Corporate Professional Today – October 20, 2018

400 October 20 To October 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 43 u^42

The above time limit is not applicable to

supplies that are liable to tax under reverse

charge mechanism. Further, 1st proviso to

Rule 37(1) provides that in case of supplies

made without consideration as specified in

Schedule I, value shall be deemed to be paid

and, thus, there would be no requirement of

ITC reversal.

Further, as per 2nd proviso to said sub-

rule inserted vide N. No. 26/2018-CT dated

13.06.2018, value of supplies on account of

any amount added in accordance with the

provisions of section 15(2)(b) (i.e., any amount

that the supplier is liable to pay but incurred

by the recipient which is not included in the

price), shall also be deemed to be paid and,

thus, requiring no reversal of ITC.

GST on reimbursement towards Air ticket

Will the air tickets booked by client for

travel of Chartered Accountants to facilitate

an outstation audit be liable to GST,

even if the engagement contract provides

that any travel expenses incurred by the

supplier in this behalf will be reimbursable

to the chartered accountants?

S

ection 15(2)(b) of the CGST Act,2017 provides

that expenses incurred by the recipient

in relation to supplies made by supplier

of goods/services is to be included in the

transaction value, only where such expenses

are to be borne by the supplier. However,

in the instant case, it cannot be said that

the suppliers, i.e., Chartered Accountants are

liable to incur the cost of booking of flight

tickets or that the cost was incurred by the

recipient on behalf of the supplier. Further, in

this case no reimbursement is also involved.

Hence, the value of flight tickets booked is

not required to be included by the Chartered

Accountants in their invoice, for computation

of transaction value of audit service.

lll

Creating a trust for the benefit of

dependent wife and daughter

One of my clients aged 70 is running

a restaurant for the past 3 decades. He

wants to create a trust by means of ‘will’

and put his long-time friends to manage

the business after him for the benefit of

his daughter and wife who are wholly

dependent on him. He was told that it is

possible. Can you outline the precautions

to be taken as regards income-tax?

I

ncome of private trust engaged in business

is liable to tax at the maximum marginal

I n c o m e Ta x

(Contributed by CA V.K. Subramani)

rate. However, the proviso to section 164(1)

provides exception from the general rule of

applying the maximum marginal rate.

The maximum marginal rate will not apply

if the following conditions are satisfied:

(a) the beneficiaries do not have any other

income chargeable to tax and are not

beneficiaries of any other trust;

(b) the income receivable is from a trust

established by means of ‘will’ and it

is the only trust declared by him;

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