Ernst & Young LLP
S.R. Batliboi & Co.
S.R. Batliboi & Associates
Tidel Park, 6th and 7th Floor
Rajiv Gandhi Salai Taramani
Chennai – 600 113
India
Indirect tax contact
Sriram Balakrishnan R
Pune
Ernst & Young LLP
S.R. Batliboi & Co.
S.R. Batliboi & Associates
Panchshil Tech Park, Yerwada
Pune 411 006
India
Indirect tax contact
Sagar Shah
Kolkata
Ernst & Young LLP
S.R. Batliboi & Co.
S.R. Batliboi & Associates
22 Camac Street
3rd Floor
Block C
Kolkata 700 016
India
Indirect tax contact
Sidhartha Jain
A. At a glance
Names of the taxes
+91 (44) 6654-8700
b.sriram@in.ey.com
+91 (20) 4912-6025
sagar10.shah@in.ey.com
+91 (33) 6615-3565
sidhartha.jain@in.ey.com
Goods and services tax (GST): consists of central tax, state tax or union territory tax, integrated tax and GST compensation cess
Local name Maal aur Seva Kar
Date introduced 1 July 2017 (GST)
Trading bloc membership Asia-Pacific Trade Agreement (APTA), South Asia Free Trade Area (SAFTA), Bay of Bengal Initiative for Multi-Sectorial Technical and Economic Cooperation (BIMSTEC)
Administered by
Central tax and integrated tax are levied and administered by the Central Government State/Union Territory (UT) tax is levied and administered by the respective state government/UT
GST rates 0%, 0.25%, 3%, 5%, 12%, 18%, 28%
GST number format
GST return periods
Thresholds
Registration
Supplier of goods only
Goods and Services Tax Identification Number (GSTIN) is a permanent account number (PAN)-based number in which the first two digits denote the state code. PAN is a unique identification code issued under the Indian Income Tax legislation.
Annually in case of businesses opting for composition scheme
Quarterly for taxable persons with turnover below INR50 million
Monthly (for all other taxable persons)
In specified special category states – INR1 million
In some states who have not opted higher threshold limit –INR2 million
In all other states – INR4 million
Other suppliers
Recovery of GST by non-established businesses
B. Scope of the tax
In specified special category states – INR1 million
In all other states – INR2 million
Yes, subject to certain conditions
A dual GST model is implemented in India where taxes are levied by both central and state governments on a common base.
GST levied by the Center is known as central tax (CGST) and that levied by states or union territories is known as state tax (SGST) or union territory tax (UTGST). Intrastate supply of goods and services attract CGST and SGST/UTGST in equal proportion.
Further, integrated tax (IGST) is levied by the Central Government on interstate supply of taxable goods and services. It is equivalent to sum of CGST and SGST.
Additionally, to compensate the states for the loss in tax revenue on account of subsuming some of the state taxes in GST, compensation cess is levied on certain specified supplies, such as luxury and sin products.
The CGST and SGST/UTGST or IGST applies to all supplies of goods and services except the exempt supplies and the supplies that are outside the purview of GST, like alcohol for human consumption and petroleum products.
The scope of supply for levy of GST is very wide. It includes all forms of supply such as sale, transfer, barter, exchange, etc., made or agreed to be made for a consideration by a person in the course or furtherance of business. Import of services for a consideration is considered a supply, whether or not it is in course or furtherance of business. Certain prescribed activities are treated as supply even if they are made without consideration. Examples of such activities include the supply of goods or services between related or distinct persons, between principal and agent, permanent transfer or disposal of business assets on which input tax credit has been availed. Certain transactions are specified to be treated as a supply of goods or a supply of services. A few transactions are specified to be neither treated as a supply of goods nor supply of services, thus making them nontaxable. Such transactions include services by an employee to the employer in course of employment, sale of land or completed buildings.
Alcoholic liquor for human consumption has been kept out of the scope of GST. Instead, it attracts state excise duty and VAT. In addition to GST, tobacco continues to attract Central excise
There are specific provisions to value supplies between related or distinct persons. The same is as follows:
• Open market value of such supply
• If the open market value is not available, the value of supply of goods or services of like kind and quality
• If the value is not determinable as above, 110% of the cost of production/provision of such services or by using reasonable means consistent with the principles and the general provisions of valuation under GST
However, where the goods are intended for further supply as such by the recipient, the value shall, at the option of the supplier, be 90% of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person.
Also, where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value. It is also clarified by the government that if no invoice is issued in such cases, the value declared (i.e., the open market value) will be considered to be nil.
Valuation and discounts. Generally, the transaction value is considered as the taxable value for applying GST. Certain items that must be included in the taxable value are prescribed under the GST legislation. They include any interest or penalty for delayed payment of the consideration for a supply, and incidental expenses, including commission and charges for packing, charged by the supplier to the recipient of supply.
Discounts are not included in the taxable value if they are duly recorded in the invoice. Any postsale discount should be in accordance with the contractual terms and be specifically linked to the relevant invoice.
C. Who is liable
A person who is registered under GST is liable to pay tax. The liability to pay tax is generally the obligation of the supplier. However, in certain specific cases prescribed under the GST law, the recipient of goods or services is obliged to pay the tax.
All suppliers whose aggregate turnover in a financial year exceeds the prescribed turnover threshold are required to register for GST.
In case of persons exclusively engaged in the supply of goods, the threshold limit is INR4 million. In some states that have not opted for higher threshold, the limit of INR2 million is applicable. Further, in specified special category states, the threshold limit is INR1 million.
In case of all other supplies, the threshold limit is INR2 million. However, in specified special category states, the threshold limit is INR1 million.
The following persons are required to register, irrespective of their turnover:
• Casual taxable persons making taxable supplies; a casual taxable person is any person who occasionally undertakes transactions of supply in a state or a union territory where the person has no fixed place of business
• Persons who are required to pay tax under the reverse-charge provisions
• Persons making interstate supplies of goods (except handicraft goods)
• Nonresident taxable persons making taxable supplies Thus, any person who has no fixed place of business or residence in India, but who occasionally undertakes transactions of supply of goods or services in India, must mandatorily obtain GST registration.
• Persons who are required to deduct tax at source
• Persons who make taxable supplies of goods or services, or both, on behalf of other taxable persons whether as an agent or otherwise
• Input service distributors
• Electronic commerce operators who are required to collect tax at source
• Persons supplying online information and database access or retrieval services from a place outside India to an unregistered person in India
• Persons supplying online money gaming from a place outside India to a person in India
Exemption from registration. The following persons are not liable to register for GST:
• Any person engaged exclusively in the business of supplying goods or services that are not liable to tax or that are wholly exempt from tax
• An agriculturist (farmer), to the extent of the supply of produce resulting from the cultivation of land
• Persons who are only engaged in making supplies of taxable goods or services, the total tax on which is liable to be paid via the reverse-charge mechanism
• Any other category of persons that may be notified by the government
Voluntary registration and small businesses. An entity that has turnover below the threshold may apply to register for GST voluntarily.
Group registration. Group GST registration is not allowed in India. However, a single registration can be obtained for all business units of the same legal entity within a state. Different legal entities under the same group cannot register as a single person.
Unless the taxable person obtains separate registration for a place of business in the state, all places of business in a state will be covered under single registration.
There is no minimum time period required for the duration of a single registration for all business units of the same legal entity within a state. Because there is no concept of group GST registration in India, there is no joint and several liabilities between group members. Each legal entity is responsible for its own GST debts and penalties.
Fixed establishment. The term “fixed establishment” is defined for GST purposes as a place (other than the registered place of business) that is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs. The same is used to determine location of the supplier and recipient of services.
Non-established businesses. A nonresident taxable person means any person who occasionally undertakes transactions involving the supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India. The law has not defined the term “occasionally.” Practically, a view has been formed that if the taxable person has undertaken business on a regular or frequent basis, then normal GST registration may be required to be taken in India. Such a person can register for GST on its own, or it can appoint a tax representative to register it on its behalf. Appointing a tax representative is optional and not mandatory for the non-established business.
Non-established suppliers providing online information and database access or retrieval (OIDAR) services to any unregistered person in India (i.e., business-to-consumer (B2C)), are required to register and account for GST. An “unregistered person” for the above purpose will also include a person registered solely for the purpose of deducting tax at source.
In addition, non-established suppliers providing online money gaming to any person in India (B2C) are also required to register and account for GST. “Online money gaming” means online gaming in which players pay or deposit money or money’s worth in the expectation of winning money or money’s worth in any event including game, scheme, competition or any other activity or process. This is irrespective of whether the outcome or performance is based on skill or chance and whether the same is permissible or otherwise under any other law in India.
Tax representatives. Practicing chartered accountants, advocates, employees of a taxable person and other persons set out in the law can be authorized to represent a taxable person before the tax administration and courts of law. However, in India it is not mandatory to appoint a tax representative. A nonresident business can directly register for GST or can also appoint a tax representative. Hence, both the options are available.
Reverse charge. For certain supplies of goods and services, the tax due is payable by the recipient, instead of supplier, under the reverse-charge mechanism. In the case of import of services, the recipient importer is required to discharge the GST on reverse-charge basis. Further, the recipient importer is also required to self-bill for imported services.
Domestic reverse charge. The domestic reverse charge is applicable for prescribed domestic supplies. Examples of such supplies include services performed by a goods transport agency for the transportation of goods by road, services provided by an advocate, sponsorship services and renting of motor vehicle. There is also a provision requiring the recipient procuring goods or services from any unregistered person to pay tax under the reverse charge. At present, this provision has been made applicable for certain category of supplies in real estate sector. If the supplier of the goods or services subject to the reverse-charge mechanism is not registered, the registered recipient is required to self-bill for receipt of those goods or services.
Digital economy. For online information and database access or retrieval services provided by a person located in a nontaxable territory to an unregistered recipient in India (B2C), the tax is payable by such nonresident supplier by registering for GST in India, regardless of the turnover. For business-to-business (B2B) supplies of such services, tax is payable by the GST registered recipient, under the reverse-charge mechanism.
A nonresident supplier supplying online money gaming to any recipient in India (B2C) is also required to register and pay GST in India. This is regardless of the recipient being registered or unregistered in India (see the “Non-established businesses” subsection above).
There are no other specific e-commerce rules for imported goods in India.
Online marketplaces and platforms. Online marketplaces/platforms (referred in the GST law as “e-commerce operators”) are required to collect tax at source at 1% of value of taxable supplies made through it by other suppliers. The requirement to collect tax at source is applicable only in cases where the consideration with respect to such supplies is collected by the e-commerce operator. They are required to register for such collection of tax at source, regardless of their turnover.
Further, GST in respect of certain notified categories of services supplied by other suppliers through e-commerce operators (viz., accommodation, housekeeping, transport of passengers by motor vehicle and restaurant services) shall be paid by such operators as if it is the supplier liable for paying tax in relation to supply of such services.
Registration procedures. The application for GST registration must be completed online. Scanned copies of the documents prescribed by law must be submitted along with the application for registration. The documents required to be submitted for GST registration include:
• Constitution of business (e.g., certificate of incorporation)
• Proof of principal place of business
• Bank account-related proof
• Authorization form and board resolution appointing authorized signatory
The applicant will also have to undergo Aadhar authentication, failing which, the tax authorities will do a physical verification of the applicant’s place of business. After undertaking a review of the application and the documents submitted with it, the relevant authorities grant a GST registration certificate to the applicant.
of payment. If the due date of payment is not ascertainable from the contract, then the invoice should be issued before or at the time when the supplier of the service receives the payment. If the payment is linked to the completion of an event, the invoice must be issued on or before the date of completion of that event.
Goods sent on approval for sale or return. There are no separate provisions for determining the time of supply for the supply of goods sent on approval for sale or return. However, the time of supply is linked to the issuance of invoices and the invoice in this scenario shall be issued before or at the time of supply (actual supply) or six months from the date of removal, whichever is earlier.
Reverse-charge services. For taxable services provided by a supplier located outside India and received in India, IGST must be paid by the recipient in India under the reverse charge. The time of supply is the earlier of the date when payment is made to the foreign supplier or the date of self-billing by the recipient.
For transactions with associated enterprises, the time of supply is the date of entry in the books of account of the recipient or the date of payment, whichever is earlier.
Leased assets. There are no special time of supply rules in India for supplies of leased assets. As such, the general time of supply rules apply (as outlined above).
Imported goods. IGST and compensation cess (if applicable) are levied at the time of importation of goods and they are collected as a part of customs duty.
Vouchers. If the supply is identifiable at the time of issuance of the voucher, the time of supply is the date of issue of the voucher, otherwise, the time of supply is the date of redemption of the voucher.
F. Recovery of GST by taxable persons
A registered person is entitled to take credit for tax charged on goods or services procured by it, provided they are procured in the course or furtherance of business; this is called input tax credit (ITC). IGST and compensation cess (if applicable) paid at the time of import are also available as input tax credit. Such input tax credit can be utilized to discharge the taxable person’s liability for GST on sales (output tax).
A valid tax invoice and the actual receipt of the goods or services are mandatory conditions for claiming input tax credit.
The recipient of a supply is not eligible to claim input tax credit if the supplier has not paid the output tax on that supply to the Government.
Further, input tax credit shall not be allowed to a taxable person if the corresponding invoices are not reported by the supplier in its returns, thus restricting the input tax credit to the extent of matched invoices.
The input tax credit cannot be claimed beyond a stipulated time frame. This time frame is the earlier of:
• 30 November following the end of financial year to which the invoice relates Or
• Submission of the relevant annual return for the financial year to which the invoice relates
If the recipient fails to pay the value of the supply and GST charged thereon to the supplier within a period of 180 days from the date the invoice was issued, the credit that has been taken needs to be reversed along with payment of interest (in case credit has been utilized). However, the credit can be reclaimed subsequently when payment is made to the supplier and the above time limit shall not apply.
Any office of a person that receives tax invoices for the receipt of input services for or on behalf of other registrations of the same legal entity (distinct persons) is required to be registered as an Input Service Distributor to distribute the input tax credit in respect of such invoices to the respective registrations.
Input tax credit for IGST should be first utilized to discharge output tax on account of IGST. The remaining IGST credit can be utilized towards payment of CGST and SGST, in any order.
After utilizing the IGST credit fully, the ITC of CGST can be utilized against output tax of CGST and then IGST. In the same manner, SGST credit can be utilized for payment of SGST first and then IGST.
CGST credit cannot be utilized for payment of SGST and vice versa.
Nondeductible input tax. Input tax credit is not available for goods and services used for making exempt supplies or for a nonbusiness purpose. For this purpose, the value of exempt supplies includes supplies on which the recipient is liable to pay tax on the reverse-charge basis, transactions in securities and the sale of land or completed buildings and excludes interest on loans and deposits (other than in the case of banks and financial institutions).
Further, the GST law specifies a list of goods and services for which no input tax credit is available.
Examples of items for which input tax is nondeductible
• Motor vehicles for transportation of persons with seating capacity up to 13 persons (except in specified circumstances)
• Goods or services received by a taxable person, which are used or intended to be used for activities relating to its obligations under corporate social responsibility
• Membership of a club, health or fitness center
• Goods or services for the construction of immovable property (except plant or machinery) on own account;
• Works contract services for construction of immovable property (other than plant and machinery), except where it is an input service for further supply of such services
• Goods or services used for personal consumption
• Goods lost, stolen, destroyed, written off or disposed of as a gift or free sample
In addition, tax charged by a taxable person who has opted for the composition scheme is not eligible as input tax credit.
Examples of items for which input tax is deductible (if related to a taxable business use)
• Hotel accommodation of employees traveling for business purposes
• Lease rentals for office premises
• Motor vehicles for transportation of persons with seating capacity of more than 13 persons
At the time of booking the invoice, the taxable person must check whether the expense relates to the cases for which input tax is not deductible.
Partial exemption. If the goods or services acquired by a business are used for making both taxable and exempt supplies, the input tax credit is allowed proportionately to the extent of the value of the taxable supplies made. A formula has been prescribed for apportioning the credit, based on turnover of taxable and exempt supplies. A banking company or a financial institution engaged in supplying services by way of accepting deposits, extending loans or advances has the option to either claim a proportionate credit as above or take 50% of the eligible input tax credit.
Approval from the tax authorities is not required to use the partial exemption standard method in India. Special methods are not allowed in India.
Where invoices are generated and issued electronically, signature of supplier or its authorized representative is not required.
Simplified GST invoices. For insurance companies, banking or financial institutions, multiplexes and suppliers of passenger transport services, certain requirements for invoicing have been relaxed. The relaxation is mainly with respect to details of service recipient and serial number of documents. Insurance companies, banking or financial institutions also have the option to issue consolidated tax invoice at the end of the month.
Self-billing. Self-billing is required in India. It is allowed where the tax due is payable by a customer for a supply subject to the reverse-charge mechanism, and the supplier is not registered for GST; then the customer is required to operate a type of self-billing. This is done by the customer issuing an invoice in respect of the goods or services received from the unregistered supplier.
Proof of exports. Export invoices must carry an endorsement indicating the option exercised by the exporter and must contain the name and address of the recipient, address of delivery and the name of the country of destination.
In case of exports without payment of tax, goods must generally be exported within three months from the date of invoice.
Foreign currency invoices. Generally, invoices are issued in the domestic currency, which is the Indian rupee (INR). However, for exports, the invoices may be issued in foreign currency. In such cases, GST rules provide for adopting a rate of exchange for determining taxable value.
For goods, the rate of exchange will be the rate notified by Central Board of Indirect Taxes and Customs under the Customs Act. For services, the rate of exchange will be the rate determined as per generally accepted accounting principles on the date of the time of supply of such services..
Supplies to nontaxable persons. A registered person is not required to issue a tax invoice if the value of the supply to unregistered persons is less than INR200 and the recipient does not require an invoice. For a supply made by a registered person to an unregistered person below the value of INR50,000, the supplier is allowed to issue a document without the name and address of the recipient of the supply and the address of delivery. However, in above case, where the transaction involves taxable supply of services by or through online marketplace/platforms or supply of online information and database access or retrieval services or online money gaming, the invoice shall contain the name of the state of the recipient.
Records. Every GST-registered person is required to maintain the prescribed accounts and records. In India, examples of what records that must be held for GST purposes include details of inward and outward supplies, stock of goods, input tax credit availed, GST paid on outward supplies. Relevant documents like invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers and refund vouchers are to be preserved.
In India, VAT books and records can be kept outside of the country. This is only allowed if the taxable person does not have any place of business in India. Such records are required to be maintained at the principal place of business (i.e., this can be physically in India or outside). Where there are additional places of business mentioned in the registration certificate, the accounts relating to each additional place of business should be kept at such place.
Record retention period. The accounts and records are required to be retained for 72 months (i.e., 6 years) from the due date of furnishing of annual return for the year pertaining to such accounts and records.
Electronic archiving. Electronic archiving is allowed in India. The records can be kept and archived electronically, subject to certain conditions. However, invoices received from supplier
in physical form need to be maintained in their original form if input tax credit is taken with respect to such invoices.
I. Returns and payment
Periodic returns. A return containing a summary of inward and outward transactions must be filed and GST payment is to be made on a monthly basis by the 20th of the next month. Also, a return containing invoice details of outward supplies is to be filed on monthly or quarterly basis, as applicable by 11th of the next month.
Taxable persons with turnover of less than INR50 million can file returns on a quarterly basis with tax payments to be done monthly.
Persons who have opted for the composition scheme have to file returns annually and make payment of tax quarterly.
Periodic payments. The tax liability pertaining to a specific month must be paid by the 20th of the succeeding month. However, taxable persons with an aggregate turnover up to INR50 million in the previous financial year must pay tax on or before the 22nd/24th of the succeeding month, depending on the state of registration.
The tax due can be paid using internet banking, credit or debit cards, national electronic fund transfer, real-time gross settlement or any other prescribed method.
Interest is levied with respect to nonpayment or late payment of tax. The rate of interest for a delay in payment of tax is 18% per annum.
Electronic filing. Electronic filing is mandatory in India for all taxable persons. The returns are to be filed on the common online portal at www.gst.gov.in. Before filing the return for a tax period, the return for all previous tax periods must also be filed with the tax authorities.
Payments on account. Payments on account are not required in India.
Special schemes. Composition scheme. Manufacturers, traders and restaurants with turnover of up to INR15 million may opt for taxation under the “composition scheme.” Under this scheme, suppliers pay tax at a flat rate on all their supplies, with no right of input tax credit for the tax paid on their purchases. The flat rate for manufacturers and traders is 1%. For restaurants, the tax rate is 5%. Certain conditions are prescribed for opting for the composition scheme, such as the supplier is not engaged in making interstate supplies of goods or supplies not subject to tax. A manufacturer or trader opting for this composition scheme can provide services only up to the specified limit.
Flat rate scheme for other small businesses. Other businesses can opt to pay tax at a flat rate of 6% if their turnover in the preceding financial year is up to INR5 million, subject to certain conditions.
Secondhand goods. Traders dealing in buying and selling of secondhand goods have an option to pay tax on the margin, i.e., the difference between the selling price and the purchase price, without recovery of input tax on purchase of goods.
Similarly, there are specific schemes for taxing the transactions of money exchange bureaus, air travel agents, and life insurance businesses.
Annual returns. Every registered person must submit an annual GST return for each financial year by 31 December following the end of the financial year. This is in addition to the monthly/ quarterly GST returns (see the Periodic returns subsection above). Taxable persons with an aggregate turnover up to INR20 million have been exempted from filing annual return for FY 2023-24.
Supplementary filings. Taxable persons that have an aggregate turnover exceeding INR50 million are required to submit a self-certified reconciliation statement, along with the annual return (external certification in earlier periods).
Correcting errors in previous returns. Any omission or incorrect particulars should be disclosed or rectified in the return for the subsequent period during which the same was noticed. However, rectification is not allowed after 30 November following the end of relevant financial year or after the annual return for that financial year has been filed, whichever is earlier. There are no separate provisions for submitting corrections in paper or in person by approaching tax authorities.
Digital tax administration. There are no transactional reporting requirements in India.
J. Penalties
Penalties for late registration. A penalty of INR20,000 may apply for failure to obtain a registration.
Penalties for late payment and filings. Nonpayment of tax, an incomplete tax payment, an incorrect refund or incorrect use of input tax credit is liable to a penalty of INR20,000 or 10% of the tax due, whichever is higher.
The late filing of periodic returns also attracts a penalty calculated on a daily basis with maximum cap of INR10,000.
Relief from the penalty due is provided if the defaulter pays the tax due with interest as and when a “show cause” notice is issued by the appropriate authority. The penalty must be paid only in cash (i.e., input tax credit cannot be used to pay the penalty).
Penalties for errors. A penalty is imposed on other offenses including the following: issuing incorrect or fake invoices, noncompliance while transporting goods, distribution of input tax credits by an input service distributor by not following prescribed provisions and non-maintenance of books that must be maintained by law. Most of these offenses attract a penalty at INR20,000 or an amount equivalent to the tax amount involved, whichever is higher.
Penalties for fraud. If any offense is carried out with fraudulent intention, the penalty is INR20,000 or an amount equivalent to the tax due, whichever is higher.
Personal liability for company officers. If any offense is committed by a company under the GST law, proceedings can be initiated against every person who, at the time of the offense, was in charge of and was responsible to the company for the conduct of its business. If it is found that an offense has been committed with the consent or due to the negligence of any director, manager, secretary or other officer of the company, then such persons would also be deemed guilty, and proceedings can be initiated against them as well.
If the person proves that the offense was committed without their knowledge or that they had exercised all due diligence to prevent the commission of such offense, then they shall not be liable for punishment.
If any tax, interest or penalty due from a private company cannot be recovered, then, every person who was a director of the company during such period is jointly and severally liable for such payment unless they prove that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on their part in relation to the affairs of the company.
Statute of limitations. The statute of limitation in India for tax periods up to financial year 202324 is as follows:
• Tax authorities can issue demand orders within three years from the due date of filing of the relevant annual return or the date of erroneous refund in case of nonpayment or underpayment
of tax, an incorrect refund or an incorrect recovery of input tax for reasons not involving fraud. The notice of demand is required to be issued at least three months prior to the above date.
• For cases involving fraud, tax authorities can issue a demand order within five years from the due date of the filing of the relevant annual return or the date of erroneous refund. The notice of demand in such cases is required to be issued at least six months prior to the above date.
For tax periods pertaining to financial year 2024-25 onward, a common statute of limitations for issuance of demand notices and orders is provided, irrespective of cases involving fraud or not. Demand notices are required to be issued within 42 months from the due date of filing the relevant annual return or erroneous refund. Further, the time limit to pass demand order is 12 months from the date of notice, which can be further extended by six months.