May 2021 / India

The Central Board of Direct Taxes (CBDT) has specified the thresholds in determining significant economic presence (SEP) of a non-resident in India under section 9(1)(i) of the Income Tax Act (ITA) for the purpose of attributing income in India.

The thresholds, which will apply beginning 1 April 2022, are set as follows:

• payment threshold: transactions involving goods, services or property carried out by a non-resident with any person in India, including data or software downloads in India, equivalent to INR 20 million or more of the prior year's total payments; or
• user threshold: systematic and continuous soliciting of business activities or engaging in interaction with 300,000 or more users in India.

Under the ITA, the SEP of a non-resident constitutes a business connection in India, which in turn determines the non-resident's taxable income in India.

The thresholds are issued in Notification No. 41/2021 of 3 May 2021.

In light of the COVID-19 pandemic, the government has extended various deadlines, including for filing of appeals, objections, tax returns and payment of tax deducted at source, among other things, to ease the compliance burden for affected taxpayers.

Under the Income Tax Act (ITA), the deadlines for the following actions have been extended until 31 May 2021, unless specified otherwise:

• an appeal to the Commissioner (Appeals) under chapter XX of the ITA for which the last day of filing is 1 April 2021 or thereafter (the deadline is the prescribed deadline under the ITA or 31 May 2021, whichever is later);
• an objection to the Dispute Resolution Panel under section 144C Of the ITA for which the last day of filing is 1 April 2021 or thereafter (the deadline is the prescribed deadline under the ITA or 31 May 2021, whichever is later);
• filing of an income tax return in response to a notice under section 148 of the ITA for which the last day of filing is 1 April 2021 or thereafter (the deadline is the prescribed deadline in the notice or 31 May 2021, whichever is later);
• filing of a belated return under section 139(4) of the ITA and revised return under section 139(5) of the ITA for the assessment year 2020-21 for which the last day of filing is 31 March 2021;
• payment of tax deducted at source under section 194-IA (purchase of immovable property), section 194-IB (rent paid by certain persons) and section 194M (certain payments made by certain persons) of the ITA and filing of the challan-cum-statement for such tax deducted, which are required to be paid and furnished by 30 April 2021; and
• a statement in Form No. 61, containing particulars of declarations received in Form No. 60, which is due to be furnished by 30 April 2021.

Under the Central Goods and Services Tax Act (CGSTA), read in conjunction with the Integrated Goods and Services Tax Act and Union Territory Goods and Services Tax Act:

• the filing/furnishing deadlines for the following GST forms have been extended as follows:
  • Form GSTR-1 and IFF for April 2021 (additional 15 days);
  • Form GSTR-4 for financial year 2020-21 (31 May 2021); and
  • Form ITC-04 for January to March 2021 (31 May 2021);
• for the completion or compliance of any action prescribed under the CGSTA, such as the passing of orders and notices, filing of appeals and furnishing of reports and returns, by any authority or by any person, which falls during the period 15 April 2021 to 30 May 2021, the deadline has been extended until 31 May 2021. If the completion or compliance of any action prescribed under rule 9 of the Central Goods and Services Tax Rule falls within the period 1 May 2021 to 31 May 2021, the deadline has been extended until 15 June 2021; and
• where a notice has been issued for the rejection of a refund claim and where the time limit for the issuance of an order falls during the period 15 April 2021 and 30 May 2021, the deadline for the issuance of such order has been extended by 15 days after the receipt of the reply to the notice from the registered person or 31 May 2021, whichever is later.

The government also reduced the interest rate from 18% to 0%/9% for delayed GST payments and waived late payment fees for March and April 2021.

The government has extended various deadlines under the Income Tax Act, including the filing of tax returns and furnishing of statements, among other things, on account of the COVID-19 pandemic.

The extensions apply to the following statements/forms/returns:

• statement of financial transactions for the financial year (FY) 2020-21: from 31 May 2021 to 30 June 2021;
• statement of reportable accounts for 2020: from 31 May 2021 to 30 June 2021;
• statement of deduction of tax for the last quarter of FY 2020-21: from 31 May 2021 to 30 June 2021;
• certificate of tax deducted at source (Form No. 16): from 15 June 2021 to 15 July 2021;
• TDS/TCS book adjustment statement (Form No. 24G) for May 2021: from 15 June 2021 to 30 June 2021;
• statement of deduction of tax from contributions paid by trustees of an approved superannuation fund for FY 2020-21: from 31 May to 30 June 2021;
• statement of income paid or credited (Form No. 64D) by an investment fund to its unit holder for the previous year (PY) 2020-21: from 15 June 2021 to 30 June 2021;
• statement of income paid or credited (Form No. 64C) by an investment fund to its unit holder for PY 2020-21: from 30 June 2021 to 15 July 2021;
• income tax return for the assessment year (AY) 2021-22:
  • due on 31 July 2021: 30 September 2021;
  • due on 31 October 2021: 30 November 2021; and
  • due on 30 November 2021: 31 December 2021;
• belated/revised income tax return for AY 2021-22 due on 31 December 2021: 31 January 2022;
• report of audit for PY 2020-21: from 30 September 2021 to 31 October 2021; and
• report from an accountant for persons entering international transactions or specified domestic transactions for PY 2020-21: from 31 October 2021 to 30 November 2021.

According to a press release of 13 May 2021, published by the Indian Ministry of Labour & Employment, the BRICS countries (Brazil, China (People's Rep.), India, Russia and South Africa) resolved to enter into discussions with each other leading towards the signing of social security agreements between them, during the 1st BRICS Employment Working Group (EWG) Meeting held virtually from 11 to 12 May 2021. Further developments will be reported as they occur.

Gujarat has emerged as the top FDI destination, accounting for 37 per cent of the total inflows out of all states in the country. Maharashtra (27 per cent) and Karnataka (13 per cent) were second and third in terms of investment received.

India saw its highest-ever inflow of foreign direct investment (FDI) of $81.72 billion during the financial year 2020-21. It is a 10 per cent rise on a year-on-year basis, as per the latest data provided by the commerce and industry ministry.

Out of all states in the country, Gujarat has emerged as the top FDI destination, accounting for 37 per cent of the total inflows. Maharashtra (27 per cent) and Karnataka (13 per cent) were second and third in terms of inflows received.

It may be noted that Gujarat has bagged the top spot for the fourth consecutive year in a row. The state saw total FDI inflow of $30.23 billion in the last financial year.

Almost 94 per cent of the investment that trickled into the state was in the computer hardware and software sector, said the state in a statement. The state accounts for 78 per cent of the country’s total FDI inflow in this sector.

Gujarat tops FDI inflows

The latest data available on the promotion of industry and internal trade (DPIIT) for the April-December 2020 period shows Gujarat received the biggest share of Rs 1.77 crore FDI.

Meanwhile, Maharashtra managed to get Rs 1.53 lakh crore FDI and Karnataka came in third, bagging FDI worth Rs 78,160 crore. Delhi occupied the fourth spot after bagging investments worth Rs 59,830 crore during the April-December period.

Tamil Nadu and Jharkhand occupied the seventh and eighth sports, attracting investments worth Rs 19,734 crore and Rs 19,200 crore, respectively. Other states that added over Rs 10,000 crore FDI were Haryana (Rs 13,661 crore) and Telangana (Rs 11,332 crore). West Bengal and Uttar Pradesh managed to saw FDI inflows of over Rs 4,000 crore during the period.

It may be noted that data for the January-March quarter is not yet available on the DPIIT website.

Top Investors and Sectors

The top investors who contributed to India’s high FDI inflow in FY21 include Singapore (29 per cent), followed by the US (23 per cent) and Mauritius (9 per cent).

Construction activity (infrastructure), computer software and hardware, rubber goods, retail trading, drugs and pharmaceuticals and electrical equipment have registered more than 100 per cent jump in equity during FY21 as compared to the previous year.

  Source: India Today