Why Investors are crazy about Cryptocurrencies?

A cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. Cryptocurrencies are called ‘dark internet’ or ‘another internet world’ for the complexity attached to it. The first cryptocurrency to capture the public imagination was bitcoin, which was launched in 2009 by an individual or a group under the pseudonym Satoshi Nakamoto. Since then, numerous cryptocurrencies have been created.

Why its gaining popularity?

No matter which cryptocurrency one would have invested last year, the returns would have been astronomical.

If one is serious about trading or investing in cryptocurrencies, the way to go about can be having a diversified portfolio of cryptos with higher weightages for bitcoin and ethereum and minimal weightages for other emerging crypto currencies. To choose which crypto currency to invest in, one has to study the underlying blockchain technology and see if it is superior to others, and also check if some of the recognised companies and institutions are accepting the cryptocurrencies. Wider the acceptance, lower the risk in investing in a cryptocurrency.

Source: DSIJ, Wiki, Investopedia

Revisiting GST on Restaurants Services

The government as part of major revamp of GST tax Structure had earlier this month decided to fix the GST rate at 5 percent for all restaurants and not give them input tax credit.

Type of Restaurants	GST Rate
All restaurants	5% no ITC
Restaurants within hotels (room tariff <7,500-5% without ITC)	5% no ITC
Restaurants within hotels (room tariff >7,500) still 18% with ITC	18% with ITC
Outdoor catering	18% with ITC

For Expert Assistance in GST Advisory, Filing, Training, Invoicing, Accounting call us at 9900397777 mail us at info@preethamandco.com

GST Implications on Second Hand Goods

Normally GST is charged on the transaction value of the goods. However, in respect of second hand goods, a person dealing is such goods may be allowed to pay tax on the margin i.e. the difference between the value at which the goods are supplied and the price at which the goods are purchased. If there is no margin, no GST is charged for such supply. The purpose of the scheme is to avoid double taxation as the goods, having once borne the incidence of tax, re-enter the supply and the economic supply chain.

Valuation of second hand goods: As per Rule 32(5) of the CGST Rules, 2017, where a taxable supply is provided by a person dealing in buying and selling of second-hand goods, i.e., used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored.

Illustration:

For instance, a company say M/s FirstSource Ltd, which deals in buying and selling of second hand cars, purchases a second hand Maruti Celerio Car of March, 2014 make (Original price Rs. 5 lakhs) for Rs. 3 lakhs from an unregistered person and sells the same after minor furbishing in July, 2017 for Rs. 3,50,000/-. The supply of the car to the company for Rs. 3 lakhs shall be exempted and the supply of the same by the company to its customer for Rs. 3.5 lakhs shall be taxed and GST shall be levied. The value for GST purpose shall be Rs. 50000/-, i.e.the difference between the selling and the purchase price of the company.

In case any other value is added by way of repair, refurbishing, reconditioning etc., the same shall also be added to the value of goods and be part of the margin. If margin scheme is opted for a transaction of second hand goods, the person selling the car to the company shall not issue any taxable invoice and the company purchasing the car shall not claim any ITC.

Taxing Bitcoin Transaction-A Perplexing Issue

With a whopping return of 800 per cent that Bitcoin has given over the last one year it has caught the attention of many in India. Thus, there is a need to understand the IT nuances of their bitcoin transactions. Kindly note Bitcoins in India are unregulated but are not yet illegal. However, the RBI has on occasion cautioned investors of inherent risks. An inter-disciplinary committee set up by the government is examining the framework of virtual currencies.

Tax Implications

Even though Bitcoins are not specifically mentioned in the income tax act, Bitcoins are assets which are usually owned so holder can gain from an increase in its value. In that sense, they acquire the definition of capital gains. Which is a wide definition as per the Income Tax Act. Accordingly these can be classified as long-term when held for more than 3 years and short-term when held for less than 3 years. In case of long-term gains indexation benefit must be allowed and gains taxed at 20 per cent. Short term gains will be taxed as per the applicable income tax slab.

But there is a hitch involved, where there are too many trades in Bitcoins the owner may be classified as a trader and income will have to be reported as income from a business. In the absence of specific guidance on the matter, some taxpayers may choose to report this income under the fifth head of income which is income from other sources.

Conclusion

According to the law if somebody makes some money that should be subject to income tax. Realizing the growing popularity of crypto currencies, the government formed a committee this year in April to give recommendations for regulating the crypto currency market. The report is yet to come out. Having said that, mining, buying and selling virtual currencies is not illegal in India, but it is also not recognized by law either. There is a question mark on the taxability aspect too. So if you have been trading or investing do make sure any gains from the sale of Bitcoins is included in your income tax return.

Source: TOI, BT. Compiled and presented by Preetham Shetty & Co. Chartered Accountants

For expert assistance do contact us at 9900397777/ mail us at info@preethamandco.com

GST Reboot Revised Deadlines

GSTR 1 For turnover upto Rs. 1.5 cr:

Period (Quarterly)	Due dates
July- Sept	31st Dec 2017
Oct- Dec	15th Feb 2018
Jan- Mar	30th April 2018

GSTR 1 For turnover of more than Rs 1.5 cr:

Period (Quarterly)	Due dates
July to Oct	31st Dec 2017
November	10th Jan 2018
December	10th Feb 2018
January	10th March 2018
February	10th April 2018
March	10th May 2018

Others GSTR filing extensions

Return	Revised Due Date	Old Due Date
GSTR-5  (for Non Resident)	15th Dec 2017	Earlier of 20th August 2017 or  7 days from date of registration
GSTR-4  (for Composition Dealers)	24th Dec 2017	18th October 2017
GSTR-6  (for ISD)	31st Dec 2017	13th August 2017
ITC-04 (for job work) for quarter of Jul-Sep	31st Dec 2017	25th October 2017
TRAN-1	31st Dec 2017	30th September 2017

For Expert Assistance in GST Advisory, Filing, Training, Invoicing, Accounting call us at 9900397777 mail us at info@preethamandco.com

GST Reboot In-Depth analysis of 23rd GST council meeting

Relief in GSTR compliance

All businesses to file GSTR-1 and GSTR-3B till March 2018

GSTR-2 and GSTR-3 filing dates for July 2017 to March 2018 will be worked out later by a Committee of Officers

GSTR 4 due date for July to September extended to 24th December 2017

Turnover under Rs 1.5 Cr to file quarterly GSTR-1

Turnover above Rs 1.5 Cr to file monthly GSTR-1

Changes in Composition Scheme

Composition scheme limit to be increased to Rs 1.5 crore (can be extended to Rs 2 crore later)

1 % GST rate for manufacturers & traders

Composition tax of 1% on turnover of taxable goods (turnover of exempted goods to be excluded)

Composition Returns, GSTR-4 due date extended to 24th December

Those supplying goods and services (services not exceeding Rs 5 lakhs in total) eligible for compositions scheme

Composition dealers cannot make inter-state sales. Input tax benefit not allowed.

Relief for service providers

All service providers with turnover up to Rs 20 lakhs exempt from GST registration. Including those who supply inter-state or supply through e-commerce operator, such service providers do not have to register.

Changes in GST Rates W.e.f. 15th Nov 2017

Only 5% GST (instead of 12% & 18%) on food bills in restaurants 🍕

Reduced from 28% to 18% - Shampoo, Perfume, tiles, watches ⌚️

Reduced from 28% to 12% - Wet grinders, tanks

Reduced from 18% to 12% - condensed milk, refined sugar, diabetic food

Reduced from 12% to 5% - desiccated coconut, idli dosa batter, coir products 🍚

Reduced from 5% to nil - guar meal, khandsari sugar, dried vegetables

Restaurants within hotels (room tariff <7,500- 5% without ITC

Restaurants within hotels (room tariff >7,500 ) still 18% with ITC

1 % composition rate for manufacturers & traders

Outdoor catering 18% with ITC

Late Fees reduced

           For delayed filing of NIL returns, late fee reduced from Rs 200 per day to Rs 20 per day

For Expert Assistance in GST Advisory, Filing, Training, Invoicing, Accounting call us at 9900397777 mail us at info@preethamandco.com

Key Takeaways from 23rd GST Council Meet

Quick insight to Payments Bank.

Payments banks is a new model of banks conceptualized by the Reserve Bank of India (RBI) with the objective of achieving financial inclusion and increased access to financial services. A payments bank is like any other bank, but operating on a smaller scale without involving any credit risk. It can carry out most banking operations but can't advance loans or issue credit cards. It can accept demand deposits (up to Rs.1 lakh), offer remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking and third party fund transfers. 

Why payments banks? The main objective of payments bank is to widen the spread of payment and financial services to small business, low-income households, migrant labour workforce in secured technology-driven environment. With payments banks, RBI seeks to increase the penetration level of financial services to the remote areas of the country.

System	Access Deposits	Advance Loans	Make Payment
Commercial Banks like SBI, PNB	YES	YES	YES
Payment Network operations (Master Card, Visa)	NO	NO	YES
Payments Bank	YES	NO	YES

Join the revolution. Start your Digital Savings Account today!

Source: Wiki, The Economic Times. Complied and Presented by Preetham Shetty & Co. Chartered Accountants

Deadline for Filing Tax Audit Reports Extended

Due date for filing ITRs&Tax Audit Reports under ITAct has been extended from30.09.2017to07.11.2017 for those liable to file ITRs by30.09.17

— Income Tax India (@IncomeTaxIndia) October 31, 2017

Due date for GSTR 2 & 3 for July 2017 Extended

To facilitate trade, last date for filing GSTR-2 & GSTR-3 for July 2017 extended to 30th Nov & 11th Dec 2017 respectively.

— GST@GoI (@askGST_GoI) October 30, 2017

Waiver of late fee on filing of GSTR-3B

To facilitate taxpayers, late fee on filing of GSTR-3B for Aug & Sept has been waived. Late fee paid will be credited back to taxpayer ledger.

We are now at Bannerghatta Road!

Happy Diwali

Decoding the Rupee Cost Averaging Strategy

"More Wait, Less Fluctuation"

By using Rupee Cost approach, you avoid the complex or even impossible duty of trying to figure out the exact best time to invest. Rupee cost averaging is an approach in which you invest a fixed amount of money at regular intervals. This in turn ensures that you buy more shares of an investment when prices are low and less when they are high. This automatically falls in line with the age-old principle of buy low and sell high. The rupee cost averaging effect - averages out the costs of your units and hence lessens the results of short-term market fluctuation on your investments. This is the system followed in SIPs (Systematic Investment Plans) of mutual funds.

Getting it right:

Decide on the amount you can invest on a regular and long-term basis

Select an investment you want to hold for the long-term

Invest at regular intervals (weekly, monthly or quarterly)

Understanding the Basics of ELSS

What is ELSS?

ELSS is the short form of Equity Linked Savings Scheme.

Now, being an equity oriented mutual fund it invests more than 65% of its investment in Equities, the ELSS has market risks as well as rewards. Apart from it, under Section 80C of Income Tax Act, ELSS also helps you save taxes. You can invest in ELSS through the Demat account via ECS or through Cheque.

What is the Lock-in Period of ELSS?

ELSS has a lock-in period of 3 Years.

Which means that you cannot sell your funds before three years from the date when you invested.

This Lock-in period is applicable to each portion individually, i.e., if you invested x amount in April 2015, and y amount in February 2016, you’ll be allowed to withdraw the full returns of x in April 2018 and of y in February 2019. However, you can keep the invested amount for more than Three years.

Two Options of ELSS Funds

While you invest in ELSS, you’ll be given two alternatives.  Dividend Option and Growth Option.

Dividend Option

This lets you receive the dividend on your investments at Regular intervals. This lets your returns be reinvested in the same ELSS, summing up to be a larger amount.

Growth Option

With this option, you get timely returns on your investment. Plus, these returns are not Taxable. This option involves market risks, but the returns are worth it.

As ELSS is an equity fund, it’s prone to market risks. So, it doesn’t always assure good returns. One needs to do proper research and figure out it’s performance over the course of years.

How to choose the right fund?

One should always check the record of particular ELSS fund before investing in it. Compare the returns of the short-term (six months to a year), medium-term (three years) and long-term (five-six years) horizons with the benchmark you have set for your future.

It is also advisable not to put a lump amount in an ELSS fund at once. One always has the Systematic Investment Plan (SIP), in which they are allowed to put monthly amount (minimum Rs.500).

Head of Income and Taxation

The returns of ELSS fall under the head Income from Capital Gains.

After one year of investing, the returns on ELSS are considered Long term Capital Gain. Thus, when you withdraw the full amount after the lock-in period of Three years, the amount will be considered Long term Capital Gain.

This amount is not Taxable.

On the other hand, the annual amount invested in ELSS is fully deductible from taxes provided it is upto 1,50,000. Meaning, if you have the annual income of 10,00,000 and you invest 2,00,000 in your ELSS, the total taxable income will be Rs. 10,00,000 minus Rs. 1,50,000 (limit prescribed by government), which is Rs. 8,50,000.

Sale and purchase of ELSS are subject to Securities Transaction Tax (STT) and as per section 10(38) of the income tax act, long term capital gains on sale of securities which are subject to STT are exempt from tax.

However, if you suffer loss at the end of lock-in period, you can’t set it off against other incomes.

In order to Invest money that helps with Tax Deductions, one can also consider the option of ULIP. Here’s how ULIP and ELSS are different:

Attributes	ELSS	ULIP
Nature	It is solely an investment option.	It is a combination of insurance and investment.
Investment	They are Equity based funds that primarily invest in shares or options related to shares	One part of the amount goes to investment while the remaining part is invested in debt or equity related products.
Lock in Period	The lock-in period is of 3 years	The lock-in period is of 5 years
Return on your Investment	This type of investment is pretty transparent about how the fund operates and the places where investments are done. This makes the returns easily understandable	There are hidden fees deducted when one pays the premium. Fees like morality charges, administration expenses, fund management fees. The balance amount is invested.
Tenure	You are not compelled to hang on for many years because of the simplicity of the process.	Experts comment that you need to wait till almost 12-15 years to get the best overall Returns.

For Tax Planning assistance contact us at +91 9900397777/ info@preethamandco.com