No, when calculating aggregate turnover under GST, you do not include the value of inward supplies on which the Reverse Charge Mechanism (RCM) is payable. Reference to the Law: Section 2(6) of the CGST Act, 2017 defines “aggregate turnover” as the aggregate value of all taxable supplies, exempt suppRead more
No, when calculating aggregate turnover under GST, you do not include the value of inward supplies on which the Reverse Charge Mechanism (RCM) is payable.
Reference to the Law:
- Section 2(6) of the CGST Act, 2017 defines “aggregate turnover” as the aggregate value of all taxable supplies, exempt supplies, and exports made by a person in the course or furtherance of business.
- Inward supplies under RCM are not included because they represent supplies received (where the recipient is liable to pay tax) and not supplies made by you.
Why This Matters:
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Accurate Calculation:
The purpose of calculating aggregate turnover is to determine GST registration thresholds and compliance requirements based on your own business supplies. Including inward supplies would inflate your turnover incorrectly. -
Statutory Clarity:
The definition in Section 2(6) clearly focuses on supplies made by the taxpayer, ensuring that reverse charge transactions—where tax is paid on inward supplies—are excluded.
When companies undergo a merger or acquisition, the treatment of depreciation on transferred assets is governed by specific provisions of the Income Tax Act. The key objective is to ensure that the tax benefit of depreciation already claimed by the transferor is preserved for the transferee, subjectRead more
When companies undergo a merger or acquisition, the treatment of depreciation on transferred assets is governed by specific provisions of the Income Tax Act. The key objective is to ensure that the tax benefit of depreciation already claimed by the transferor is preserved for the transferee, subject to certain conditions.
Key Points to Consider:
Carry Forward of Unabsorbed Depreciation:
Under the provisions applicable to amalgamations and demergers, any unabsorbed depreciation on assets of the transferor can be carried forward by the acquiring company. This means that if a company has already claimed depreciation in previous years, that benefit can continue in the new entity, provided the required conditions are met.
Continuity Conditions:
For the depreciation benefit to be transferred, the following conditions must generally be satisfied:
Continuity of Business: The acquiring company should continue the same business operations as the transferor.
Shareholding Continuity: There is often a requirement that a certain percentage (commonly 50% or more) of the transferor’s share capital or voting power is maintained by the acquiring company.
Basis of Depreciation for Transferred Assets:
The cost of the asset in the hands of the acquiring company is typically taken as the cost in the hands of the transferor, adjusted for any unabsorbed depreciation already claimed. This ensures that the depreciation deductions for future years are computed on the written-down value carried forward from the transferor’s books.
Practical Impact:
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See lessIf Conditions Are Met:
The acquiring company continues to claim depreciation on the transferred assets, and the benefit of unabsorbed depreciation is preserved. This helps in maintaining a lower taxable income post-merger or acquisition.
If Conditions Are Not Met:
If the continuity conditions fail, the depreciation claimed by the transferor may not be carried forward. In such cases, the acquiring company might have to start fresh without that tax benefit, potentially resulting in higher taxable profits.