As per the provisions mentioned in Income-tax Act, 1961, there is a requirement to furnish Form 15CA/15CB electronically. In the existing system on old Income Tax portal, taxpayers upload the Form 15CA, along with the Chartered Accountant Certificate in Form 15CB, wherever applicable, before submitting the copy to the authorised dealer for any foreign remittance.

Recently on 7^th June 2021, CBDT has launched new Income Tax portal. Considering the difficulties facing by the taxpayer of procedure & DSC issue, CBDT by Press release dated 14^th June 2021, has defer the uploading of online 15CA/CB on Income Tax Portal till 30^th June 2021.

Now by Press release Dated 05^th July 2021, CBDT has further extended the aforesaid date to 15^th July 2021. In view thereof, taxpayers can now submit the said Forms in manual format to the authorized dealers till 15th July, 2021. On other side, Authorized dealers are advised to accept such Forms till 15th July, 2021 for the purpose of foreign remittances.

A facility will be provided on the new e-filing portal to upload these forms at a later date for the purpose of generation of the Document Identification Number.

KNM India can assist you with a range of complete financial services that range from Corporate advisory to Transaction advisory, Pre-incorporation to Post-incorporation, Insolvency and bankruptcy code to Secretarial services, Assurance to Internal audit services, along with Market entry strategy to Foreign company registration in India. To discuss any of these please book your slot, or call us on +91-99105-04170 – or email us at services@knmindia.com to get a quick response.

The article has been contributed by:

CA Kavita Arora

Sr. Manager-Direct Tax

Further, we shall be happy to assist in case of any clarifications. For a deeper discussion, feel free to revert us at services@knmindia.com

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication.

Under section 143(1) of Income Tax Act, 1961, an intimation for adjustment of refund/demand needs to be send within 9 months from the end of the financial year in which the return is made. Earlier this timeline was 12 months from the end of the financial year in which the return is made.

However, due to some technical issues or other reasons, of course not attributed to taxpayers several Income Tax returns up to the AY 2017-18 were not processed and consequently Intimations of the same were not sent to taxpayers. This has led to a situation where the taxpayer is unable to get his legitimate refund in accordance with provisions of the Act, although the delay is not attributable to him.

As per the earlier order dated 10^th July 2020, time frame was given till 31^st October 2020 to process such returns with refund claims but considering the pending taxpayers’ grievances related to issue of refund and to mitigate genuine hardship being faced by the taxpayers these time limits are further extended till 30^th September 2021 through order u/s 119 of IT Act, 1961.

The relaxation accorded above shall not be applicable to the following returns:

(a) returns selected in scrutiny.

(b) returns remain unprocessed, where either demand is shown as payable in the return or is likely to arise after processing it.

(c) returns remain unprocessed for any reason attributable to the assessee.

To ensure adequate safeguards, it has been decided that once administrative approval is accorded by the Pr. CCIT/CCIT, the Pr. CIT/CIT concerned would make a reference to the DGIT(Systems) to provide necessary enablement to the Assessing officer on a case-to-case basis.

KNM India can assist you with a range of complete financial services that range from Corporate advisory to Transaction advisory, Pre-incorporation to Post-incorporation, Insolvency and bankruptcy code to Secretarial services, Assurance to Internal audit services, along with Market entry strategy to Foreign company registration in India. To discuss any of these please book your slot, or call us on +91-99105-04170 – or email us at services@knmindia.com to get a quick response.

The article has been contributed by:

CA Kavita Arora

Sr. Manager-Direct Tax

Further, we shall be happy to assist in case of any clarifications. For a deeper discussion, feel free to revert us at services@knmindia.com

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication.

EXECUTIVE SUMMARY

Income Tax

CBDT has come out with the following amendments as below: –

• Launching of New Income Tax Website.
• Compliance check Functionality for ease the usance of section 206AB/CCA.
• Extension of time limits of certain compliances to provide relief to taxpayers.
• Issuance of Cost Inflation Index for FY 2021-22.

GST

CBIC has come out with the following amendments as below: –

• GST notifications issued on June 1st 2021 to provide effect of 43rd GST council meeting
• GST rates reduced on Goods on specific items prescribed in 44th GST council meeting held on June 12th 2021
• Clarification on applicability of Dynamic QR Code

Companies Act 2013/ Other Laws

MCA has come out with the following amendments as below:

• MCA has issued the much-awaited clarification for passing general and special resolutions and convening an EGM in unavoidable circumstances and extended the validity of the existing circulars up to December 31, 2021, in light of the current social distancing norms.
• All companies are free to discuss and approve the matters related to the approval of the annual financial statements; the approval of the Board’s report; the approval of the prospectus; the Audit Committee Meetings for consideration of financial statement including consolidated financial statement if any;

To know in detail please continue reading…

• CBDT vide Press release dated 5^th June 2021 informed for launching of new Income tax website incometax.gov.in on 07^th June 2021 with an aim to providing better interface, free ITR preparation utility in some cases, new & functionalities and also for quick refunds etc.

• CBDT vide Notification No. 71/2021 / No. 370142/19/2021-TPL dated 8^th June 2021 amend the rule 31A (4) to comply with clauses amended according to 194A, 196D and 194Q. In addition to Appendix II has been changed in form 26Q to give effect to TDS sections.

• CBDT vide Circular F.NO.225/61/2021/ITA-I dated 10^th June 2021 has issued parameters for compulsory selection of returns for Complete Scrutiny during Financial Year 2021-22 and conduct of assessment proceedings.

• CBDT vide Press release dated 14^th June 2021 has informed that until fixation of bugs/error on new Income Tax website taxpayer can prepare 15CA/CB manually. This notification is applicable till 30^th June 2021. A facility will be provided on the new e-filing portal to upload these forms at a later date for the purpose of generation of the Document Identification Number.

• CBDT vide Notification No. 73/2021 / NO. 370142 / 10 / 2021-TPL dated 15^th June 2021 has issued Cost inflation index (CII-317) for the financial year 2021-22 and is applicable from AY 2022-23.

• CBDT vide Circular No.11/2021[F.NO. 370133/7/2021-TPL] dated 21^th June 2021 has issued circular regarding use of functionality u/s 206AB/CCA. For more details, please click the link: https://knmindia.com/tds-tcs-on-goods-along-with-deduction-collection-at-higher-rates-a-deep-insight/.

• CBDT vide Press release dated 23^rd June 2021 has informed about approves agreement between India and Saint Vincent and grenadines for exchange of information and assistance in collection with respect to taxes.

• CBDT vide circular No. 12 of 2021 dated 25th June 2021 has issued clarification that income-tax exemption will be given to the amount received by a taxpayer for medical treatment from employer or from any person for treatment of Covid-19 during FY 2019-20 and subsequent years. It has been decided to provide income-tax exemption to ex-gratia payment received by family members of a person from the employer of such person or from other person on the death of the person on account of Covid-19 during FY 2019-20 and subsequent years. The exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to Rs. 10 lakh in aggregate for the amount received from any other persons.

Further due to covid-19 provide various relaxations through extension of time limits of certain compliances to provide relief to taxpayers as below:

• CBDT vide Notification No. 74/2021/ F. No. 370142/35/2020-TPL dated 25th June 2021 & 75/2021/ No.IT(A)/01/2020-TPL Dated 25^th June,2021 has decided to extend the various dates as below:

For GST notifications dated 01^st June 2021 for Relaxations and effect to GST council notifications please refer the below link (https://knmindia.com/relaxations-by-gst-council/)

• The GST council in its 44th meeting held on 12th June, 2021 recommended reduction in GST rates on goods on specific items being used in COVID -19 relief and management. (Link /https://knmindia.com/relaxations-by-gst-council/)

• CBDT vide Circular No. 156/12/2021 – GST dated 21^st June 2021 issue various clarifications in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification 14/2020- Central Tax dated 21st March, 2020 as below:
• Dynamic QR Code is to be provided on an invoice issued to an Unique Identity Number holder.
• Bank account and IFSC details need not to be provided separately in the Dynamic QR Code along with UPI ID.
• where the payment is collected by some person other than the supplier (E-Commerce Operator or any other person authorized by the supplier on his/ her behalf) then in such cases UPI ID of such person who is authorized to collect the payment on behalf of the supplier, may be provided.
• Wherever an invoice is issued to a recipient located outside India, for supply of services where place of supply is in India and the payment is received by the supplier in foreign currency, through RBI approved mediums, then such invoice may be issued without having a Dynamic QR Code.
• In some instances, it may not possible for the supplier to provide details of invoice number in the dynamic QR code displayed to the customer on payment counter where payment received before generation of invoice then cross reference of such payment received along with unique order ID/ sales reference number to be provided on the invoice.
• When the part-payment for any supply has already been received from the customer/ recipient, in form of either advance or adjustment through voucher/ discount coupon etc. then the dynamic QR code may provide only the remaining amount payable by the customer/ recipient against “invoice value”. However, the total invoice value should be mentioned on invoice showing advance adjustment.

• CBIC vide Notification no. 34/2021- customs dated 29^th June 2021 seeks to reduce the basic custom duty on Crude Palm Oil [1511 10] and Palm Oil other than Crude Palm Oil [1511 90] till 30th September 2021.

• CBIC vide Notification no. 33/2021- customs dated 14^th June 2021 Seeks to rescind notification No. 30/2021-Customs, dated 01.05.2021 relating to reduce IGST on Oxygen Concentrators when imported for personal use.

• CBIC vide Notification no. 32/2021 – (Customs ADD ) dated 03rd June 2021 Seeks to further amend notification No. 23/2016-Customs (ADD) dated 6th June, 2016 extend the levy of Anti-Dumping duty on Polytetrafluoroethylene originating in or exported from Russia, up to and inclusive of 31st October, 2021.

• CBIC vide Notification no. 33/2021 – (Customs ADD ) dated 03^rd June 2021 Seeks to further amend notification No. 6/2016-Customs (ADD) dated 8th March, 2016 to extend the levy of Anti-Dumping duty on Phenol originating in or exported from European Union and Singapore, up to and inclusive of 31st October, 2021.

• MCA has issued the much-awaited clarification for passing general and special resolutions and convening an EGM in unavoidable circumstances and extended the validity of the existing circulars up to December 31, 2021, in light of the current social distancing norms

The MCA has earlier issued General Circular no 14/2020 (first circular) and 17/2020 (second circular) dated 13th April 2020 for providing relaxations and clarifying various difficulties in following the first circular. The circular details guidelines for conducting an EGM for companies that need to provide e-voting facility or have opted for e-voting as per section 108 of the Companies Act, 2013, every listed company and company not having less than 1000 shareholders must mandatorily provide e-voting facility and for companies that do not need to provide e-voting facilities. All other requirement and conditions provided in the said circulars shall remain unchanged.

• MCA has notified the Companies (Accounting Standards) Rules, 2021 which shall come into force on the date of their publication in the Official Gazette i.e 23-06-2021.

Through these Rules, MCA has notified the Accounting Standards for small and medium companies that revise the turnover and borrowing limits as well as help in making disclosure requirements less onerous. The definition of Small and Medium-Sized Companies (SMCs) under the standards has been revised and accordingly turnover limit has been increased from Rs 50 crore to not exceeding Rs 250 crore and with enhanced borrowing limits. This is in addition to the requirements that such entities should be unlisted companies, which are not banks, financial institutions, or insurance companies. The Accounting Standards 1 to 5, 7, and 9 to 29 as recommended by the Institute of Chartered Accountants of India shall be applicable on SMC and shall come into effect in respect of accounting periods commencing on or after 01-04-2021. Every company, other than companies on which Indian Accounting Standards as notified under Companies (Indian Accounting Standards) Rules, 2015 are applicable, and its auditor(s) shall comply with the Accounting Standards at the time of preparation of Financial Statements. Further, an existing Company which has subsequently become SMC can only claim the benefits of SMC under these Rules after two years.

• MCA has notified the Companies (Creation and Maintenance of Databank of Independent Directors) Amendment Rules, 2021,

Which shall come into force on the date of their publication in the Official Gazette i.e. 18-06-2021. The MCA has notified the much-awaited amendment and eased the requirement for aspiring as well as serving independent directors on the board of companies to get their names included in an official database of eligible professionals. As per a rule change notified by the ministry on Friday, in spite of any delay, a professional could get her name empaneled in the official database of independent directors maintained by the Indian Institute of Corporate Affairs (IICA) by paying ₹1,000/-. This is expected to give relief to those who have missed their deadline. Aspiring independent directors were expected to get their names included in the database before they took up the assignment while serving ones had time till last October as per an earlier instruction.

• MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2021,

Which shall come into force on the date of their publication in the Official Gazette i.e. 18-06-2021.  To enable users of financial statements to understand the effect of interest rate benchmark reform on an entity‘s financial instruments and risk management strategy, an entity shall disclose information about the nature and extent of risks to which the entity is exposed arising from financial instruments subject to interest rate benchmark reform, and how the entity manages these risks; and the entity‘s progress in completing the transition to alternative benchmark rates, and how the entity is managing the transition. Among others, there are changes in the basis for determining the contractual cash flows as a result of interest rate benchmark reform. The disclosures will enable users of financial statements to understand the effect of these changes, including an entity’s progress in completing the transition to alternative benchmark rates. Further, the amendments to Ind ASs are in terms of insertion of certain paragraphs, substituting definition of certain terms used in the standard along with aligning the bare text of Standards with Conceptual Framework of Financial reporting under IndAS.

The MCA has notified the Companies (Meetings of Board and its Powers) Amendment Rules, 2021 

Which shall come into force on the date of their publication in the Official Gazette i.e 15-06-2021. Through this Amendment, Rule 4 related to the matters not to be dealt with in a meeting through video conferencing or other audiovisual means has been omitted. Accordingly, now all companies are free to discuss and approve the matters related to the approval of the annual financial statements; the approval of the Board’s report; the approval of the prospectus; the Audit Committee Meetings for ²[consideration of financial statement including consolidated financial statement if any; and the approval of the matter relating to amalgamation, merger, demerger, acquisition, and takeover, in any meeting held through video conferencing or other audio visual means. Earlier, MCA has provided relaxation in this regard up to 30^th June 2021.

Other Laws

SEBI

• The Securities and Exchange Board of India has amended the SEBI (Alternative Investment Funds) Regulations, 2012(“AIF Regulations”), which were notified on May 05, 2021. 

The Amendment, 2021 notified on June 25, 2021 provides a framework for AIFs to invest simultaneously in units of other AIFs and directly in securities of investee companies. In terms of Regulation 15(1) (c) and (d) of the AIF Regulations, AIFs may invest in an Investee Company up to a specified limit, directly or through investment in the units of other AIFs. In terms of Regulation 20(1), the key management personnel of the AIF and the Manager shall abide by the Code of Conduct as specified in the Fourth Schedule of the AIF Regulations. In terms of provision to Regulation 20(8) of AIF Regulations, there is a requirement to furnish a waiver to AIF in respect of compliance with the said Regulation. The consent of the investors of the AIF or scheme may not be required for change in ex-officio external members (who represent the sponsor, sponsor group, manager group or investors, in their official capacity), in the investment committee set up by the Manager.

• SEBI has relaxed the vesting period requirement under the employee stock option schemes of listed companies in case of the death of an employee, a move aimed at providing relief to families of the deceased staff amid the coronavirus pandemic. 

The relaxation will be available to all such employees who died on or after April 1, 2020. The Share Based Employee Benefit (SBEB) Regulation provides that there will be a minimum vesting period of one year in case of employee stock options and Stock Appreciation Rights (SAR). In the event of death of an employee, all the options, SAR or any other benefit granted to him or her under a scheme till such date will vest in the legal heirs or nominees of the deceased employee. SEBI has now decided the provisions under the SBEB Regulations relating to minimum vesting period of one year shall not apply in case of death (for any reason) of an employee and in all such instances, all the options, SAR, or any other benefit granted to such an employee will vest with his/her legal heir or nominee on the date of death of the employee.

• SEBI has issued a circular regarding Automation of Continual Disclosures as per SEBI (Prohibition of Insider Trading) Regulations, 2015 for System driven disclosures for inclusion of listed Debt Securities.

It has now been decided to include the listed debt securities of equity listed companies under the purview of the said System Driven Disclosures for the entities. The Depositories and Stock Exchanges shall make necessary arrangements such that the disclosures pertaining to listed Debt Securities along with equity shares and equity derivative instruments are disseminated on the websites of respective stock exchanges with effect from July 01, 2021.

RBI

RBI with an intent to infuse greater transparency and uniformity in practice has notified a Guidelines on the Distribution of Dividends by NBFCs.

These guidelines shall be applicable on all NBFC’s and shall be effective for the declaration of dividend from the profits of the financial year ending March 31, 2022, and onwards. All NBFCs eligible to declare dividend may pay a dividend, subject to the Dividend Payout Ratio is the ratio between the amount of the dividend payable in a year and the net profit as per the audited financial statements for the financial year for which the dividend is proposed. The proposed dividend shall include both dividend on equity shares and compulsorily convertible preference shares eligible for inclusion in Tier 1 Capital. Further, in case the net profit for the relevant period includes any exceptional and/or extraordinary profits/ income or the financial statements are qualified (including ’emphasis of matter’) by the statutory auditor that indicates an overstatement of net profit, the same shall be reduced from net profits while determining the Dividend Payout Ratio. It has also made clear that the Reserve Bank shall not entertain any request for ad-hoc dispensation on the declaration of dividend.

IBBI

• The Insolvency and Bankruptcy Board of India has issued the provisional list of IPs prepared in accordance with ‘Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2021

For appointment as, IRP in a CIRP under section 16(4), liquidator in a liquidation process under section 34(6), RP in an individual insolvency resolution process under section 97(4) or 98(3), and bankruptcy trustee (BT) under section 125(4), 146(3) or 147(3) of the Insolvency and Bankruptcy Code, 2016. This list shall be in effect during the period between July 1, 2021 – December 31, 2021. The Board has prepared a common Panel of IPs for appointment as IRP, Liquidator, RP and BT and shall share the same with the Adjudicating Authority (‘AA’) (NCLT and DRT) in accordance with these Guidelines. The Panel will have validity of six months and a new Panel will replace the earlier Panel every six months. For example, the first Panel under these Guidelines will be valid for appointments during July – December 2021, and the next Panel will be valid for appointments during January – June 2022, and so on. The NCLT may pick up any name from the Panel for appointment of IRP, Liquidator, RP or BT, for a CIRP, Liquidation Process, Insolvency Resolution or Bankruptcy Process relating to a corporate debtors and personal guarantors to corporate debtors, as the case may be.

View Monthly Compliance Calendar

KNM India can assist you with a range of complete financial services that range from Corporate advisory to Transaction advisory, Pre-incorporation to Post-incorporation, Insolvency and bankruptcy code to Secretarial services, Assurance to Internal audit services, along with Market entry strategy to Foreign company registration in India. To discuss about any of these please book your slot, or call us on +91-99105-04170 – or email us at services@knmindia.com to get a quick response.

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates are for the period 26.05.2021 till 25.06.2021.

A much-needed relief by the Ministry of Corporate Affairs (MCA) to conduct the Extra Ordinary General Meetings (EGM) through Video Conference (VC) or Other Audio-Visual Means (OAVM) in accordance with the framework provided till 31^st December 2021.

A. Background

The Ministry of Corporate Affairs had earlier provided relaxations for conducting EGM through Video Conference (VC) or Other Audio-Visual Means (OAVM) on account of COVID-19. The MCA had issued the First General Circular no. 14/2020 dated 8^th April 2020 for providing relaxation wherein the companies were allowed to conduct Extra-Ordinary General Meeting (EGM) for passing ordinary and special resolutions requiring approval of members through VC or OAVM considering the COVID 19 outbreak situation.

In furtherance to the above circular, the Second General Circular no. 17/2020 was issued on 13^th April 2020 clarifying the framework for conducting the EGM through VC or OAVM.

B. Relaxation

Now, it has been allowed to all the companies to conduct EGM’s through VC or OAVM or transact items through postal in accordance with the framework provided till 31^st December 2021 vide the General Circular No. 10/2021 dated 23^rd June 2021.

MCA had already allowed the companies to conduct the Annual General Meeting (AGM) through VC or OAVM till 31^st December 2021 vide circular dated 13^th January 2021.

C. Frequently Asked Questions (FAQs)

1. Is the Facility of conducting EGM through VC or OAVM is available for all companies?

Yes, all companies whether Listed, Private, Public or Small Companies are allowed to provide facility of VC or OAVM for conducting their EGM.

2. Are companies allowed to conduct Annual General Meeting through VC or OAVM?

Yes, the Companies are allowed to conduct Annual General Meeting (AGM) through VC or OAVM facility.

3. Is it necessary to maintain the recorded transcript of the General Meeting held through VC or OAVM facility?

Yes, it is necessary to keep the recorded transcript in the safe custody of the Company.

4. What is the time period allowed by MCA to conduct the EGM / AGM through VC or OAVM?

As per the recent circulars, the Companies can conduct their EGM / AGM through VC or OAVM till 31^st December 2021.

The article has been contributed by:

CS Anuradha Newatia

Executive Secretarial

Further, we shall be happy to assist in case of any clarifications. For a deeper discussion, feel free to revert us at services@knmindia.com

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication.

Executive Summary:

Income Tax

1. Notification for relaxations of due date in time barring matters

2. Circular for extension of due dates falling on 31st March /30th April 2021, up to 31st May 2021

3. Circular extending compliance due dates for the FY 2020-21, relating to filing of returns and audit reports

4. Covid-19 relaxation in Section 269ST- Cash Receipt more than INR 2 Lakh.

5. Time line to update UDIN of Past Audit Reports and certificates has been further extended up to 30th June 2021

6. Government to launch new income tax e- filing website on 7th June 2021

International Tax

1. New Rule 11UD inserted in ITA to define the threshold limits for Significant Economic Presence

2. Section 139A exemption to Eligible Foreign Investors.

Goods and Services Tax

1. Relaxations in waiver of late fee and reduction in interest rates for compliance periods of March and April 2021

2. Amnesty and relaxations recommended by GST council in its 43rd Meeting dated 28th May 2021, capping late fee in filing GST returns

3. Recommendations by GST council for full exemption from GST to covid-19 related goods, imported from outside India on payment basis, for donating to government or any relief agency

4. Recommendations of the GST council to make present system of filing GSTR-1 / 3B, as default return filing mechanism under GST

5. Refund filing timeline to exclude period in notifying by the officer, deficiencies in refund application filed

Corporate & Other Laws

1. MCA has provided relaxation on additional fee on various forms as per the circular no. 06/2021 and 07/2021

2. MCA has provided clarification on offsetting the excess CSR spent for Financial Year 2019-20

3. MCA has provided the relaxation under the Section 173 by increasing the gap between two Board Meeting by 180 days

Income Tax

Notification for extension of Time barring matters

• The CBDT vide Notification No. 38/2021 Dated 27th April,2021 has decided to extend the various time barring dates, which were earlier extended to 30-04-2021, by various notifications. It has been decided to extend due dates from 30-04-2021 to 30-06-2021 in the following cases:

a) Time limit for passing of any order for assessment or reassessment, the time limit for which is provided under section 153 or section 153B.

b) Time limit for passing an order consequent to the direction of DRP under section 144C(13).

c) Time limit for issuance of notice under section 148 for reopening assessment where income has escaped assessment.

d) Time Limit for sending intimation of processing of Equalisation Levy.

• The CBDT vide Notification No. 39/2021 Dated 27th April,2021 has decided to extend the due date for making payment without additional charge under Vivad se Vishwas Act., which were earlier extended to 30-04-2021 has extended further from 30-04-2021 to 30-06-2021.
  Time line to update UDIN of Past Audit Report and certificates has been further extended
  CBDT notifies dated 30th April 2021 that the timeline to update UDIN of past uploads of audit report and certificates has been further extended
  up to 30th June, 2021 to avoid invalidation.
  Notifications for Statement of Financial Transactions (SFT) for Depository Transactions
  CBDT vide Notification No. 3 & 4 of 2021 dated 30.04.2021, issued format, procedure and guidelines for submission of Statement of Financial Transactions (SFT) for Depository Transactions & Mutual Fund Transactions by Registrar and Share transfer Agent.Extension of dates by up to 31st May 2021 for compliances ending 31st March / 30th April
  (Circular No. 08/2021, Dated 30th April, 2021)

Though the due date for filing of Income-tax Return for the Assessment Year 2021-22 has been extended, but no relief shall be provided from the interest chargeable under section 234A if the tax liability exceeds Rs. 1 lakh. Thus, if self-assessment tax liability of a taxpayer exceeds Rs. 1 lakh, assessee would be liable to pay interest under section 234A from the expiry of original due dates, i.e., 31-07-2021 or 31-10-2021 or 30-11-2021. The interest under section 234A shall not be levied if the self- assessment tax liability of taxpayer does not exceed Rs. 1 lakh and ITR if filed within the extended due date.
Further In case of senior citizen having no PGBP Income, all taxes paid upto 31st July will be deemed as Advance Tax.

Relaxation in Section 269ST: Cash Receipt more than INR 2 Lakh
On account of Curbing cash transaction, Government had introduced the section 269ST, in which no person is allowed to take an amount of INR Two lakh or more from a person on a single day for one event/transaction.
However considering the surge of Covid-19, Govt. vide Notification No.56/2021 dated 07th May 2021, has allowed to below mentioned entities to take Cash after obtaining PAN or AADHAAR of the patient and the payee and the relationship between the patient and the payee:
– Hospitals, -Dispensaries, -Nursing Homes, -Covid Care Centres or similar other medical facilities. during period begin from 01.04.2021 to 31.05.2021.
On 10th May, 2021 Govt. has issued a corrigendum that instead of payee, Payer should be read.
Government to launch new income tax e-Filing website

Government has announced that it is launching a new website on 7th June, 2021 for income tax e-filing. ITA also said that the existing website will not be accessible between 1st June 2021 to 6th June 2021.
CBDT has issued first instruction for Faceless Assessment Scheme
CBDT has issued instruction that notices u/s 143(2) will be issued electronically by NeAC and cases covered under Central charge i.e. search & seizure, & International Taxation will still continue with Prescribed authority.

Extension of time limits of year end compliances for FY 2020-21
(Circular No. 09/2021, Dated 20th May, 2021)

Computation of FMV in case of Slump Sale
CBDT has notified a new rule 11UAE for computation of fair market value of capital assets in slump sale. As per the amendment, the new Rule 11UAE under section 50B has given two formulae for calculation and has stated that the fair market value will be the higher among the two values. It is to be noted that earlier, the actual consideration of the slump sale transaction was considered as full value of consideration for computing capital gains meaning thereby that there was no need to arrive at Fair Market Value.
Formula 1: The FMV1 shall be the fair market value of the capital assets transferred by way of slump sale
Formula 2: FMV2 shall be the fair market value of the consideration received or accruing as a result of transfer by way of slump sale
Accordingly, now a uniform formula to compute FMV in case of slump sale has been provided, which shall provide a certainty in tax litigation and clarity to taxpayers.
Clarification on limitation for filing of CIT(A)
CBDT via Circular No 10 of 2021 dt 25.05.2021, issues clarification w.r.t. limitation for filing of appeals before CIT(Appeals) under Income- tax Act,1961 in consonance with directions issued by Hon’ble Supreme Court in Suo Motu WP(Civil) No 3 of 2020 vide order dt 27th Apr, 2021. It was clarified that if different relaxations are available to the taxpayers for a particular compliance, the taxpayer is entitled to the relaxation which is more beneficial to him. Thus, for the purpose of counting the period(s) of limitation for filing of appeals before the CIT(Appeals) under the Act, the said limitation stands extended till further orders as ordered by the Hon’ble Supreme Court in aforesaid Suo-motu Writ Petition.

International Tax

• New Rule 11UD inserted in ITA to define the threshold limits for Significant Economic Presence
  CBDT vide Notification No. 41/2021 Dated 3rd May,2021 has inserted a new rule 11UD to define the threshold limits for Significant Economic Presence u/s 9(1)(i) that specify transaction based threshold is Rs.2 Crores whereas user based threshold is Rs. 3 lacs users in India.
• Notifications for exemption of provision of section 139A not apply on Eligible Foreign investor
  CBDT vide Notification No. 42 of 2021 dated 04.05.2021, further amend rule 114aab to give exemption w.r.t. to provision of section 139A, to those Non-resident or foreign companies who are investing in capital asset like GDRs & etc. which are listed on IFCs & consideration are paid in Foreign currency only. Person must ensure that they are having income from these capital asset only in India.

GST

Section-A: Relaxations on account of Covid-19 – Period Covered: March and April 2021

** Pursuant to recommendations of GST council in its 43rd Meeting dated 28th May 2021, the said period has been extended from 15th April 2021 to 29th June 2021 and the revised due date being 30th June 2021.

Section-B : Key outcomes of 43rd GST Council Meeting dated 28th May 2021
1. Amnesty scheme for waiver of Late Fee

Condition: The reduced rate of late fee would apply if GSTR-3B returns for these tax periods are furnished between 01st June 2021 to 31st August 2021.
2. Rationalization of Late fees for Future periods

3. Simplification of Annual Return for Financial Year 2020-21
– In order to ease compliance in filing of Annual return- GSTR-9 for the FY 2020-21, amendments were made in Finance Act, 2021 omitting
the requirement for obtaining certified Reconciliation Statement in GSTR-9C, from a chartered accountant.
– Accordingly, compliance for the FY 2020-21 regarding annual return is as under:

4. Other key recommendations of the Council

The aforesaid relaxations are recommendations of the GST council in its recent 43rd meeting dated 28th May 2021. Formal notification in respect of various relaxations shall be separately released, wherever applicable.

Section-C : Other Notifications

Changes made according to various CGST rules Notification No. 15/2021 – Central Tax dated 18th May 2021

CBIC vide notification No. 15/2021 dated 18th May 2021, On the recommendations of the council Government made amendment in procedures of various rules including additions or removal of proviso in rules of revocation of cancellation of registration, acknowledgement of refund applications, order sanctioning refund and E- way bill rules to provide ease of compliances and procedures to support respective sections.

CBIC has issued circular on Standard Operating Procedure (SOP) for implementation of the provision of extension of time limit to apply for revocation of cancellation of registration

CBIC vide circular No. 148/04/2021-GST dated 18th May,2021, issue procedure on SOP for implementation of the provision of extension of time limit to apply for revocation of cancellation of registration u/s 30 of CGST Act amended to ensure uniformity in the implementation of the provisions, till the time an independent functionality for extension of time limit for applying in FORM GST REG-21 is developed on the GSTN portal.

Measures to facilitate trade during lockdown period facility of acceptance of an undertaking in lieu of Bond
CBIC vide Circular No. 09/2021 – Customs dated 08th May 2021 has decided to restore the facility of acceptance of an undertaking in lieu of bond by custom formations from the date of issue of circular till 30th June 2021, terms and conditions remain the same as underlined in circular no. 17/2020, dated 30th April 2020 as amended by circular no. 21/2020 dated 21st April 2020. Importers/ Exporters availing the facility shall ensure that the undertaking furnished in lieu of bond is duly replaced with a proper bond by 15th July 2021.

Clarification regarding carrying out Job work under the ambit of the Customs (Import of goods at concessional rate of duty IGCR) Amendment rules, 2021
CBIC vide Circular no.10/2021-customs , dated 17.05.2021, extended scope of job work for a manufacturer importer who is without complete manufacturing facility. Also, 100% out sourcing for manufacture of goods on job-work basis has been permitted for importers who do not have any manufacturing facility at all. However, sensitive sectors such as gold, articles of jewellery and other precious metals or stones have been excluded from the facility of job work. Detailed procedure had been prescribed for an importer which provide prior Intimation to Jurisdictional officer along with one time continuity bond. Periodical prescribed details has to be made available to the concerned officers as prescribed.

Exempt IGST on imports of specified covid-19 relief material donated from abroad
Ad hoc exemption has been provided through Exemption order no. 4/2021- Customs Dated 03rd May 2021 for IGST on imports of specified COVID-19 relief material donated from abroad, up to 30th June, 2021.

IGST has been reduced on oxygen concentrators when imported for personal use
CBIC vide Notification No. 30/2021-customs dated 01st May, 2021 notifies to reduce IGST to 12% on Oxygen Concentrators when imported for personal use. This notification shall remain in force upto and inclusive of the 30th June, 2021.

Corporate Laws

Relaxation of time of filing forms related to creation or modification of charges under the Companies Act, 2013
a) In case, a form CHG-1 and Form CHG-9 where the date of creation and modification of charge is before 01.04.2021, but time line for filing such form had not expired under section 77 of the act as on 01.04.2021 , the period beginning from 01.04.2021 and ending on 31.05.2021 shall not be reckoned for the purpose of counting the number of days under section 77 or section 78 of the Act. In case, the form is not filed within such period, the first day after 31.03.2021 shall be reckoned as 01.06.2021 for the purpose of counting the number of days within which the form is required to be filed under section 77 or section 78 of the Act.
b) In case a modification and creation of charge fall on any date between 01.04.2021 to 31.05.2021, the period beginning from the date of
creation/modification of charge to 31.05.2021 shall not be reckoned for the purpose of counting of days under section 77 or section 78 of the Act.

Gap between two Board Meeting under section 173 of the Companies Act, 2013:
It has now said that the gap between two consecutive board meetings can extend to 180 days during the quarter – April to June 2021 and July to September 2021 – instead of 120 days as stipulated in the company law. Resurgence of Covid-19 cases during the ongoing second wave has prompted the corporate affairs ministry (MCA) to relax the norm around the time gap between two consecutive board meetings of companies in a financial year. It has now said that the gap between two consecutive board meetings can extend to 180 days during the quarter – April to June 2021 and July to September 2021 – instead of 120 days as stipulated in the company law. Put simply, another sixty days window is being extended as gap between two consecutive Board meetings.

Clarification on offsetting the excess CSR spent for Financial Year 2019-20:
The certain companies claimed to have contributed CSR funds to the ‘PM CARES Fund’ over and above their prescribed CSR amount for FY 2019-20. Several representations have been received in the Ministry for setting off the excess CSR amount spent by the companies in FY 2019-20 by way of contribution to ‘PM CARES Fund’ against the mandatory CSR obligation for FY 2020-21. The issues raised in the said representations have been examined in the Ministry and accordingly, it is hereby clarified that where a company has contributed any amount to ‘PM CARES Fund’ on 31.03.2020, which is over and above the minimum amount as prescribed under section 135(5) of the Companies Act, 2013 (“Act”) for FY 2019-20, and such excess amount or part thereof is offset against the requirement to spend under section 135(5) for FY 2020-21 in terms of the aforementioned appeal, then the same shall not be viewed as a violation subject to the conditions that:
i. the amount offset as such shall have factored the unspent CSR amount for previous financial years, if any;
ii. the Chief Financial Officer shall certify that the contribution to “PMCARES Fund” was indeed made on 31st March 2020 in pursuance of the appeal and the same shall also be so certified by the statutory auditor of the company; and
iii. the details of such contribution shall be disclosed separately in the Annual Report on CSR as well as in the Board’s Report for FY 2020-21 in terms of section 134(3) (o) of the Act.
Waiver of additional fees on filing of various forms as per Circular no. 06/2021 and 07/2021, dated 3rd May 2021
Relaxation was provided to Companies and LLPs in filing of various forms, related to companies and LLP without payment of any additional fees where it has been due for filing for a specified period of time, the Ministry has issued a clarification listing out the forms covered under such relaxation. Further, it is to be noted that the relaxation w.r.t waiver off additional fees has been provided for the forms which are due for filing during a specific period of time only; therefore the clarification (list of forms) has to be referred along with its respective circular issued on 3rd May 2021.

Other Laws

SEBI notifies substantial amendments in Listing Regulation(Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2021)
SEBI, the capital market regulator of India, vide a gazette notification dated 06th May, 2021 notified Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2021 [“the Amendment Regulations”] that were approved in SEBI’s Board Meeting held on March 25, 2021. Most of the amendments were already rolled out earlier as consultation papers in 2020. The amendments become effective from May 06, 2021.

RBI
Sponsor Contribution to an AIF set up in Overseas Jurisdiction, including IFSCs:
The Ministry of Finance, Government of India, Reserve Bank of India vide Circular No. 04/RBI/2021-22 dated 12.05.2021 has provided that in attention of AD Category – I banks is invited to paragraph A.3.(e) and B.6 of Master Direction No.15 dated January 1, 2016, on “Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad”, as amended from time to time and Regulation 7 of the Notification FEMA 120/2004-RB, pertaining to provisions for an Indian Party (IP) making investment/ financial commitment in an entity engaged in the financial services sector.
The Circular states that Investment by Indian Party (“a company incorporated in India or a body created under an Act of Parliament or a partnership firm registered under the Indian Partnership Act, 1932 making investment in a Joint Venture or Wholly Owned Subsidiary abroad”), as a sponsor into AIF set-up in an overseas jurisdiction and IFSCs in India will be considered as an outbound investment under the automatic route provided Indian Party complies with the conditions investing in an entity engaged in the financial service sector outside India.
This is a welcome move by the regulator as Indian Party is no longer required to take prior RBI approval. This move should boost the IFSC regime.

Relaxation on in timeline for compliance with various payment system requirements
A reference is invited to Reserve Bank of India instructions – (a) DPSS.CO.PD.No.1164/02.14.006/2017-18 dated October 11, 2017(as updated from time to time) on Master Direction on Issuance and Operation of Prepaid Payment Instruments (PPI-MD);
(b) DPSS.CO.PD.No.629/02.01.014/2019-20 dated September 20, 2019 on Harmonization of Turn Around Time (TAT) and Customer Compensation for Failed Transactions using Authorised Payment Systems; (c) DPSS.CO.OD.No.1325/06.11.001/2019-20 dated January 10, 2020 on Scope and Coverage of System Audit of Payment Systems; (d)DPSS.CO.PD.No.1810/02.14.008/2019-20 dated March 17, 2020 on Guidelines on Regulation of Payment Aggregators (PAs) and Payment Gateways (PGs); and (e) DPSS.CO.PD.No.1897/02.14.003/2019-20 dated June 4, 2020 on Extension of Timeline for Compliance with Various Payment System Requirements.
Keeping in view the resurgence of the COVID-19 pandemic and the representations received from various bank and non-bank entities, it has
been decided to extend the timeline prescribed for compliance in respect of a few areas.

DGFT
Amendment in Import Policy of integrated circuits and incorporation of policy condition.
The Ministry of Finance, Government of India, Central Board of Indirect Taxes and Customs vide Notification No. 05/2015-2020 dated 10.05.2021 has amended Import policy of item of Electronic Integrated Circuits shall be subject to Chip Imports Monitoring System (CHIMS) with effect from 01.08.2021.
Issuance of Export Authorisation for Restricted Items (Non-SCOMET) from new online Restricted Exports IT Module w.e.f. 17.05.2021.
The Ministry of Finance, Government of India, Central Board of Indirect Taxes and Customs vide Trade Notice No. 03/2021-22 dated 10.05.2021 has introduced a new online module for filing of electronic, paperless applications for export authorizations with effect from 17.05.2021. All applicants seeking export authorization for restricted items may apply online by navigating to the DGFT website (https://www.dgft.gov.in) → Services → Export Management Systems → License for Restricted Exports. Accordingly, applications for issuance as well as for amendment/re-validation of export authorization will need to be submitted online as per the above link and export authorizations for restricted items(Non-SCOMET) will continue to be issued from DGFT HQ, Udyog Bhawan, New Delhi through new module with effect from 17.05.2021. It may further be noted that all pending applications will be migrated to this new system and will be processed at DGFT(HQ).

On account of COVID 19, Indian Government is trying to provide relieves / measures to address the confusion / unrest in the industry. In continuation of relaxation and other parameters addressed by government, RBI; SEBI; DGFT and MCA has provided some of the important announcement / clarifications as mentioned in this presentation.

Due Dates: June 2021

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication.

Income Tax

• • • • • • • As per the latest order F. NO. 187/3/2020-ITA-1, Dated 31-3-2021,CBDT has specifies that all proceedings/order will be completed under Faceless manner. Further it is also clarified that this order will not cover search/investigation and international taxation charges cases.

           

          • • CBDT vide Notification S.O. 1432(E) [No. 20/2021/F. No. 370142/35/2020-TPL], Dated 31-3-2021, , has specifies that proceedings/action u/s 139AA, 144C, 148, 149 and151 will be completed till 30-04-2021 instead of 31-03-2021.
              Further considering the Covid-19 situation, CBDT has further extended the above date to 30-06-2021.

           

          • • CBDT vide Notification No. G.S.R. 242(E) [NO. 21/2021/F.NO. 370142/5/2021-TPL], DATED 31-3-2021, has amended the Rule 12 of Income tax Rules 1962 and issued Income tax forms for AY 2021-22. Keeping in view the ongoing crisis due to COVID pandemic and to facilitate the taxpayers, no significant changes have been made to the ITR Forms in comparison to the last year’s ITR Forms. Only the bare minimum changes necessitated due to amendments in the Income-tax Act, 1961 have been made.

           

          • • CBDT vide notification dated 12th March 2021 widening the scope of Specified Financial Transaction by including Dividend, Interest, & Capital gain on Mutual fund to be reported by specified person. Now CBDT by Notification no 1 & 2 of 2021 [DGIT(S)/ADG(S)¬2/REPORTING PORTAL/2021/180], DATED 20-4-2021, has specified format, procedure & guidelines for uploading information on compliance portal with regard to Dividend & Interest.

           

          International Taxation

           

          • • CBDT vide Notification S.O. NO. 1442(E) [NO.29/2021/F.NO.501/03/92-FTD-II], Dated 01-4-2021, hereby declared that Tax Treaty/DTAA between Government of Republic of India And Government of Islamic Republic of Iran is effective from 01.04.2021 considering Article 30(3)(b) of the said agreement in India. Please note that this agreement was signed at New Delhi on the 17th February, 2018.

           

          • • CBDT vide Notification G.S.R 250(E) [NO. 31 / 2021 / F.NO.370142 /19 /2019-TPL], Dated 05-4-2021, has amended the rule 10DB for applicability of Form 3CEAD(CBCR). As per the amended Rule 10DB, threshold will be INR 6,500 Crore instead of INR 5,500. Further, form 3CEAB will be applicable on a designated entity whether it is containing residential status of Resident or non-resident. Earlier it is filed by Resident Constituent entity only.

           

          • • CBDT vide Notification 1661(E) [ NO. 33/2021/ F. NO. 370142/6/2021-TPL], Dated 19-4-2021, declares Nor fund, Government of Norway as specified sovereign wealth fund. Now its income will be exempt u/s 10(23FE) subject to fulfillment of certain conditions as specified in the notifications.

           

          Goods & Services Tax (GST)

           

          

          • • • CBIC vide Notification No. 05/2021-Central Tax dated 08th March 2021, has mandated E-Invoicing to taxpayers having turnover more than Rs. 50 crores, w.e.f. 01st April 2021, for all B2B supplies made including exports. E-invoicing applicable where turnover of a taxpayer crossed the aforesaid limits during any F.Y. from 2017-18.

             

            • • Currently, the recipients of the deemed export supplies are finding difficulty in claiming refund of tax paid in respect of such supplies, because the system is not allowing them to the file refund claim under the aforesaid category unless the claimed amount is debited in the electronic credit ledger. This is due to the reason that Para 41 of circular no:125/44/2019 –GST dt. 18/11/2019 has placed a condition that the recipient of deemed export supplies shall submit an undertaking that he has not availed ITC on invoices for obtaining the refund of tax paid on such supplies. Accordingly, the recipient of deemed export supplies cannot avail ITC on such supplies, but when they proceed to file refund on the portal, the system requires them to debit the amount so claimed from their electronic credit ledger.

             

        • CBIC vide Vide Order No.147/02/2021-GST dated 12-03-2021 has now remove the restriction of non-availment of ITC by the recipient of deemed export supplies on the invoices, for which refund has been claimed by such recipient.

       

      • • CBIC vide Circular No. 146/02/2021-GST dated 23-02-2021 has issued the following clarifications in respect of the applicability of Dynamic QR code on invoices issued for B2C supplies:- QR code shall not be required to be generated in case of export transaction even though such supplies are made by a registered person to unregistered persons;- Following details to be captured in the QR code: GSTN of the supplier, UPI ID and bank A/C number and IFSC of the supplier, invoice number, invoice date, total invoice value and GST amount along with breakup i.e., CGST, SGST, IGST and Cess.- Where the payment is made without using the dynamic QR code, the invoice shall be deemed to have complied with the requirement of Dynamic QR Code, if the cross reference of the payment is made on the invoice.- Where payment is made after generation /issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice. This is applicable to suppliers making supplies through E-commerce portal or an online application.

       

      Companies Act, 2013

      

      • • MCA amends Schedule III of Companies Act 2013. The Read disclosures to be made in Balance Sheet with effect from 1st day of April, 2021.

       

      • • The Schedule III of the Companies Act 2013 contains the general instructions for preparation of Balance Sheet and Statement of Profit and Loss of a Company. Broadly, changes have been made to align the Schedule III with recent changes and to make it more meaningful and speaking. Now companies have to round off the figures appearing in the financial statements, hitherto it was optional. Further, the criteria for rounding off shall be based on “total income” in place of “turnover”. All Companies now have to disclose Shareholding of Promoters, Current maturities of long term borrowings, Trade Payables & Trade Receivables ageing schedule to be given, details of all the immovable whose title deeds are not held in the name of the Company, Disclosures to be made where Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and related parties, Capital – work – in progress & Intangible assets under development ageing schedule shall also be given, Disclosure of any proceedings initiated or pending against the company for holding any Benami property under the Benami Transactions (Prohibition)Act, 1988. Further, where a company is a declared willful defaulter by any bank or financial Institution or other lenders, Disclosure of any transactions with companies struck-off, and Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof shall be disclosed & detail to be provided in the Balance sheet.

           

        • MCA has notified the Companies (Accounts) Amendment Rules, 2021 which shall come into force with effect from the 1st day of April, 2021.

         

        • Accordingly, MCA has mandated that for the financial year commencing on or after the 1st day of April, 2021, every company which uses accounting software for maintaining its books of account shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled. Further, the notification also specified that Board Report should contain the following additional information’s relating to the details of an application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year and the details of the difference between the amount of the valuation is done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with the reasons thereof.

         

        • MCA has notified Companies (Audit and Auditors) Amendment Rules, 2021 which shall come into force with effect from the 1st day of April, 2021.

         

        • MCA has deleted the clause relating to dealings in Specified Bank Notes during the prescribed time period from the Auditors Report and instructed to insert the clause relating to the funds advanced/received or loaned or invested by the company to or in any other person(s) or entity(ies), including foreign entities with the understanding that the Intermediary shall lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company. Further, the Auditors is required to comment on the status the dividend declared or paid during the year by the company is in compliance with section 123 of the Companies Act, 2013. The Auditors are also required to comment on accounting software used by the Company for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software

         

        • MCA has created a way to compensate non-executive or Independent Directors of companies, which are loss-making or have inadequate profits.

         

        • The MCA has issued a notification to make amendments in the Schedule V of the Companies Act, 2013, which limits the remuneration that a non-executive director can be given depending upon the effective capital of the Company. Earlier, only the executive director was entitled to remuneration in the event of a loss. The new provision allows the Board of Directors to pass a special resolution if they want to further increase the remuneration beyond the upper limit. This provision is applicable to both non-executive and executive directors. The Rule 4 of the company’s appointment and remuneration of managerial personnel 2014, the sitting fees to an independent director or a director would not exceed a sum of Rs 100,000 per meeting. At the lowest slab of Rs 12 lakh, a year independent director could still draw thrice the amount that would have been payable for four board meetings in a year.

         

        • MCA notified the 18th March, 2021 as the effective date for implementation of changes in provisions of Independent Director and Remuneration to Directors inserted Companies (Amendment) Act, 2020.

         

        • The Central Government hereby appoints the 18th March, 2021 as the date on which the provisions of section 32 and section 40 of the said Act shall come into force. Section 32 of the Companies (Amendment) Act, 2020 seeks to amend Section 149 of the Companies Act, 2013 wherein a proviso was added to provide that an independent director may receive remuneration, if a company has no profits or inadequate profits in accordance with Schedule V of the Act. Further, Section 40 of the Companies (Amendment) Act, 2020 seeks to amend Section 197(3) of the Companies Act, 2013 to provide that, if a company fails to make profits or makes inadequate profits in a financial year, any non-executive director of such company, including an independent director shall be paid remuneration in accordance with Schedule V of the Act.

         

        • MCA establishes CSC for carrying out Scrutiny of STP E-Forms filed by Companies.

         

        • The Ministry of Corporate Affairs established a Central Scrutiny Centre (CSC) for carrying out scrutiny of Straight Through Processes (STP) e-forms filed by the companies under the Act and the rules. The notification said that the CSC shall function under the administrative control of the e-governance Cell of the Ministry of Corporate Affairs. The CSC shall carry out scrutiny of the aforesaid forms and forward findings thereon, wherever required, to the concerned jurisdictional Registrar of Companies for further necessary action under the provisions of the Act and the rules made thereunder. The CSC shall be located at the Indian Institute of Corporate Affairs (IICA), Plot No. 6, 7, 8, Sector 5, IMT Manesar, District Gurgaon (Haryana), Pin Code- 122050. Notification is attached.

         

        • The Ministry of Corporate Affairs has further amended the Companies (Management and Administration) Rules, 2014 and have released the Companies (Management and Administration) Amendment Rules, 2021.

         

        • Which shall come into force on the date of their publication in the Official Gazette i.e 05-03-2021. The amendment provides that One Person Company and Small Company shall file their Annual Return under the provisions of the Section 92 of the Companies Act, 2013, in Form No. MGT-7A from the financial year 2020-21 onwards and every other Company shall continue to file their Annual Return in Form No. MGT-7. A copy of the annual return shall also be filed before the registrar of companies with prescribed fees. Further, details regarding indebtedness of the company and details of Foreign Institutional Investors (FII) like their name, address, countries of incorporation, registration and shareholding pattern are omitted in the revised Form MGT – 7.

         

        • The Ministry of Corporate Affairs, has issued the Companies (Incorporation) Third Amendment Rules, 2021 to further amend the Companies (Incorporation) Rules,2013,

         

        • Which shall come into force on the date of their publication in the Official Gazette i.e 05-03-2021. The amendment provides companies the option to undergo Aadhar authentication for GSTIN registration along with companies’ registration. The amendment has revised Form INC-35 AGILE PRO to include the option to perform Aadhar authentication for GSTIN registration. The applicants who opt for it must submit an Aadhar Card along with the application for registration under GST. After this, they need to verify the same on the GST portal. An OTP will be sent on the mobile number and email ID linked to the Aadhaar card. Only upon entering this OTP, the Aadhar will get e-validated. As per GST provisions, only authorized signatory will be required to go for Aadhar authentication, not all the directors, managing director, whole-time director or other directors who are not authorized signatories, need not go for Aadhar authentication.

         

        Other Laws

        • SEBI

         

        • The Securities & Exchanges Board of India in its recent Board Meeting has approved several resolutions which would go a long way.

         

        • The SEBI Board approved several amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which inter-alia covers the requirement for formulation of dividend distribution policy to the top 1,000 listed companies on the basis of market capitalization; in case of the board meeting held for more than one day, financial results must be disclosed by the listed entities within 30 minutes of end of the board meeting for the day on which the financial results are considered; the timelines for submission of periodic reports. The SEBI Board has approved several amendments to the SEBI (Delisting of Equity Shares) Regulations, 2009 to make the delisting process more transparent and efficient which inter-alia covers that promoter/acquirer will be required to disclose their intention to delist the company by making an initial public announcement; the committee of independent directors will be required to provide their reasoned recommendations on the proposal for delisting. New requirements for sustainability reporting by listed entities has been introduced by SEBI. The new reporting called the Business Responsibility and Sustainability Report (BRSR) will replace the existing Business Responsibility Report (BRR). The BRSR will be applicable to the top 1000 listed entities (by market capitalization), for reporting on a voluntary basis for FY 2021 – 22 and on a mandatory basis from FY 2022 – 23. Further, the SEBI Board approved the proposal to rationalize the existing framework pertaining to the reclassification of promoter/ promoter group entities. It has also been decided to reduce the time gap between the date of the board meeting and shareholders meeting for consideration of reclassification request, to a minimum of one month and a maximum of three months from the existing requirement of a minimum period of three months and maximum six months.

         

        • SEBI has issued a circular on Prior Approval for Change in control w.r.t Transfer of shareholdings among immediate relatives and transmission of shareholdings and their effect on change in control.

         

        • SEBI has provided clarity on change in control criteria for market intermediaries and requirements for seeking its prior approval. With regard to unlisted body corporate intermediary, transfer of shareholding among immediate relatives would not be construed as a change in control. Further, transfer of shareholding by way of transmission to an immediate relative or not, shall not result in a change in control. Immediate relatives include any spouse of that person, or any parent, brother, sister, or child of the person or of the spouse. In case of an intermediary being a proprietary concern, the transferor bequeathing of the business/capital by way of transmission to another person is a change in the legal formation or ownership and is hence a change in control. The legal heir or transferee in such cases is required to obtain prior approval and thereafter fresh registration needs to be obtained in the name legal heir/ transferee. For transfer of ownership interest in case of partnership firm with more than two partners, inter-se transfer amongst the partners would not be construed to be changed in control. Where the partnership firm consists of two partners only, the same would stand as dissolved upon the death of one of the partners, it added. However, if a new partner is inducted in the firm, it would be considered as a change in control, requiring fresh registration and prior approval of SEBI.

         

        • SEBI issues a new framework for delivery default in the derivatives segment.

         

        • SEBI has received representations from market participants in the commodity derivatives segment for standardization of delivery default norms, among others. Consequently, Securities and Exchange Board of India in consultation with clearing corporations came out with delivery default norms, which will be effective from the first trading day of May 2021. The clearing corporation, having commodity derivatives segment, should have an appropriate deterrent mechanism in place against intentional or willful delivery default and ensure adequate compensation to the non-defaulting counterparty. In agricultural and non-agricultural commodities, the penalty for delivery default by the seller will now be 4 percent and 3 percent of the settlement price plus replacement cost, respectively. Further, the provisions for levy of penalty on delivery default by the buyer will be put in place by the clearing corporations. The Clearing Corporations and exchanges will have the flexibility to increase or decrease the penalty for specific commodities depending on the situation in consultation with SEBI.

         

        • SEBI has advised all registered entities including MIIs (which use bulk SMS for providing their services to the investors) to ensure strict compliance with the Telecom Regulatory Authority of India’s (TRAI) Telecom Commercial Communications Customer Preference Regulations, 2018 (TCCCP Regulations).

         

        • These new regulations have a provision for Principal Entities to register with the telecom service providers and are also required to register the template of the message. It may be noted that effective implementation of these new regulations will help to protect investors and the general public from unsolicited and often misleading messages. The regulator said non-compliance with the provisions of Telecom Commercial Communications Customer Preference Regulations, 2018 (TCCCP Regulations) may result in disruption of delivery of their messages to the investors.

         

        • The Finance Ministry has notified the new format of the Annual Report for Securities & Exchange Board of India (SEBI).

         

        • The SEBI has issued the Securities and Exchange Board of India (Annual Report) Rules, 2021. Accordingly, the Board shall submit a report to the Central Government giving a true and full account of its activities, policies, and programs during the previous financial year in the Annexure appended to these rules. The report shall be submitted within ninety days after the end of each financial year. Market Activity and Trends Observed (including details of applications for public issuance received and approved during the financial year, fund-raising under different categories, the median time is taken for regulatory approval on an aggregate basis). Complete details of Merchant Bankers, Bankers to an Issue, Underwriters, Debenture Trustees, Registrar to an Issue and Share Transfer Agents, etc. (including details such as new registrations, the median time is taken for approval of registrations on an aggregate basis, number of applications rejected, suspension/cancellation of registration, and regulation of activities of the intermediaries associated with the securities market). Risk Management Measures (including the categorized list of investors; concentration of investments; NPAs; instances of diversion of funds; quantum of unclaimed units, etc.). Investor grievances received and redressed (including their type, increase in number and geographic location and segment-wise categorization, major nature, or types of complaints). A detailed report on the inflow of money into IPF / beneficial owner protection funds of MIIs and SEBI shall also be attached.

         

        • SEBI extends Central KYC Registry to legal entities.

         

        • SEBI has asked regulated entities to upload ‘Know Your Customer’ data pertaining to accounts of legal entities opened on or after April 1, onto the Central KYC Registry. Regulated entities (REs) have already been uploading the KYC data pertaining to all individual accounts opened on or after August 1, 2016, onto CKYCR. Regulated entities (REs) have already been uploading the KYC data pertaining to all individual accounts opened on or after August 1, 2016, onto CKYCR. Accordingly, RIs (registered intermediaries) shall upload the KYC records of LE accounts opened on or after April 1, 2021, on to CKYCR in terms of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. The regulator has also come out with a template for legal entities in this regard. Also, registered entities would have to ensure that during such receipt of updated information, the clients’ KYC details are migrated to current client due diligence standards. Further, once a KYC identifier is generated by CKYCR, the RIs would ensure that the same is communicated to the legal entity. The provisions of this circular are not applicable to Foreign Portfolio Investors (FPIs).

         

        • SEBI has issued a circular which specifies the Unique Client Code (UCC) and mandatory requirement of Permanent Account Number (PAN).

         

        • The amendments are carried out in Clause 3 which specifies that it is mandatory for all the members of exchanges having commodity derivatives segments to use UCC. It shall now be mandatory for the members of the exchanges having commodity derivatives segment to use Unique Client Code (UCC) for all clients transacting on the commodity derivative segment. The exchanges with commodity derivatives segment shall not allow execution of trades without uploading of the UCC details by the members of the exchange. Further, Clause 5 has been modified, to provide the exchanges having commodity derivatives segment shall ensure that the members of their exchanges shall collect copies of PAN cards issued to their existing as well as new clients after verifying with the original and cross-check the aforesaid details collected from their clients with the details on the website of the Income Tax (IT) Department. However, in case of e-PAN, verify the authenticity of e-PAN with the details on the website of IT Department and maintain the soft copy of PAN in their records and upload details of PAN or e-PAN so collected to the Exchanges as part of Unique Client code.

         

        • SEBI has come out with guidelines on votes cast by mutual funds to further improve transparency and encourage such fund houses to diligently exercise their voting rights in best interest of the unit holders.

         

        • Mutual funds, including their passive investment schemes like index funds, exchange-traded funds (ETFs), will be required to cast votes compulsorily in respect of related party transactions of the investee companies and corporate governance matters. In addition, mutual funds will have to cast votes on corporate governance matters, including changes in the state of incorporation, merger and other corporate restructuring, and anti-takeover provisions as well as capital structure, including increases and decreases of capital and preferred stock issuances. Also, casting of votes would be necessary for stock option plans and other management compensation issues, social and corporate responsibility issues, appointment and removal of directors and any other issue that may affect the interest of the unit holders. Further, in case of the mutual funds having no economic interest on the day of voting, it may be exempted from compulsory casting of votes. The vote would be cast at the mutual fund level. However, in case a fund manager of any scheme has a strong view against the views of fund manager of the other schemes, the voting at scheme level would be allowed, subject to recording of detailed rationale for the same. Fund managers need to submit a declaration on a quarterly basis to the trustees that the votes cast by them have not been influenced by any factor other than the best interest of the unit holders.

         

        • SEBI has come out with operational guidelines to credit physical shares in Demat Account of investors following re-lodged transfer request.

         

        • SThe shares in demat form would help in maintaining a transparent record of shareholding of companies amid rising concerns over beneficial ownership of entities. Subsequent to processing of re-lodged transfer request, the RTA (registrar to an issue and share transfer agent) would retain physical shares and intimate the investor (transferee) about the execution of transfer through a letter of confirmation. Further, this letter will be sent through speed post or e-mail, with the digitally signed letter containing details of endorsement, shares, folio of investor as available on physical shares. The investor would have to submit the demat request, within 90 days of issue of letter of confirmation, to depository participant along with the letter of confirmation. In case of shares that are required to be locked-in, the RTA, while confirming the demat request, will also intimate the depository about the lock-in and its period. Such shares would be in lock-in demat mode for six months from the date of registration of transfer. Transfer of securities held in physical mode has been discontinued with effect from April 1, 2019, but investors have not been barred from holding shares in physical form. In March 2019, SEBI had clarified that transfer deeds lodged before the deadline of April 1, 2019, and rejected or returned due to deficiency in documents may be re-lodged with requisite documents.

         

        • SEBI has issued the Consultation Paper on Review of Regulatory Provisions related to Independent Directors for public comments

         

        • With an intent to further strengthen the independence of IDs and enhance their effectiveness in the protection of interests of minority shareholders and performing other functions. It is proposed that KMPs or employees of promoter group companies, cannot be appointed as Independent Directors in the company, unless there has been a cooling-off period of 3 years. The said restriction shall also extend to relatives of such KMPs for the same period. The prescribed cooling-off period for eligibility condition shall be harmonized to 3 years. The Consultation Paper seeks views of the public on proposals including broadening the eligibility criteria for IDs, process of appointment / re-appointment and removal of IDs, enhancing transparency in the nomination and resignation of IDs, strengthening the composition of Board Committees, etc. Additionally, views are also sought on the need for review of remuneration of IDs. The Consultation Paper is open for public comments till April 01, 2021.

         

        • RBI

         

        • The Reserve Bank of India (RBI) has decided to extend the cheque truncation system (CTS) across all bank branches by September 2021 in a bid for faster and smoother cheque clearances in the Country.

         

        • To leverage the availability of CTS and provide uniform customer experience irrespective of location of her/his bank branch, it has been decided to extend CTS across all bank branches in the country. All Banks will have to ensure that all their branches participate in image-based CTS under respective grids by September 30, 2021. Further, they are free to adopt a model of their choice, like deploying suitable infrastructure in every branch or following a hub & spoke model and concerned banks should coordinate with the respective Regional Offices of RBI to operationalize this system.

         

        • DGFT

         

        • The DGFT has issued a Trade Notice for issuance of Import Authorization for ‘Restricted’ items from DGFT HQs w.e.f. March 22, 2021

         

        • As part of IT Revamp of its exporter/importer related services, DGFT has now introduced a new online module for filing of electronic, paperless applications for import authorizations with effect from 22.03.2021. All applicants seeking import authorization for restricted items may apply online by navigating to the DGFT website and import authorizations for restricted items would be issued from DGFT HQ, Udyog Bhawan, New Delhi with effect from 22.03.2021. It may further be noted that all pending applications have been migrated to this new system and will be processed suitably at DGFT(HQ). For re-validation or amendment of such authorizations issued on or after this date, applications would be required to be submitted electronically to DGFT(HQ). Original Copies of the authorization would be required to be presented to DGFT(HQ) for re-validation/amendment endorsements.

         

        • IBBI

         

        • IBBI has notified the has notified Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2021.

         

        • which shall come into force on the date of their publication in the Official Gazette i.e. 15-03-2021. The Board inserted Rule 12A in respect of the Updation of claim which said, “a creditor shall update its claim as to and when the claim is satisfied, partly or fully, from any source in any manner, after the insolvency commencement date. The Board notified that where any activity requiring the filing of Form CIRP 7, if not completed by the specified date the interim resolution professional or resolution professional, as the case may be, shall file Form CIRP 7 within three days of the said date, and continue to file Form CIRP 7, every 30 days, until the said activity remains incomplete. However, subsequent filing of Form CIRP 7 shall not be made until thirty days have lapsed from the filing of an earlier Form CIRP 7. IBBI has also clarified that only one Form CIRP 7 shall be filed at any time whether one or more activity is not complete by the specified date. Further, in the Schedule to the principal regulations, Form C in respect of Submission of Claim by Financial Creditors shall be substituted.

         

        • IBBI extends the validity of IBBI (Online Delivery of educational Corse and Continuing Professional Education by Insolvency Profession Agencies and Registered Valuers Organization) Guidelines, 2020.

         

         

        • The Insolvency and Bankruptcy Board of India (IBBI) has issued the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2021

         

        • To further amend the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The amendments have been made in Regulation 31 (2), which specifies that the liquidator shall file the list of stakeholders with the Adjudicating Authority within forty-five days from the last date for receipt of the claims and the filing of list on stakeholders, has to be filed on the electronic platform of the Board for dissemination on its website. Further, provided that this clause shall apply to every liquidation process ongoing and commencing on or after the date of commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2021.”.

         

        • Labour Laws

         

        • The Ministry of Labour and Employment has notified the Code on Wages (Central Advisory Board) Rules, 2021

         

        • Which constitutes the Central Advisory Board and nominates a person to the board and rolls out the functions and methods of the meetings. The Board shall consist of persons to be nominated by the Central Government representing employers and employees and the independent persons and representatives of the State Governments. The persons representing employers shall be twelve and the persons representing employees shall also be twelve and the Chairperson may, call a meeting of the Board, at any time he thinks fit, Provided that on requisition in writing from not less than one half of the members, the Chairperson shall call a meeting within thirty days from the date of the receipt of such requisition. All business of the Board shall be considered at a meeting of the Board, and shall be decided by a majority of the votes of members present and voting and in the event of an equality of votes, the Chairperson shall have a casting vote, Provided that the Chairperson may, if he thinks fit, direct that any matter shall be decided by the circulation of necessary papers and by securing written opinion of the members. Provided further that no decision on any matter under the preceding proviso shall be taken, unless supported by not less than two-thirds majority of the members.

         

        KNM India can assist you with a range of complete financial services that range from Corporate advisory to Transaction advisory, Pre-incorporation to Post-incorporation, Insolvency and bankruptcy code to Secretarial services, Assurance to Internal audit services, along with Market entry strategy to Foreign company registration in India. To discuss about any of these  please book your slot, or call us on +91-99105-04170 – or email us at services@knmindia.com to get a quick response.

         

        Monthly Compliance Calendar

        
        Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates are for the period 26.11.2020 till 25.12.2020.

        Prepared by
        KNM MANAGEMENT ADVISORY SERVICES PVT. LTD.

        E-mail: services@knmindia.com
        Web site: www.knmindia.com

Income Tax

• • • • • • • Hon’ble FM Ms. Nirmala Sitharaman presented the union Budget 2021. Detailed budget analysis by us can be reached by link below:
              https://www.knmindia.com/updates_dh/union-budget_ 2021/union-budget_2021/
              Now the budget has been passed from the Lok Sabha & Rajya Sabha and also got Hon’ble President Assent too on 28th March 2021.

           

          • • CBDT vide order F.No. 187/4/2021-ITA-1 dated 26.02.2021 , clarify that penalty proceedings pending with investigation wings/ Commissioner/ Commissioner(appeal) and above are outside the purview of Faceless Penalty scheme. Further it is also clarified that this penalty scheme covers the penalty provisions mentioned under Income Tax Act, 1961.

           

          • • CBDT vide Notification No. S.O. 966(E) [NO. 10/2021/F. NO. 370142/35/2020-TPL], DATED 27-2-2021 , issued timeline upto which penalty proceedings and assessment proceedings can be extended considering current situation. As per said notification, Penalty order can be passed upto 30th June, 2021 & Assessment order 30th April, 2021. Assessment proceedings which are not covered by 30th April, 2021 will be completed by 30th September, 2021.Order covered by Prohibition of Benami Property Transaction Act, 1988, will be passed upto 30th June, 2021 but further extension can be done till 30th September, 2021.

           

          • • CBDT vide Instruction F. NO. 225/40/2021/ITA-II, Dated 4-3-2021 , issued list of cases to be covered under escaped assessment to be taken up by Jurisdictional Assessing officer. However, this instruction will not covered search cases as well as International taxes cases.

           

          • • Interest on EPF will continue to 8.5% as recommended by EPFO board on 04th March, 2021.

           

          • • CBDT vide Notification No. 11/2021, Dated 05-03-2021, made amendment and inserted Rule 3B and formula has been provided to calculate annual accretion under section 17(2)(viia) as given in Finance Act, 2020. Section 17(2)(viia) has been inserted to provide that any annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of the fund or scheme may be treated as perquisite to the extent it relates to the such excess employer’s contribution. Further as Section 17(2)(vii), any excess contribution to specified fund can’t be excess to INR 7,50,000 in a previous year otherwise it will become perquisites in the hands of Employee.

           

          • • CBDT vide Notification No. NO. 15/2021, Dated 11-03-2021, has also amendment in form 16, Form 12BA & Form 24Q to incorporate the changes done by Finance act 2020 & notification no.11/2021.

           

          • • CBDT vide Notification no. 16/2021, Dated 12th March 2021 , amended Rule 114E of the Income Tax Rules to cover the transactions of Dividend, Interest, Capital gain in the category of SFT for reporting purposes by the specified person. Here it is pertinent to note that these new reportable transactions is without any limit for the purpose of reporting. For more details, kindly refer the link:
              https://www.knmindia.com/updates_dh/specified-financial-transaction/specified-financial-transaction/

           

          • • CBDT vide Press release, Dated 17th March 2021, has clarified that taxation in case of FPI @ 5% u/s 115AD will still apply on interest income earned u/s 194LD.

           

          • • CBDT vide Circular no. 5/2021, Dated 25th March 2021, has again deferred the reporting requirement of Clause 30C & 44 i.e. GAAR reporting & Breakup of GST expenditure respectively. These clauses are deferred 4th time by the tax authority considering the Global Pandemic due to Covid-19.

           

          International Taxation

           

          • • CBDT vide Notification no. 18/2021, Dated 16th March 2021, inserted new Rule 29BA read with Section 195(2)/(7) for determination of amount to be chargeable to tax in case of Non-Resident Recipient. Now application in this case will be filed through Form 15E.

           

          • • CBDT vide Circular No. 2/2021& Press release dated 03-03-2021, has issued clarification with regard to residential status of person for the Financial Year 2020-21. Vide the said Circular, it has been provided that if any individual is facing double taxation even after taking into account the relief provided by the relevant Double Taxation Avoidance Agreement (DTAA), he/she may furnish the specified information by 31st March, 2021 in Form -NR annexed to the said Circular.

           

          Goods & Services Tax (GST)

           

          

          • • • CBIC vide Notification No. 05/2021-Central Tax dated 08th March 2021, has mandated E-Invoicing to taxpayers having turnover more than Rs. 50 crores, w.e.f. 01st April 2021, for all B2B supplies made including exports. E-invoicing applicable where turnover of a taxpayer crossed the aforesaid limits during any F.Y. from 2017-18.

             

            • • Currently, the recipients of the deemed export supplies are finding difficulty in claiming refund of tax paid in respect of such supplies, because the system is not allowing them to the file refund claim under the aforesaid category unless the claimed amount is debited in the electronic credit ledger. This is due to the reason that Para 41 of circular no:125/44/2019 –GST dt. 18/11/2019 has placed a condition that the recipient of deemed export supplies shall submit an undertaking that he has not availed ITC on invoices for obtaining the refund of tax paid on such supplies. Accordingly, the recipient of deemed export supplies cannot avail ITC on such supplies, but when they proceed to file refund on the portal, the system requires them to debit the amount so claimed from their electronic credit ledger.

             

        • CBIC vide Vide Order No.147/02/2021-GST dated 12-03-2021 has now remove the restriction of non-availment of ITC by the recipient of deemed export supplies on the invoices, for which refund has been claimed by such recipient.

       

      • • CBIC vide Circular No. 146/02/2021-GST dated 23-02-2021 has issued the following clarifications in respect of the applicability of Dynamic QR code on invoices issued for B2C supplies:- QR code shall not be required to be generated in case of export transaction even though such supplies are made by a registered person to unregistered persons;- Following details to be captured in the QR code: GSTN of the supplier, UPI ID and bank A/C number and IFSC of the supplier, invoice number, invoice date, total invoice value and GST amount along with breakup i.e., CGST, SGST, IGST and Cess.- Where the payment is made without using the dynamic QR code, the invoice shall be deemed to have complied with the requirement of Dynamic QR Code, if the cross reference of the payment is made on the invoice.- Where payment is made after generation /issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice. This is applicable to suppliers making supplies through E-commerce portal or an online application.

       

      Companies Act, 2013

      

      • • MCA amends Schedule III of Companies Act 2013. The Read disclosures to be made in Balance Sheet with effect from 1st day of April, 2021.

       

      • • The Schedule III of the Companies Act 2013 contains the general instructions for preparation of Balance Sheet and Statement of Profit and Loss of a Company. Broadly, changes have been made to align the Schedule III with recent changes and to make it more meaningful and speaking. Now companies have to round off the figures appearing in the financial statements, hitherto it was optional. Further, the criteria for rounding off shall be based on “total income” in place of “turnover”. All Companies now have to disclose Shareholding of Promoters, Current maturities of long term borrowings, Trade Payables & Trade Receivables ageing schedule to be given, details of all the immovable whose title deeds are not held in the name of the Company, Disclosures to be made where Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and related parties, Capital – work – in progress & Intangible assets under development ageing schedule shall also be given, Disclosure of any proceedings initiated or pending against the company for holding any Benami property under the Benami Transactions (Prohibition)Act, 1988. Further, where a company is a declared willful defaulter by any bank or financial Institution or other lenders, Disclosure of any transactions with companies struck-off, and Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof shall be disclosed & detail to be provided in the Balance sheet.

           

        • MCA has notified the Companies (Accounts) Amendment Rules, 2021 which shall come into force with effect from the 1st day of April, 2021.

         

        • Accordingly, MCA has mandated that for the financial year commencing on or after the 1st day of April, 2021, every company which uses accounting software for maintaining its books of account shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled. Further, the notification also specified that Board Report should contain the following additional information’s relating to the details of an application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year and the details of the difference between the amount of the valuation is done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with the reasons thereof.

         

        • MCA has notified Companies (Audit and Auditors) Amendment Rules, 2021 which shall come into force with effect from the 1st day of April, 2021.

         

        • MCA has deleted the clause relating to dealings in Specified Bank Notes during the prescribed time period from the Auditors Report and instructed to insert the clause relating to the funds advanced/received or loaned or invested by the company to or in any other person(s) or entity(ies), including foreign entities with the understanding that the Intermediary shall lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company. Further, the Auditors is required to comment on the status the dividend declared or paid during the year by the company is in compliance with section 123 of the Companies Act, 2013. The Auditors are also required to comment on accounting software used by the Company for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software

         

        • MCA has created a way to compensate non-executive or Independent Directors of companies, which are loss-making or have inadequate profits.

         

        • The MCA has issued a notification to make amendments in the Schedule V of the Companies Act, 2013, which limits the remuneration that a non-executive director can be given depending upon the effective capital of the Company. Earlier, only the executive director was entitled to remuneration in the event of a loss. The new provision allows the Board of Directors to pass a special resolution if they want to further increase the remuneration beyond the upper limit. This provision is applicable to both non-executive and executive directors. The Rule 4 of the company’s appointment and remuneration of managerial personnel 2014, the sitting fees to an independent director or a director would not exceed a sum of Rs 100,000 per meeting. At the lowest slab of Rs 12 lakh, a year independent director could still draw thrice the amount that would have been payable for four board meetings in a year.

         

        • MCA notified the 18th March, 2021 as the effective date for implementation of changes in provisions of Independent Director and Remuneration to Directors inserted Companies (Amendment) Act, 2020.

         

        • The Central Government hereby appoints the 18th March, 2021 as the date on which the provisions of section 32 and section 40 of the said Act shall come into force. Section 32 of the Companies (Amendment) Act, 2020 seeks to amend Section 149 of the Companies Act, 2013 wherein a proviso was added to provide that an independent director may receive remuneration, if a company has no profits or inadequate profits in accordance with Schedule V of the Act. Further, Section 40 of the Companies (Amendment) Act, 2020 seeks to amend Section 197(3) of the Companies Act, 2013 to provide that, if a company fails to make profits or makes inadequate profits in a financial year, any non-executive director of such company, including an independent director shall be paid remuneration in accordance with Schedule V of the Act.

         

        • MCA establishes CSC for carrying out Scrutiny of STP E-Forms filed by Companies.

         

        • The Ministry of Corporate Affairs established a Central Scrutiny Centre (CSC) for carrying out scrutiny of Straight Through Processes (STP) e-forms filed by the companies under the Act and the rules. The notification said that the CSC shall function under the administrative control of the e-governance Cell of the Ministry of Corporate Affairs. The CSC shall carry out scrutiny of the aforesaid forms and forward findings thereon, wherever required, to the concerned jurisdictional Registrar of Companies for further necessary action under the provisions of the Act and the rules made thereunder. The CSC shall be located at the Indian Institute of Corporate Affairs (IICA), Plot No. 6, 7, 8, Sector 5, IMT Manesar, District Gurgaon (Haryana), Pin Code- 122050. Notification is attached.

         

        • The Ministry of Corporate Affairs has further amended the Companies (Management and Administration) Rules, 2014 and have released the Companies (Management and Administration) Amendment Rules, 2021.

         

        • Which shall come into force on the date of their publication in the Official Gazette i.e 05-03-2021. The amendment provides that One Person Company and Small Company shall file their Annual Return under the provisions of the Section 92 of the Companies Act, 2013, in Form No. MGT-7A from the financial year 2020-21 onwards and every other Company shall continue to file their Annual Return in Form No. MGT-7. A copy of the annual return shall also be filed before the registrar of companies with prescribed fees. Further, details regarding indebtedness of the company and details of Foreign Institutional Investors (FII) like their name, address, countries of incorporation, registration and shareholding pattern are omitted in the revised Form MGT – 7.

         

        • The Ministry of Corporate Affairs, has issued the Companies (Incorporation) Third Amendment Rules, 2021 to further amend the Companies (Incorporation) Rules,2013,

         

        • Which shall come into force on the date of their publication in the Official Gazette i.e 05-03-2021. The amendment provides companies the option to undergo Aadhar authentication for GSTIN registration along with companies’ registration. The amendment has revised Form INC-35 AGILE PRO to include the option to perform Aadhar authentication for GSTIN registration. The applicants who opt for it must submit an Aadhar Card along with the application for registration under GST. After this, they need to verify the same on the GST portal. An OTP will be sent on the mobile number and email ID linked to the Aadhaar card. Only upon entering this OTP, the Aadhar will get e-validated. As per GST provisions, only authorized signatory will be required to go for Aadhar authentication, not all the directors, managing director, whole-time director or other directors who are not authorized signatories, need not go for Aadhar authentication.

         

        Other Laws

        • SEBI

         

        • The Securities & Exchanges Board of India in its recent Board Meeting has approved several resolutions which would go a long way.

         

        • The SEBI Board approved several amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which inter-alia covers the requirement for formulation of dividend distribution policy to the top 1,000 listed companies on the basis of market capitalization; in case of the board meeting held for more than one day, financial results must be disclosed by the listed entities within 30 minutes of end of the board meeting for the day on which the financial results are considered; the timelines for submission of periodic reports. The SEBI Board has approved several amendments to the SEBI (Delisting of Equity Shares) Regulations, 2009 to make the delisting process more transparent and efficient which inter-alia covers that promoter/acquirer will be required to disclose their intention to delist the company by making an initial public announcement; the committee of independent directors will be required to provide their reasoned recommendations on the proposal for delisting. New requirements for sustainability reporting by listed entities has been introduced by SEBI. The new reporting called the Business Responsibility and Sustainability Report (BRSR) will replace the existing Business Responsibility Report (BRR). The BRSR will be applicable to the top 1000 listed entities (by market capitalization), for reporting on a voluntary basis for FY 2021 – 22 and on a mandatory basis from FY 2022 – 23. Further, the SEBI Board approved the proposal to rationalize the existing framework pertaining to the reclassification of promoter/ promoter group entities. It has also been decided to reduce the time gap between the date of the board meeting and shareholders meeting for consideration of reclassification request, to a minimum of one month and a maximum of three months from the existing requirement of a minimum period of three months and maximum six months.

         

        • SEBI has issued a circular on Prior Approval for Change in control w.r.t Transfer of shareholdings among immediate relatives and transmission of shareholdings and their effect on change in control.

         

        • SEBI has provided clarity on change in control criteria for market intermediaries and requirements for seeking its prior approval. With regard to unlisted body corporate intermediary, transfer of shareholding among immediate relatives would not be construed as a change in control. Further, transfer of shareholding by way of transmission to an immediate relative or not, shall not result in a change in control. Immediate relatives include any spouse of that person, or any parent, brother, sister, or child of the person or of the spouse. In case of an intermediary being a proprietary concern, the transferor bequeathing of the business/capital by way of transmission to another person is a change in the legal formation or ownership and is hence a change in control. The legal heir or transferee in such cases is required to obtain prior approval and thereafter fresh registration needs to be obtained in the name legal heir/ transferee. For transfer of ownership interest in case of partnership firm with more than two partners, inter-se transfer amongst the partners would not be construed to be changed in control. Where the partnership firm consists of two partners only, the same would stand as dissolved upon the death of one of the partners, it added. However, if a new partner is inducted in the firm, it would be considered as a change in control, requiring fresh registration and prior approval of SEBI.

         

        • SEBI issues a new framework for delivery default in the derivatives segment.

         

        • SEBI has received representations from market participants in the commodity derivatives segment for standardization of delivery default norms, among others. Consequently, Securities and Exchange Board of India in consultation with clearing corporations came out with delivery default norms, which will be effective from the first trading day of May 2021. The clearing corporation, having commodity derivatives segment, should have an appropriate deterrent mechanism in place against intentional or willful delivery default and ensure adequate compensation to the non-defaulting counterparty. In agricultural and non-agricultural commodities, the penalty for delivery default by the seller will now be 4 percent and 3 percent of the settlement price plus replacement cost, respectively. Further, the provisions for levy of penalty on delivery default by the buyer will be put in place by the clearing corporations. The Clearing Corporations and exchanges will have the flexibility to increase or decrease the penalty for specific commodities depending on the situation in consultation with SEBI.

         

        • SEBI has advised all registered entities including MIIs (which use bulk SMS for providing their services to the investors) to ensure strict compliance with the Telecom Regulatory Authority of India’s (TRAI) Telecom Commercial Communications Customer Preference Regulations, 2018 (TCCCP Regulations).

         

        • These new regulations have a provision for Principal Entities to register with the telecom service providers and are also required to register the template of the message. It may be noted that effective implementation of these new regulations will help to protect investors and the general public from unsolicited and often misleading messages. The regulator said non-compliance with the provisions of Telecom Commercial Communications Customer Preference Regulations, 2018 (TCCCP Regulations) may result in disruption of delivery of their messages to the investors.

         

        • The Finance Ministry has notified the new format of the Annual Report for Securities & Exchange Board of India (SEBI).

         

        • The SEBI has issued the Securities and Exchange Board of India (Annual Report) Rules, 2021. Accordingly, the Board shall submit a report to the Central Government giving a true and full account of its activities, policies, and programs during the previous financial year in the Annexure appended to these rules. The report shall be submitted within ninety days after the end of each financial year. Market Activity and Trends Observed (including details of applications for public issuance received and approved during the financial year, fund-raising under different categories, the median time is taken for regulatory approval on an aggregate basis). Complete details of Merchant Bankers, Bankers to an Issue, Underwriters, Debenture Trustees, Registrar to an Issue and Share Transfer Agents, etc. (including details such as new registrations, the median time is taken for approval of registrations on an aggregate basis, number of applications rejected, suspension/cancellation of registration, and regulation of activities of the intermediaries associated with the securities market). Risk Management Measures (including the categorized list of investors; concentration of investments; NPAs; instances of diversion of funds; quantum of unclaimed units, etc.). Investor grievances received and redressed (including their type, increase in number and geographic location and segment-wise categorization, major nature, or types of complaints). A detailed report on the inflow of money into IPF / beneficial owner protection funds of MIIs and SEBI shall also be attached.

         

        • SEBI extends Central KYC Registry to legal entities.

         

        • SEBI has asked regulated entities to upload ‘Know Your Customer’ data pertaining to accounts of legal entities opened on or after April 1, onto the Central KYC Registry. Regulated entities (REs) have already been uploading the KYC data pertaining to all individual accounts opened on or after August 1, 2016, onto CKYCR. Regulated entities (REs) have already been uploading the KYC data pertaining to all individual accounts opened on or after August 1, 2016, onto CKYCR. Accordingly, RIs (registered intermediaries) shall upload the KYC records of LE accounts opened on or after April 1, 2021, on to CKYCR in terms of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. The regulator has also come out with a template for legal entities in this regard. Also, registered entities would have to ensure that during such receipt of updated information, the clients’ KYC details are migrated to current client due diligence standards. Further, once a KYC identifier is generated by CKYCR, the RIs would ensure that the same is communicated to the legal entity. The provisions of this circular are not applicable to Foreign Portfolio Investors (FPIs).

         

        • SEBI has issued a circular which specifies the Unique Client Code (UCC) and mandatory requirement of Permanent Account Number (PAN).

         

        • The amendments are carried out in Clause 3 which specifies that it is mandatory for all the members of exchanges having commodity derivatives segments to use UCC. It shall now be mandatory for the members of the exchanges having commodity derivatives segment to use Unique Client Code (UCC) for all clients transacting on the commodity derivative segment. The exchanges with commodity derivatives segment shall not allow execution of trades without uploading of the UCC details by the members of the exchange. Further, Clause 5 has been modified, to provide the exchanges having commodity derivatives segment shall ensure that the members of their exchanges shall collect copies of PAN cards issued to their existing as well as new clients after verifying with the original and cross-check the aforesaid details collected from their clients with the details on the website of the Income Tax (IT) Department. However, in case of e-PAN, verify the authenticity of e-PAN with the details on the website of IT Department and maintain the soft copy of PAN in their records and upload details of PAN or e-PAN so collected to the Exchanges as part of Unique Client code.

         

        • SEBI has come out with guidelines on votes cast by mutual funds to further improve transparency and encourage such fund houses to diligently exercise their voting rights in best interest of the unit holders.

         

        • Mutual funds, including their passive investment schemes like index funds, exchange-traded funds (ETFs), will be required to cast votes compulsorily in respect of related party transactions of the investee companies and corporate governance matters. In addition, mutual funds will have to cast votes on corporate governance matters, including changes in the state of incorporation, merger and other corporate restructuring, and anti-takeover provisions as well as capital structure, including increases and decreases of capital and preferred stock issuances. Also, casting of votes would be necessary for stock option plans and other management compensation issues, social and corporate responsibility issues, appointment and removal of directors and any other issue that may affect the interest of the unit holders. Further, in case of the mutual funds having no economic interest on the day of voting, it may be exempted from compulsory casting of votes. The vote would be cast at the mutual fund level. However, in case a fund manager of any scheme has a strong view against the views of fund manager of the other schemes, the voting at scheme level would be allowed, subject to recording of detailed rationale for the same. Fund managers need to submit a declaration on a quarterly basis to the trustees that the votes cast by them have not been influenced by any factor other than the best interest of the unit holders.

         

        •  SEBI has come out with operational guidelines to credit physical shares in Demat Account of investors following re-lodged transfer request.

         

        • SThe shares in demat form would help in maintaining a transparent record of shareholding of companies amid rising concerns over beneficial ownership of entities. Subsequent to processing of re-lodged transfer request, the RTA (registrar to an issue and share transfer agent) would retain physical shares and intimate the investor (transferee) about the execution of transfer through a letter of confirmation. Further, this letter will be sent through speed post or e-mail, with the digitally signed letter containing details of endorsement, shares, folio of investor as available on physical shares. The investor would have to submit the demat request, within 90 days of issue of letter of confirmation, to depository participant along with the letter of confirmation. In case of shares that are required to be locked-in, the RTA, while confirming the demat request, will also intimate the depository about the lock-in and its period. Such shares would be in lock-in demat mode for six months from the date of registration of transfer. Transfer of securities held in physical mode has been discontinued with effect from April 1, 2019, but investors have not been barred from holding shares in physical form. In March 2019, SEBI had clarified that transfer deeds lodged before the deadline of April 1, 2019, and rejected or returned due to deficiency in documents may be re-lodged with requisite documents.

         

        •  SEBI has issued the Consultation Paper on Review of Regulatory Provisions related to Independent Directors for public comments

         

        • With an intent to further strengthen the independence of IDs and enhance their effectiveness in the protection of interests of minority shareholders and performing other functions. It is proposed that KMPs or employees of promoter group companies, cannot be appointed as Independent Directors in the company, unless there has been a cooling-off period of 3 years. The said restriction shall also extend to relatives of such KMPs for the same period. The prescribed cooling-off period for eligibility condition shall be harmonized to 3 years. The Consultation Paper seeks views of the public on proposals including broadening the eligibility criteria for IDs, process of appointment / re-appointment and removal of IDs, enhancing transparency in the nomination and resignation of IDs, strengthening the composition of Board Committees, etc. Additionally, views are also sought on the need for review of remuneration of IDs. The Consultation Paper is open for public comments till April 01, 2021.

         

        • RBI

         

        • The Reserve Bank of India (RBI) has decided to extend the cheque truncation system (CTS) across all bank branches by September 2021 in a bid for faster and smoother cheque clearances in the Country.

         

        • To leverage the availability of CTS and provide uniform customer experience irrespective of location of her/his bank branch, it has been decided to extend CTS across all bank branches in the country. All Banks will have to ensure that all their branches participate in image-based CTS under respective grids by September 30, 2021. Further, they are free to adopt a model of their choice, like deploying suitable infrastructure in every branch or following a hub & spoke model and concerned banks should coordinate with the respective Regional Offices of RBI to operationalize this system.

         

        • DGFT

         

        • The DGFT has issued a Trade Notice for issuance of Import Authorization for ‘Restricted’ items from DGFT HQs w.e.f. March 22, 2021

         

        • As part of IT Revamp of its exporter/importer related services, DGFT has now introduced a new online module for filing of electronic, paperless applications for import authorizations with effect from 22.03.2021. All applicants seeking import authorization for restricted items may apply online by navigating to the DGFT website and import authorizations for restricted items would be issued from DGFT HQ, Udyog Bhawan, New Delhi with effect from 22.03.2021. It may further be noted that all pending applications have been migrated to this new system and will be processed suitably at DGFT(HQ). For re-validation or amendment of such authorizations issued on or after this date, applications would be required to be submitted electronically to DGFT(HQ). Original Copies of the authorization would be required to be presented to DGFT(HQ) for re-validation/amendment endorsements.

         

        • IBBI

         

        • IBBI has notified the has notified Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2021.

         

        • which shall come into force on the date of their publication in the Official Gazette i.e. 15-03-2021. The Board inserted Rule 12A in respect of the Updation of claim which said, “a creditor shall update its claim as to and when the claim is satisfied, partly or fully, from any source in any manner, after the insolvency commencement date. The Board notified that where any activity requiring the filing of Form CIRP 7, if not completed by the specified date the interim resolution professional or resolution professional, as the case may be, shall file Form CIRP 7 within three days of the said date, and continue to file Form CIRP 7, every 30 days, until the said activity remains incomplete. However, subsequent filing of Form CIRP 7 shall not be made until thirty days have lapsed from the filing of an earlier Form CIRP 7. IBBI has also clarified that only one Form CIRP 7 shall be filed at any time whether one or more activity is not complete by the specified date. Further, in the Schedule to the principal regulations, Form C in respect of Submission of Claim by Financial Creditors shall be substituted.

         

        • IBBI extends the validity of IBBI (Online Delivery of educational Corse and Continuing Professional Education by Insolvency Profession Agencies and Registered Valuers Organization) Guidelines, 2020.

         

         

        • The Insolvency and Bankruptcy Board of India (IBBI) has issued the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2021

         

        • To further amend the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The amendments have been made in Regulation 31 (2), which specifies that the liquidator shall file the list of stakeholders with the Adjudicating Authority within forty-five days from the last date for receipt of the claims and the filing of list on stakeholders, has to be filed on the electronic platform of the Board for dissemination on its website. Further, provided that this clause shall apply to every liquidation process ongoing and commencing on or after the date of commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2021.”.

         

        • Labour Laws

         

        • The Ministry of Labour and Employment has notified the Code on Wages (Central Advisory Board) Rules, 2021

         

        • Which constitutes the Central Advisory Board and nominates a person to the board and rolls out the functions and methods of the meetings. The Board shall consist of persons to be nominated by the Central Government representing employers and employees and the independent persons and representatives of the State Governments. The persons representing employers shall be twelve and the persons representing employees shall also be twelve and the Chairperson may, call a meeting of the Board, at any time he thinks fit, Provided that on requisition in writing from not less than one half of the members, the Chairperson shall call a meeting within thirty days from the date of the receipt of such requisition. All business of the Board shall be considered at a meeting of the Board, and shall be decided by a majority of the votes of members present and voting and in the event of an equality of votes, the Chairperson shall have a casting vote, Provided that the Chairperson may, if he thinks fit, direct that any matter shall be decided by the circulation of necessary papers and by securing written opinion of the members. Provided further that no decision on any matter under the preceding proviso shall be taken, unless supported by not less than two-thirds majority of the members.

         

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        Monthly Compliance Calendar

        
        Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates are for the period 26.11.2020 till 25.12.2020.

        Prepared by
        KNM MANAGEMENT ADVISORY SERVICES PVT. LTD.

        E-mail: services@knmindia.com
        Web site: www.knmindia.com