This change is seen as part of Kerala’s broader goal to prioritize merit-based appointments and attract specialized skills to the public sector. (Study Café)

(For queries or more information about accounting, contact our colleague Rahul at rahul.mundada@greenvissage.com)

Payroll and personal finance

100% DIGITAL PAYROLL PROCESSING Darwinbox has launched a cutting-edge payroll upgrade, offering 100% digital payroll processing for the first time in India. The new platform leverages the proprietary RIVeR (Review, Initiate, Verify & e-approve, Release & Report) framework, which streamlines payroll management by consolidating all payroll processes into a single system. This eliminates manual intervention, reduces errors, and improves compliance. By automating data flow across HR systems, the solution ensures high accuracy and seamless reconciliation. The platform also supports in-the-flow verification and e-approval, making it easier for companies to manage payroll and stay audit-ready. Darwinbox’s payroll system is expected to revolutionize payroll management, especially for large organizations with complex payroll structures. This new solution also aligns with the company’s vision of providing businesses with innovative HR tech to streamline operations globally. As the first of its kind in India, this launch is set to significantly improve payroll processing efficiency for businesses across industries. (Economic Times)

WITHDRAW EPF THROUGH ATM  Starting January 2025, the Employees’ Provident Fund Organisation (EPFO) will introduce a convenient new feature, allowing subscribers to withdraw their provident fund savings directly via ATM cards linked to their EPFO accounts. This facility will enable quicker and easier access to funds, up to a specified limit, and is part of a broader IT infrastructure upgrade, known as EPFO 2.01. The modernization aims to streamline operations, reduce claim rejections, and improve the speed of transactions, all designed to offer a smoother experience for the 70 million EPFO subscribers. The overhaul, which includes the development of a new advanced software platform, has already improved customer service, offering features such as end-to-end auto-processing and centralized claim settlements. EPFO subscribers can also access their account details online, file claims through the Umang app, and pensioners can upload digital life certificates. These updates align with the government’s goal to make the EPFO system as efficient as global banking systems. (Hindustan Times)

(For queries or more information about payroll and personal finance, contact our colleague Snigdha at kumari.snigdha@greenvissage.com)