Income tax - Provisions

 SUMMARY TABLE — SPECIAL RATES FOR NRI Category      Section Rate Dividend 115A 20% Interest (general) 115A 20% Interest – IDF Bonds 115A 5% Interest – FCCB/FCEB 115AC 10% NRE Interest 10(4)(i) Exempt FCNR Interest 10(15)(iv)(fa) Exempt Royalty/FTS 115A 10% LTCG Equity 112A 10% STCG Equity 111A 15% LTCG (other assets) 112 20% LTCG on unlisted shares 112 10% LTCG on foreign exchange asset 115E 10% Investment income (forex assets) 115E 20% GDR LTCG 115ACA 10%

Income Tax Transfer Pricing (TP) rules , the total value of your international transactions in a financial year determines whether detailed TP compliance is required , regardless of individual shipment size. Let me explain: 1️⃣ Thresholds for TP Documentation (India) TP Requirement Applicable Transaction Value Notes Local TP documentation (Form 3CEB/Local File) International transactions > ₹2 crore in a FY Required even for small exporters if total exports to related parties exceed this limit. Master File (Global TP documentation) Total international transactions > ₹10 crore in a FY Only large exporters need to maintain Master File. No TP documentation Transactions ≤ ₹2 crore in a FY Arm’s-length principle still applies, but formal documentation not mandatory. Important: These thresholds apply to cumulative international transactions with related parties , not to individual shipments. 2️⃣ Key Implications Small individual shipment: Even ₹...

simple eligibility checklist for furnishing a LUT under GST to make sure you don’t risk rejection: ✅ LUT Eligibility Checklist (GST) GST Registration Must be a registered person under GST . Exporter should have valid GSTIN . Financial Year LUT is valid for one financial year . Must be renewed or re-submitted for the next financial year. Prosecution / Conviction Should not be prosecuted for tax evasion involving any amount exceeding ₹2.5 crore . Must not be convicted under GST or any previous tax law. Default Status Should not have any outstanding dues from previous LUT or bond (if required). Must not have been denied LUT earlier by GST authorities. Ineligibility under Notification No. 37/2017-Central Tax Certain exporters (like those with criminal prosecution for tax fraud or evasion above the threshold) cannot furnish LUT . In such cases, the exporter must submit a bond instead. Compliance with Export Rules Exports m...

🏢 GST on Rent – When Property Has Joint Owners When two or more persons jointly own a commercial property , GST implications depend on whether they are treated as separate suppliers or as an association of persons (AOP) under the GST Act. Let’s look at both scenarios clearly: 1️⃣ Separate Owners (Most Common Case) If each joint owner: Receives rent separately , and Has a separate agreement with the tenant , and Their individual rental income share is below ₹20 lakh per year , ➡️ Then each joint owner is treated as a separate supplier under GST. ✅ GST registration is NOT required for any joint owner whose individual share of rent is below ₹20 lakh per year (₹10 lakh in special category states). Example: A commercial property is owned jointly by A and B. Total rent: ₹60 lakh per year A’s share: ₹30 lakh (50%) B’s share: ₹30 lakh (50%) If A and B receive rent separately , each exceeding ₹20 lakh → both must register and charge GST on rent. If each ...

✅ Best Practices for Joint Owners of a Rented Commercial Property To avoid confusion and unwanted GST liability , joint owners should take the following steps: 1️⃣ Separate Lease Agreements Each co-owner should ideally execute a separate lease or rent agreement with the tenant for their respective share of the property. The agreement should clearly state: The portion (e.g., 50%, 25%) owned and rented by each owner. The rent amount payable to each co-owner separately. The separate bank account to which rent is credited. 🟢 Effect: Each owner’s rental income is considered separately for GST threshold (₹20 lakh), even if the tenant is the same. 2️⃣ Separate Rent Invoices / Receipts Each owner should issue their own invoice or rent receipt for their share of the rent. If an owner is registered under GST, they must: Use their own GSTIN , and Charge 18% GST on rent, File GST returns for their share. 3️⃣ Separate Bank Accounts Ideally...

  🧾 Scenario: A house property (say a building, office, or commercial space) is jointly owned by two or more persons. One of the co-owners is registered under GST , and the property is rented out to a client. 1️⃣ Determine the nature of supply Renting of commercial property is a supply of service under GST. (If residential property is rented for residence, it is exempt .) 2️⃣ GST registration and responsibility Case Who should charge GST Remarks All co-owners are jointly renting Each co-owner is treated as a separate supplier for their share. Each co-owner must register separately if their individual rental income exceeds ₹20 lakh (₹10 lakh in special category states) . One co-owner is GST registered and others are not The registered co-owner will issue a GST invoice for their share of rent only. The unregistered co-owner cannot charge GST on their portion. They can issue a normal (non-GST) receipt. 3️⃣ How to invoice the client (tenant) Let’s assume: Total r...

Purpose Codes in detail — especially P0104 (Export of goods) — which are required for foreign remittances under FEMA/RBI regulations. 🏦 1. What is a Purpose Code? A Purpose Code is a standardized code prescribed by the Reserve Bank of India (RBI) to identify the nature of a cross-border transaction — whether it’s for exports, imports, services, loans, investments , etc. These codes are used by Authorized Dealer (AD) Banks to report every foreign exchange transaction to the RBI through: EDPMS (Export Data Processing and Monitoring System) for exports, and IDPMS (Import Data Processing and Monitoring System) for imports. 🌍 2. Purpose Codes for Export Transactions When you receive a foreign inward remittance against an export, your AD Bank must enter the correct Purpose Code while reporting the transaction. Here are the most common export-related purpose codes 👇 Purpose Code Description (as per RBI) Used For P0104 Export of goods For physical ex...

reconciliation of export proceeds with the Authorized Dealer (AD) Bank using shipping bill details , when foreign buyer payments are received from abroad . This is a very important compliance process under Foreign Exchange Management Act (FEMA) and also linked to GST refund eligibility for exports. Let’s go step by step 👇 🌍 1. Background When an exporter makes a shipment, two parallel reporting systems are involved: System Purpose Key Document Customs (ICEGATE) Records export shipment Shipping Bill Bank (AD Bank) Records inward foreign exchange receipts Foreign Inward Remittance Certificate (FIRC) / Bank Realisation Certificate (BRC) These two datasets — Shipping Bill (customs) and FIRC/BRC (bank) — must match to prove that: The export declared in customs has been realized (i.e., payment received in convertible foreign exchange). The remittance belongs to the correct export shipment . 💰 2. When You Receive Payment from Abroad When your o...