Advocacy

Shri Sanjay Kumar Mangal
Principal Commissioner, GST Policy wing,

Central Board of Indirect Taxes & Customs

Ministry of Finance

Room No 159-A, North Block,

New Delhi 110 001

Sub: Representation on exemption of GST on CSR contribution by the Companies to the implementing agencies for charitable purposes

Respected Sir,

We, Bombay Chamber of Commerce and Industry, a non-profit organization registered under Section 8 of the Companies Act 2013 (Section 25 of the Companies Act, 1956), respectfully submit this representation to seek relief on levy of the GST on CSR contributions made by the Companies to the Implementing Agencies to undertake charitable activities.

This representation is made without prejudice to the belief and understanding within the trade and industry that contribution for CSR activities, by their very nature, have always been outside the scope of ‘supply’ as defined under GST laws. However, differing interpretations by field formations have led to ongoing litigations, creating uncertainty for companies regarding the taxability of such contributions. We are submitting this representation along with all the supporting documents for your kind consideration.

We believe that the resolution of this issue will alleviate compliance and reduce any ambiguities that may hinder proper implementation.

We humbly request an opportunity to present our concerns in person before you, to further elaborate on the issues and provide additional context, should it be necessary.

Thank you for your valuable time and consideration. We sincerely hope for your prompt attention to this matter and look forward to your favorable response.

Yours faithfully,

Sandeep Khosla

Director General

Mr. Ravi Agarwal, I.R.S.
Chairman

Central Board of Direct Taxes

Ministry of Finance

Government of India

North Block

New Delhi – 110 001

Sir,

Re : Representation to address anomaly in the holding period of undertaking u/s. 50B and shares sold in Offer For Sale (OFS) in Initial Public Offer to turn long term

The Finance (No.2) 2024 reformed the capital gains taxation regime by rationalisation of period of holding and long term/short term capital gains tax rates for different types of capital assets.

The holding period for all capital assets was rationalised to 1 year for listed securities and 2 years for other assets. However, there exists an anomaly for the period of holding for following two types of assets.

· Business undertaking referred in s.50B for taxation of slump sale of undertaking

· Shares sold in Offer for sale (OFS) in an IPO

The holding period for undertaking to turn long term is 3 years whereas it is 2 years for all other assets. In case of shares sold in OFS, the holding period is 2 years, although all other tax attributes are the same as listed securities (viz. applicability of STT, LTCG rate of 12.5% u/s. 112A, STCG rate of 20% u/s. 111A, substitution of fair market value as on 31 January 2018) for which the holding period is 1 year to turn long term.

Since the above appear to be unintended anomalies, we request the Government to kindly address the same in the next Budget to align with the new capital gains tax regime. It is recommended to amend first proviso to s.50B to substitute “thirty-six” months with “twenty-four” months to reduce the period of holding of business undertaking to turn long term It is also recommended to amend first proviso to s.2(42A) to include unlisted shares sold under an offer for sale to the public included in an initial public offer to reduce the holding period for such shares to turn long term from 24 months to 12 months.

In this regard, we are pleased to furnish a detailed representation along with text of suggested amendments for your kind consideration. Our representatives shall be happy to discuss and provide any further clarifications to facilitate the necessary amendments.

Thanking you,

Yours sincerely,

Sandeep Khosla

Director General

Shri. Ajay Seth, I.A.S.
Revenue Secretary

Department of Revenue

Ministry of Finance

Government of India

Room No.128-B, North Block

New Delhi – 110 001

Sir,

Re : Representation for amending reference of “merchant banker” in Income-tax rules relating to valuation by adding “registered valuer” or “accountant” pursuant to SEBI’s decision to prohibit Merchant Bankers from valuation activities

The Income-tax Rules 1961 provide for valuation of shares and other assets by Category I Merchant Banker regulated under SEBI Guidelines in various circumstances like ESOP perquisites, indirect transfer u/s. 9(1)(i), gift taxation u/s. 56(2)(x), etc. For this purpose, “merchant banker” is defined to mean Category I merchant banker registered with Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) (Refer, for instance, Rule 11U(c))

In this regard, we would like to bring to your kind attention that recently SEBI in its 208th Board Meeting held on 18 December 2024 has approved amendments to SEBI (Merchant Bankers) Regulations, 1992. One of the decisions taken is to prohibit Merchant Bankers from undertaking valuation activity as part of Merchant Banker registration. However, existing valuation assignments taken up by them may be completed. If a Merchant Banker wishes to take up valuation activities, it shall obtain registration from the concerned regulator or authority, within a period of nine months.

This development has immediate and significant impact on income tax compliances concerning valuation by Category I Merchant Banker under various Income-tax rules. This is because for all new valuation assignments accepted after the effective date of amendment, the valuation will not be in the capacity as Category I Merchant Banker and therefore, there could be litigation on whether it is valid for income tax purposes.

We suggest that the reference to “merchant banker” in various Income tax rules may be amended to add registered valuer referred in section 247 of the Companies Act, 2013 (18 of 2013) or an accountant (wherever accountant is not already covered therein). In this regard, we are pleased to attach a detailed representation setting out the background and rationale for our recommendation.

Immediate action of CBDT by amending the relevant rules will clear any ambiguity, lead to certainty & better compliance by taxpayers and avoid any unwarranted litigation on valuation aspect.

Our representatives shall be happy to discuss the issue in person and provide any further information or clarifications to facilitate the above referred amendment.

Thanking you,

Yours sincerely,

Sandeep Khosla
Director General

On behalf of the Bombay Chamber of Commerce and Industry, I would like to express my sincere thanks for your trailing email inviting suggestions for Project Integrated e-filing and CPC (IEC3.0).

Based on the inputs received from our members, we are attaching our suggestions/representations for Project Integrated e-filing and CPC (IEC3.0) for your kind consideration.

Thanking you once again,

Yours sincerely,

Sandeep Khosla
Director General

Mr. Tanmay Kumar

Chairman

Central Pollution Control Board
Parivesh Bhawan

East Arjun Nagar

Delhi – 110032

Sir,

Subject: Representation on the Plastic Reuse Requirement Under the Plastic Waste Management Rules (PWMR) 2024

The Bombay Chamber of Commerce and Industry (BCCI) extends its appreciation to the Ministry for its ongoing efforts to address plastic waste through the updated PWMR framework. As one of the oldest industry associations in India, representing a diverse membership base across multiple sectors, we fully support the government’s sustainability goals and initiatives aimed at fostering a circular economy. Our member companies are committed to enhancing sustainable packaging practices and are diligently working toward meeting regulatory requirements.

However, with the upcoming “Reuse of packaging” mandate under Rule 7.4 Sub-Clause b(I) and b(II) of Schedule II set to commence in FY 2025-26, we would like to present some practical concerns and considerations. We respectfully submit this representation to highlight the industry’s challenges and propose constructive solutions to ensure the intended objectives are achieved effectively.

Key issues are:

1. Informal Reuse Practices in India: Reuse of rigid plastic packaging is already prevalent at the consumer level, with items repurposed for everyday household uses such as water storage, grain containers, and other requirements. This practice is deeply embedded in the cultural landscape and differs from the formalized reuse systems seen in other developed markets.

2. Environmental Impact: A new system for collecting and redistributing rigid plastic packaging introduces its own environmental costs, particularly in terms of carbon emissions from transportation and handling. This will be higher than the current consumer practice of using them for their personal requirements.

3. Operational Barriers:

a. The infrastructure necessary to retrieve brand-specific packaging is underdeveloped, particularly when packaging designs are often indistinguishable between different brands.

b. Without a reliable system to track how many times packaging has been reused, companies face potential risks in maintaining product safety and ensuring compliance with the regulations.

4. Product Safety and Standards:

a. Repeated use of plastics brings up the risk of microbial contamination, which could pose a health threat to consumers.

b. Currently, there are no established standards for cleaning and sanitizing packaging for reuse. Without clear guidelines from BIS, companies are at risk of compromising product safety.

c. Certain sectors already have restrictions in place on packaging reuse, creating additional barriers to compliance for those industries.

5. Risk of Counterfeit Products: Reused packaging could easily be refilled with counterfeit products, which poses significant risks to consumer safety and could damage the reputation of trusted brands.

We would recommend:

a) An extension of the timelines by 2 to 3 years

b) Developing Regional implementation strategy starting with some states or districts that volunteer to develop all the operational modalities

c) Start with more gradual implementation milestones focussed only on Large packs (5L and above) such as 2% in Yr 1 and going to 10% in Yr 3 of implementation.

d) Depending on the learnings from the above (b&c) initiatives, we might want to consider a compliance mechanisms that achieves an equivalent reduction in virgin plastic measured through a composite KPI ( e.g. Absolute Reduction in Virgin Plastic). This may allow for a more thorough development of practical, safe, and effective reuse systems customized to individual industry needs.

We request your consideration of these proposals and look forward to engaging in constructive discussions to advance our shared sustainability goals.

Thanking you,

Yours sincerely,

Sandeep Khosla

Director General

We thank you for inviting our Chamber for interaction with Hon’ble Member (Taxpayer Services & Revenue), CBDT Shri. H B S Gill, Hon’ble PCCIT of Mumbai Shri. Raj Tandon and CCITs of Mumbai. We believe such interactions foster better trust between taxpayers and the Tax Department. It helps the industry chambers to raise issues and make suggestions for improvement in tax administration and revenue collection to meet the developmental needs of our beloved nation.

On behalf of our Chamber, Mr. Ravikant Kamath, Partner, Ernst & Young LLP & Chairperson of Direct Tax Committee of our Chamber, Ms. Ankita Parekh, Head-Taxation, Pidilite Industries Ltd and Mr. Sanjay Desai, General Manager-Taxation, KEC International Ltd attended the interactive meeting and provided suggestions on following issues :-

Clarify non-applicability of Section 194R on certain items like Free Medical Samples, Brand Reminders, etc.
Clarify that write off of trade debts or waiver of loans does not attract TDS under S.194R
Relief from tax withholding in case of multiple small ticket transactions in lieu of bank guarantee or monthly advance tax
Remove onerous compliance w.r.t. issuance of TDS / TCS certificates
Digitisation of process of obtaining approvals for recognised provident fund, superannuation fund and gratuity fund
Rationalization of Central Processing Centre (CPC) processes

In this regard, we are pleased to provide written representations (attached herewith) for the kind consideration of Hon’ble CBDT Member (Taxpayer Services & Revenue), Hon’ble PCCIT Mumbai and other CCITs of Mumbai region who attended this meeting. We believe these suggestions will reduce compliance burden for taxpayers without adversely impacting the Revenue’s interests, reduce unwarranted litigation and improve ease of doing business.

We shall be happy to provide any further clarifications on the above suggestions

Thanking you,

Yours faithfully,

Sandeep Khosla

Director General

Shri Sanjay Malhotra, I.A.S.
Revenue Secretary

Department of Revenue

Ministry of Finance

Government of India

Room No.128-B, North Block

New Delhi – 110 001

Sir,

Re : Bombay Chamber’s representations on issues arising from CBDT’s Circular No. 12/2024 on The Direct Tax Vivaad Se Vishwas Scheme, 2024

We are truly appreciative of the Government’s efforts to reduce direct tax litigation through The Direct Tax Vivaad Se Vishwas Scheme, 2024. We understand that one of the primary objects of the Scheme is to reduce the huge pendency of appeals before Commissioner of Income-tax Appeals (CIT (A))/Joint Commissioner of Income-tax Appeals (JCIT(A)).

We thank Shri Pankaj Jindal, Joint Secretary, TPL II, CBDT for sparing his valuable time on 6th November 2024 to explain the Scheme to our members through a webinar. As discussed during the webinar, while CBDT’s Circular No. 12/2024 (Guidance Note No. 1) on the Scheme containing 35 FAQs provides clarity on many issues, our members still have certain concerns and suggestions. Accordingly, as suggested during the webinar, we are pleased to furnish herewith compilation of suggestions for your kind consideration.

We believe the suggestions are possible to be implemented within the statutory framework of the Scheme and if accepted, will enable the Scheme to be used by many taxpayers to settle pending litigations and result in additional revenue for the Government leading to success of the Scheme. Our representatives shall be happy to discuss the suggestions at a physical/virtual meeting and provide any further clarifications.

Thanking you,

Yours sincerely,

Sandeep Khosla

Director General

Shri Sanjay Malhotra, I.A.S.
Revenue Secretary

Department of Revenue

Ministry of Finance

Government of India

Room No.128-B, North Block

New Delhi – 110 001

Sir,

Sub: Pre-Budget Memorandum of Bombay Chamber 2025-26 (Direct Tax) for Union Budget 2025 to be presented in February 2025

We are happy to present herewith our Pre-Budget Memorandum on Direct Tax for the year 2025-26 for your kind consideration. These are based on inputs and suggestions received from our members. The issues and suggestions are divided into following two categories and accordingly, two documents are attached as follows :-

1) Part-A – Issues requiring legislative amendments

2) Part-B – Non-legislative issues which can be addressed by CBDT through amendment in Rules or issue of Notifications or Circulars

The suggestions made in the above documents are intended to improve the private investment ecosystem in India, provide tax certainty, address procedural challenges in tax compliances, reduce litigation and enhance ‘ease of doing business’ in India.

The Chamber is cognizant of the Government’s direct tax policy of moderate progressive tax rates with very few incentives & deductions with a view to keep the tax system simple and increase the tax base. The suggestions made in the attached memorandum are consistent with this policy.

The representatives of the Chamber would be privileged to participate in any meetings to be held with the members of your esteemed Department to explain some of the key suggestions and provide any clarifications on its suggestions made in the attached Memorandum.

Thanking you,

Yours sincerely,

Sandeep Khosla

Director General

Shri Sanjay Malhotra, IAS
Revenue Secretary

Ministry of Finance

Government of India

North Block

New Delhi- 110001

Sir,

Sub: Representation on Provisions w.r.t. Waiver of Interest and Penalty [Amnesty Scheme] under GST

The Bombay Chamber is India’s premier Chamber of Commerce and Industry situated in Mumbai, the industrial, financial and commercial capital of India. Established in 1836, it is the oldest Chamber in the country and has a long and illustrious history of 188 years of continuous service to trade and industry. It is registered under Section 8 of the Companies Act, 2013 (Section 25 of The Companies Act, 1956) a non-profit organization. With a large member base, the Chamber represents various industries in different sectors including SMEs.

Based on the recommendations of the GST Council made in its 53rd meeting, Section 128A has been inserted vide Finance Act, 2024, in the Central Goods and Services Tax Act, 2017 (CGST Act) with effect from 1 November 2024 to provide for waiver of interest or penalty or both, relating to demands under section 73 of the CGST Act pertaining to Financial Years 2017-18, 2018-19 and 2019-20, subject to certain conditions.

Subsequently, based on the recommendations of the GST Council made in its 54th meeting, Rule 164 has been inserted in Central Goods and Services Tax Rules, 2017 (CGST Rules) with effect from 1 November 2024, vide notification No.20/2024- Central tax dated 8 October 2024, providing for procedure and conditions for closure of proceedings under section 128A of CGST Act.

To facilitate implementation of the Amnesty scheme, CBIC has also issued a Circular No. 238/32/2024-GST dated 15 October 2024 clarifying the provisions of Section 128A read with Rule 164 and answering various doubts raised by Trade and Field formations, in the form of FAQs.

Apart from the clarifications issued by CBIC, Members of the Bombay Chamber have raised several issues concerning the Amnesty Scheme which they may face once it is implemented from 1 November 2024. In the attached document, we have listed key issues of concern of the members and the respectful suggestions to address them and make the scheme more effective.

Bombay Chamber would be glad to facilitate the dialogue and assist both the government and taxpayers in effectively navigating implementation of the Amnesty scheme.

We will be pleased to provide any further information that may be required for consideration of this representation.

Thanking you,

Yours sincerely,

Sandeep Khosla

Director General

Shri. Sanjay Malhotra
Revenue Secretary

Ministry of Finance

North Block

New Delhi- 110001

Sub:Representation on the Invoice Management System (IMS) released by GSTN

Respected Sir,

The Bombay Chamber is India’s premier Chamber of Commerce and Industry situated in Mumbai, the industrial, financial and commercial capital of India. Established in 1836, it is the oldest Chamber in the country and has a long and illustrious history of 188 years of continuous service to trade and industry. It is registered under Section 8 of the Companies Act, 2013 (Section 25 of The Companies Act, 1956) a non-profit organization. With a large member base, the Chamber represents various industries in different sectors including SMEs.

The Goods and Services Tax Network (GSTN) has released an advisory dated September 3, 2024, on the GST Portal, introducing the new ‘Invoice Management System (IMS). According to the advisory, the system is designed to streamline the process of making changes to invoices directly through the GST portal, facilitating (recipient) taxpayers in matching their invoices with those issued by their suppliers for availing correct input tax credit (“ITC”).

As per the advisory, the recipient taxpayer will be able to accept, reject, mark as pending inward invoices or take no action against the said invoices in the IMS functionality. Basis the action taken, the GSTR-2B for the recipient will be generated to enable the filing of GSTR-3B. The advisory also outlines the operational workflow of the IMS on the GST Portal.

IMS is proposed to be operationalized w.e.f.1 October 2024 and will be accessible on the portal from November 2024.

IMS also calls for major alterations to the GST compliance workflow, business processes and current IT infrastructure of both the supplier and the recipient to enable them to comply with the new facility introduced by the GSTN. The workflow suggested in the IMS will be a significant shift from the way transactions are reviewed and compliances are currently undertaken under GST.

Members of the Chamber have raised several issues concerning IMS functionality which they may face once the IMS workflow is implemented from 1 October 2024. In the attached document, we have listed key issues of concern of the members and the respectful suggestions to address them and make the system more efficient.

As discussed in the attached representation document, implementation of the IMS, as it currently stands, is likely to have profound effect on taxpayers’ operations related to tax compliance, as well as notable commercial implications for businesses across various sectors. These changes could alter existing workflows and require substantial adjustments to compliance processes, potentially placing a strain on resources.

Thus, it would be prudent to engage more deeply with industry stakeholders to gather their insights and suggestions, ensuring a comprehensive understanding of the implications before moving forward with the introduction of the system. This collaborative approach would not only enhance the effectiveness of the IMS but also promote smoother adaptation for taxpayers.

Accordingly, it is humbly requested to defer the implementation of IMS functionality till the time a solution to various apprehensive scenarios is inbuilt in the system. Additionally, the industry may kindly be given at least 6 months’ time from the date when the law in relation to the said functionality is notified, in order to implement this new feature in their ERP or other accounting software for carrying out the compliance in an effective manner.

Bombay Chamber would be glad to facilitate the dialogue and assist both the government and taxpayers in effectively navigating these forthcoming changes.

We will be pleased to provide any further information that may be required for consideration and implementation of this representation.

Thanking you,

Yours sincerely,

Sandeep Khosla

Director General