CA CMA Syam sundar

  What is Blocked ITC? Blocked ITC means input tax credit which cannot be claimed, even if GST has been paid on such goods or services. Section 17(5) of CGST Act, 2017 lists these cases. ⸻ 🔸 Main Cases of Blocked ITC (Section 17(5)) 1. Motor vehicles & conveyances • ITC not allowed on motor vehicles for transportation of persons (seating capacity ≤ 13), except when used for: • Further supply of such vehicles (car dealers) • Transport of passengers (cab, bus operators) • Training on driving such vehicles • For vessels & aircraft, ITC blocked except when used for: • Transport of goods or passengers • Further supply (sale/lease) • Training 2. Food & beverages, outdoor catering, beauty treatment, health services, club membership, travel benefits to employees • ITC blocked, unless: • The inward supply is used to make outward taxable supply of the same category (e.g., catering company). • It is obligatory for employer under law to provide (e.g., canteen under...

 ORDER TO CASH (O2C) CYCLE – COMPLETE EXPLANATION The Order to Cash (O2C) cycle is an end-to-end process that starts when a customer places an order and ends when the company receives payment and records it in accounts. It directly impacts revenue, cash flow, and customer satisfaction. 🔹 Steps in O2C Cycle: 1. ORDER MANAGEMENT - Customer places order for goods/services. - Order details recorded: product, quantity, price, delivery date, customer data. 2. CREDIT MANAGEMENT - Customer’s credit history checked before approval. - Reduces risk of bad debts. 3. ORDER PROCESSING / FULFILMENT - Approved order is picked, packed, and shipped from warehouse. - For services, schedule and delivery is confirmed. 4. SHIPPING & LOGISTICS - Goods dispatched with delivery note and tracking details. - Proof of delivery recorded. 5. BILLING / INVOICING - Invoice sent to customer with product, price, taxes, due date, payment terms. - Accuracy in invoicing avoids disputes. 6. ACCOUNTS RECEIVABLE (AR...

 Post-Sale Discounts & Credit Notes under GST – A Compliance Reminder Recently, there have been instances where the GST Department has disallowed credit notes issued for post-sale discounts – despite the clarifications given in Circular No. 178/10/2022-GST dated 03.08.2022. 👉 The common ground for such disallowance: The Credit Notes did not contain reference to the original invoice against which they were issued. As per Section 15(3)(b) of the CGST Act, 2017, post-sale discounts are permissible deductions only when they can be linked to the relevant supply/invoice. Further, Rule 53(1A)(g) of the CGST Rules, 2017 mandates that a credit note must contain the "number and date of the corresponding tax invoice(s)". ⚠️ Risk: If this linkage is missing, the Department may argue that the credit note is not valid for GST purposes, leading to denial of tax adjustment.

Field 40A – Form of Documentary Credit Specifies whether the credit is Irrevocable / Revocable / Confirmed . 👉 Meaning: Almost all modern LCs are Irrevocable , i.e., cannot be cancelled without consent of all parties. Field 20 – Documentary Credit Number Unique LC number assigned by the issuing bank. 👉 Meaning: Used for identification and correspondence. Field 31C – Date of Issue The date when the LC is issued. 👉 Meaning: Marks the beginning of LC validity. Field 31D – Date and Place of Expiry Specifies the expiry date and the place where documents must be presented. 👉 Meaning: If documents are not presented before this date/place, the LC is no longer valid. Field 50 – Applicant The buyer/importer who requests the bank to issue the LC. 👉 Meaning: Party responsible for payment obligation to bank. Field 59 – Beneficiary The seller/exporter in whose favor the LC is issued. 👉 Meaning: Party entitled to receive payment upon compliance. Field 32B – Currency and Amoun...

 Lok Sabha Passes New Income Tax Bill, 2025: A New Era for Taxation in India  The Lok Sabha has passed the new Income Tax Bill, 2025, after intense debates and deliberations. This significant legislative development aims to replace the Income-tax Act, 1961, with a more transparent and taxpayer-friendly framework. *Background:* - *Revised Legislation:* The revised Bill incorporates recommendations from the Select Committee, addressing drafting errors and ambiguities in the earlier draft. - *New Tax Code:* The Bill consists of 536 clauses and 23 chapters, providing a comprehensive overhaul of India's income-tax law. *Key Objectives:* - *Simplified Language:* The Bill aims to make tax provisions easier to understand for both taxpayers and professionals. - *Reduced Litigation:* The focus is on minimizing disputes through clearer drafting and rules. - *Taxpayer-Friendly System:* The Bill is designed to streamline compliance and improve taxpayer experience. *Why the Change Was Neede...

  New vs. Old Tax Regime – FY 2024-25: Detailed Comparison for Tax Planning As we step into the new financial year, many professionals and taxpayers face the question: 👉 Should I opt for the New Tax Regime or continue with the Old one? Here’s a complete side-by-side comparison of deductions, exemptions, and benefits available under both regimes for FY 2024-25, to help you make an informed choice: 🔍 Rebate: ✅ New Regime – ₹7,00,000 ✅ Old Regime – ₹5,00,000 💰 Capital Gains Rebate: ❌ STCG u/s 111A – Not available in New, ✅ Available in Old ❌ LTCG u/s 112A – Not available in New, ✅ Available in Old 📄 Standard Deduction: ✅ ₹75,000 (New) | ₹50,000 (Old) 🏠 Exemptions Not Available in New Regime (but ✅ Available in Old): House Rent Allowance (HRA) Leave Travel Allowance (LTA) Food Allowance Professional Tax LIC/PF/PPF (Section 80C) NPS Employee Contribution Mediclaim (Section 80D) Disabled Individual (Section 80U) Education Loan Interest (Section 80E) EV Loan (Section ...

  Golden Conditions to Claim Input Tax Credit (ITC) — Are You Meeting Them All? Maximizing your business’s tax savings starts with mastering Input Tax Credit (ITC) under Section 16(2) of the CGST Act. Claiming ITC can lower your GST liability, but non-compliance may lead to interest, penalties, or disallowances. Here are the 5 essential conditions to claim ITC rightfully: ✅ 1. Possession of a Valid Tax Invoice No invoice = No ITC. Simple and strict. ✅ 2. Receipt of Goods or Services Goods/services must be actually received to be eligible. ✅ 3. Supplier Has Paid the Tax to the Government You can’t claim ITC unless your vendor has deposited the tax. ✅ 4. ITC Must Be Declared in GSTR-3B File it correctly in your monthly return. ✅ 5. ITC Must Be for Business Use Personal use? That’s a straight disqualification. Note: Always reconcile ITC claims with GSTR-2B before filing.

 What is a Letter of Intent in Construction Contracts? Is Letter of Intent a legally binding document? A Letter of Intent (LoI) in the context of construction is a formal document issued during the pre-contractual phase of a project. It reflects the employer’s intention to enter into a definitive agreement with a contractor and may authorize the commencement of limited preliminary work prior to the execution of the full contract. While a LoI facilitates early engagement, it is generally not legally binding unless it explicitly states that it is intended to create enforceable obligations. In legal terms, it represents a statement of intent, not a contract, and is typically not enforceable in court unless supported by clear language and conduct.    KEY ELEMENTS OF A BINDING LOI: (may differ depending on nature of business/transaction) - Project details and defined scope of work - Price or payment terms - Project timelines - Liability caps - Conditions precedent (e.g., permi...