News & UpdatesMonthly News & Updates September Month – KNM Management Advisory

Executive Summary

Income Tax

• New rule & forms are notified to keep balancing the taxable & non-taxable EPF contribution.
• New rule & forms are notified to channelise the provision of Section 194P inserted by Finance Act 2021.
• Exemption given to person having receipt of shares of PSU under strategic disinvestment.
• Various Due dates of ITRs & Audit Report have been extended.

Goods & Services Tax (GST)

• Various recommendations presented under 45th GST Council meeting relating to GST rates, laws and procedure on supply of goods and services
• Circulars for Clarification in respect of “intermediary services” and “merely establishment of distinct person” have been released
• Amnesty Scheme for GSTR-3B late fee has been extended from 31.08.2021 up to 30.11.2021.

No need to carry the physical copy of tax invoice in cases where an e-invoice has been

Companies Act 2013/ Other Laws

• MCA has extended the Due date of AGM by 2 Months.
• SEBI has issued a circular to allow stock exchanges to offer T+1 rolling settlement on an optional basis effective from January 01, 2022
• DGFT has granted a final opportunity to IEC holders (Import-Export code) to update their IEC in this interim period till 05.10.2021, failing which the given IECs shall be de-activated from October 6, 2021

Income Tax

• CBDT vide Notification No. 95/2021, Dated 31^st August 2021 inserted the Rule 9D after Rule 9C. As per the Rule 9D two separate account need to be maintained for taxable and non-taxable portion contribution of Recognized Provident Fund.
• CBDT vide Notification No. 99/2021, Dated 31^st August 2021 has inserted Rule 26D & Form 12BBA to give effect the provision of Section 194P introduced in Finance Act 2021 related to Senior Citizen. As per the provision a bank is obliged to compute the total income of such specified senior citizen for the relevant assessment year and deduct income-tax on such total income on the basis of the rates in force. So, giving effect to the provision declaration by senior citizen will be done in the Form 12BBA.
• CBDT vide Notification No. 101/2021, Dated 6^th September 2021, has decided that submissions made on Income tax portal after logging to designated account shall be deemed that the electronic record has been authenticated under electronic verification code.
• CBDT vide Press release Dated 10^th September 2021, provide relaxation of Section 79 to PSU. The Finance Act, 2021 has amended section 72A of the Income-tax Act, 1961 (the Act) to inter alia provide that in case of an amalgamation of a public sector company (PSU) which ceases to be a PSU (erstwhile public sector company), as part of strategic disinvestment, with one or more Company or companies, then, subject to the conditions laid therein, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss, or as the case may be, allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected.

In order to facilitate the strategic disinvestment, it has been decided that Section 79 of the Income-tax Act, 1961, shall not apply to an erstwhile Public Sector Company which has become so as a result of strategic disinvestment. Accordingly, the loss incurred in any previous year prior to, and including, the previous year of strategic disinvestment shall be carried forward and set off by the erstwhile public sector company. The above relaxation shall cease to apply from the previous year in which the company, that was the ultimate holding company of such erstwhile public sector company immediately after completion of the strategic disinvestment, ceases to hold, directly or through its subsidiary or subsidiaries, fifty-one percent of the voting power of the erstwhile public sector company.

• CBDT vide Notification No. 105/2021, Dated 10^th September 2021 has amended Rule 11UAC to give exemption to a person who receive shares of PSU given by CG or SG under strategic disinvestment.
• CBDT vide Circular No 17/2021, Dated 9^th September 2021 has extended the due dates of respective ITRs & Audit report as follows.

Particulars		Original Due Date		Due dates extended by previous notifications		New Due Dates (Circular 17/2021)
Original Income Tax Return (ITR)   –  Non-Tax Audit/Non-TP Case –  Tax Audit/Non TP-Case   -TP Case		­­­­­­31st July 2021 31st October 2021 30th November, 2021		30th September 2021 30th November 2021 31st December, 2021		31st December 2021 15th February 2022 28th February 2022
Belated/Revised ITR for AY 2021-22 (FY 2020-21)		31st December, 2021		31st January, 2021		31st March, 2021
Audit Report by CA-   -Tax Audit -TP Certification/Audit u/s 92E		30th September 2021 31st October 2021		31st October 2021 30th November 2021		15th January 2022 31st January 2022

 

Goods & Services Tax (GST)

• CBIC vide Notification No. 33/2021 – Central tax dated 29^th August 2021extend Form GSTR-3B late fee Amnesty Scheme from 31.08.2021 up to 30.11.2021.
• CBIC vide Notification No. 35/2021 – Central tax dated 24^th September 2021 authorize the Aadhar authentication for the registered person for filing of application for revocation of cancellation of registration and refund.
• CBIC vide Circular No. 159/15/2021-GST Central tax dated 20^th September 2021 issue clarification on doubts related to scope of “Intermediary”. Scope of Intermediary services has been defined including primary requirements i.e. Minimum of three parties, Two distinct Supplies. The role of intermediary is only supportive and Sub- contracting for a service is not an intermediary service.

Further, specific provision of place of supply of ‘intermediary services’ under section 13 of the IGST Act shall be invoked only when either the location of supplier of intermediary services or location of the recipient of intermediary services is outside India.

• CBIC vide Circular No. 160/15/2021-GST Central tax dated 20^th September 2021 issues clarification in respect of GST related issues as below:

• In case of debit notes, the date of issuance of debit note (not the date of underlying invoice) w.e.f. 01.01.2021 shall determine the relevant financial year for the purpose of section 16(4) of the CGST Act. For Debit Note issued after 01.01.2021, the eligibility for availment of ITC will be governed by the amended provision of section 16(4). For Debit note issued prior to 01.01.2021, the provisions of section 16(4), as it existed before the said amendment on 01.01.2021.
• No need to carry the physical copy of tax invoice in cases where an e-invoice has been generated by the supplier prescribed under rule 48(4) of the CGST Rules and production of the Quick Response (QR) code having an embedded Invoice Reference Number (IRN) electronically, for verification by the proper officer.
• It is clarified that only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54(3) from availment of refund of accumulated ITC. Goods, which are not subject to any export duty and in respect of which either NIL rate is specified in Second Schedule to the Customs Tariff Act, 1975 or which are fully exempted from payment of export duty by virtue of any customs notification or which are not covered under Second Schedule to the Customs Tariff Act, 1975, would not be covered by the restriction imposed under the first proviso to section 54(3) of the CGST Act for the purpose of availment of refund of accumulated ITC.
• CBIC vide Circular No. 161/17/2021-GST Central tax dated 20th September 2021 clarified that supply of services by a subsidiary/sister company/group concern etc. of a foreign company, which is incorporated in India under theCA,2013 to the establishments of the said foreign company located outside India (incorporated outside India), would not be barred by the condition (v) of the Sec. 2(6) of the IGST Act 2017 for being considered as export of services, as it would not be treated as supply between merely establishments of distinct persons under Explanation 1 of Sec. 8 of IGST Act 2017.
• CBIC vide Circular No. 162/18/2021- GST Central tax dated 20th September 2021clarifies in respect of refund of tax where Tax wrongfully collected and paid to central or state government specified in section 77(1) of the CGST Act and section 19(1) of the IGST Act.
• CBIC vide Notification no. 44/2021- customs dated 17th September, 2021 amends the BCD rate on Lentils (Masur) [0713 40 00], originating in or exported from USA.
• CBIC vide Notification no. 76/2021 – (Customs NT) dated 24th September 2021 notify the manner to issue duty credit for goods exported under the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP).
• CBIC vide Notification 77/2021 – (Customs NT) dated 24^th September 2021 Seeks to notify the manner to issue duty credit for goods exported under the continuation of Scheme for Rebate of State and Central Taxes and Levies (RoSCTL).
• CBIC vide Notification no. 41/2021- customs dated 30^th August 2021 amends notification No. 28/2001-Customs dated 01.02.2021 Customs to extend the exemptions under the said notification up to 30th September, 2021.
• CBIC vide Notification no. 42/2021- customs dated 10^th September 2021 specify to amend the notification No. 50/ 2017 -Customs dated 30.06.2017 and notification No. dated 11/2021 dated 01.02.2021 in order to reduce and rationalize the import duties on Palm, Sunflower and Soya-bean oils.
• CBIC vide press release dated 17th September 2021, provides the GST Council’s 45th meeting made recommendations relating to changes in GST rates on supply of goods and services and changes related to GST law and procedure as below:

1. Recommendations relating to GST rates on Goods and Services

1. Various major recommendations have been received relating to GST rates on goods and services for extension of existing concessional GST rates and reduction of various GST rates due to relief measures under COVID-19.
2. Supply of mentha oil from unregistered person has been brought under reverse charge. Further, Council has also recommended that exports of Mentha oil should be allowed only against LUT and consequential refund of input tax credit.
3. Brick kilns would be brought under special composition scheme with threshold limit of Rs. 20 lakhs, with effect from 1.4.2022. Bricks would attract GST at the rate of 6% without ITC under the scheme. GST rate of 12% with ITC would otherwise apply to bricks.
4. GST rate changes in order to correct inverted duty structure, in footwear and textiles sector, as was discussed in earlier GST Council Meeting and was further deferred for an appropriate time, will be implemented with effect from 01.01.2022.
5. Major recommendations on GST changes in relation to rates and scope of exemption on goods and services has been received.
6. Issue of whether specified petroleum products should be brought within the ambit of GST was placed for consideration before the Council. After due deliberation, the Council was of the view that it is not appropriate to do so at this stage.

2. Presentation relating to Compensation Cess using of revenue collections from Compensation Cess in the period beyond June 2022 till April 2026 for repayment of borrowings and debt servicing made to bridge the gap in 2020-21 and 2021-22.

3. Recommendations relating to GST law and procedure

Measures for Trade facilitation:

1. Relaxation in the requirement of filing Form GST ITC-04 under GST rules relaxed as under:
   1. Taxpayers whose annual aggregate turnover in preceding financial year is above Rs. 5 crores shall furnish ITC-04 once in six months;
   2. Taxpayers whose annual aggregate turnover in preceding financial year is up to Rs. 5 crores shall furnish ITC-04 annually.
2. Interest would be levied at 18% on Ineligible ITC availed and utilized instead of ineligible ITC availed u/s 50(3) with retrospective effect from July 01, 2017.
3. Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred between distinct persons (entities having same PAN but registered in different states), without going through the refund procedure, subject to certain safeguards.
4. Clarification in respect of “intermediary services” and “merely establishment of distinct person”

 

4. Clarification in respect of Certain GST related issues
   1. e.f. 01.01.2021, the date of issuance of debit note (and not the date of underlying invoice) shall determine the relevant financial year for the purpose of section 16(4) of CGST Act, 2017;
   2. There is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier in the manner prescribed under rule 48(4) of the CGST Rules, 2017;

• Only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54(3) of CGST Act, 2017 from availment of refund of accumulated ITC.

Other Recommendations has been received as below:

1. Aadhaar authentication of registration to be made mandatory for being eligible for filing refund claim and application for revocation of cancellation of registration.
2. Rule 59(6) of the CGST Rules to be amended with effect from 01.01.2022 to provide that a registered person shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for the preceding month.
3. Late fee for delayed filing of Form GSTR 1 to be auto populated and collected in next open return in Form GSTR 3B
4. Rule 36(4) of CGST Rules, 2017 to be amended, section 16(2)(aa) of CGST Act, 2017 is proposed to be notified, to restrict availment of ITC in respect of invoices/ debit notes, to the extent the details of such invoices/ debit notes are furnished by the supplier in FORM GSTR-1/ IFF and are communicated to the registered person in FORM GSTR-2B.

Companies Act 2013

• The Ministry of Corporate Affairs has directed all Registrar of Companies to accord its approval of a 2 (Two) months extension to companies who have not been able to hold their Annual General Meetings for the financial year ended March 31, 2021.

In terms of the power vested under the third proviso to sub-section (1) of Section 96 of the Act, the Registrar of Companies extended the time to hold AGM, other than the first AGM, for the financial year ended on March 31, 2021, for Companies within the jurisdiction of their respective office, which are unable to hold their Annual General Meeting, without requiring extension for such period within the due date of holding the AGM by a period of two months from the due date by which the AGM ought to have been held in accordance with companies to file applications for seeking such extension by filing the prescribed Form No. GNL-1. The RoC clarified that the extension granted under this Order shall also cover the pending applications filed in Form No. GNL-1 for the extension of AGM for the financial year ended on 31.03.2021, which is yet to be approved. Further, the applications filed in Form No. GNL-1 for the extension of AGM for the financial year ended on March 31, 2021, which were rejected, where the approval for the extension of AGM up to 2 months from the due date of the AGM shall be deemed to have been granted without any further action on the part of the Company.

Other Laws.

SEBI

• SEBI has issued a circular to allow stock exchanges to offer T+1 rolling settlement on an optional basis effective from January 01, 2022.

Acoordingly, a Stock Exchange may choose to offer a T+1 settlement cycle on any of the scrips subject to the conditions that advance notice of at least one month, regarding the change in the settlement cycle to be given, to all stakeholders, including the public at large, and also disseminate the same on its website. After opting for a T+1 settlement cycle for a scrip, the Stock Exchange shall have to mandatorily continue with the same for a minimum period of 6 months. Thereafter, in case, the Stock Exchange intends to switch back to T+2 settlement cycle, it shall do so by giving 1-month advance notice to the market. Any subsequent switch (from T+1 to T+2 or vice versa) shall be subject to a minimum period and notice period. Further, there shall be no netting between T+1 and T+2 settlements. The settlement option for security shall be applicable to all types of transactions in the security on that Stock Exchange.

• SEBI has issued the SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2021, which shall come into force on the date of their publication in the Official Gazette.

The amendment provides that the listed entity shall give prior intimation to the stock exchange of at least two working days in advance, excluding the date of the intimation and the date of the meeting of the board of directors, about the Board meeting in which the Board is going to consider any of the proposals relating to an alteration in the form or nature of non-convertible securities that are listed on the stock exchange or in the rights or privileges of the holders thereof; An alteration in the date of the interest/ dividend/redemption payment of non-convertible securities; Financial results viz. quarterly or annual, as the case may be; Fundraising by way of issuance of non-convertible securities; or(e) any matter affecting the rights or interests of holders of non-convertible securities. Further, the amendment also provides that the annual audited standalone and consolidated financial results for the financial years shall be submitted to the stock exchange(s) within sixty days from the end of the financial year along with the audit report.

RBI

• RBI has issued a notification to direct the NBFCs (Non-Banking Financial Companies), payment system providers and payment system participants to submit applications for obtaining Aadhaar e-KYC authentication license.

In terms of Section 11A of the Prevention of Money Laundering Act (PMLA), 2002, the government through a notification may permit entities other than banking firms to authenticate client’s Aadhaar number using the e-KYC facility provided by the Unique Identification Authority of India (UIDAI). However, the notification shall be issued only after consulting with the UIDAI and the appropriate regulator. Further, a detailed procedure for processing of applications under the aforementioned section for the use of Aadhaar authentication services by entities other than banking companies have been provided by the Department of Revenue, Ministry of Finance in its earlier notification dated 9th May, 2019. Accordingly, NBFCs, payment system providers, and payment system participants desirous of obtaining Aadhaar Authentication License -KYC User Agency (KUA) License or sub-KUA License (to perform authentication through a KUA), issued by the UIDAI, may submit their application to this Department for onward submission to UIDAI.

National Company Law Tribunal

• The Government has appointed 8 (Eight) Judicial and 10 (Ten) Technical Members have been appointed to the National Company Law Tribunal.

The list of appointees includes Andhra Pradesh High Court Judge Justice Telaprolu Rajani, Bombay High Court retired Judge Justice Pradeep Narhari Deshmukh, Madras High Court retired Judge Justice S. Ramathilagam, District Court Judge Deep Chandra Joshi, DRT-3 (Delhi) Presiding Officer Dharminder Singh, Punjab and Haryana High Court retired Registrar General Harnam Singh Thakur, Principal District Court, Salem (Tamil Nadu) retired district court judge P. Mohan Raj and advocate Rohit Kapoor are among those appointed as the Judicial Members to the NCLT. The newly-appointed technical members include Principal Commissioner of Income Tax Ajai Das Mehrotra, retired NHPC Chairman and Managing Director Balraj Joshi, retired Ministry of Panchayati Raj Secretary Rahul Prasad Bhatnagar, Retired Principal Director-General of Income Tax Subrata Kumar Dash, retired Department of Consumer Affairs Secretary Avinash K Srivastava and retired SBI Chief General Manager Shree Prakash Singh. Other technical members are chartered accountant Sameer Kakar, retired Director General of Income Tax Manoj Kumar Dubey, Chief Commissioner of Income Tax Kaushalendra Kumar Singh and Principal Chief Commissioner of Income Tax Anuradha Sanjay Bhatia. The Appointments Committee of the Cabinet has approved the appointments to the posts of Judicial Member and Technical Member in the National Company Law Tribunal, in the pay scale of Rs.67,000-79,000/- (pre-revised), for a period of 05 years from the date of assumption of charge of the post, or till attaining the age of 65 years, or until further orders, whichever is the earliest.

IBBI

• The Insolvency and Bankruptcy Board of India made Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2021

To amend the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The amendment regulations enhance the conduct, timeliness, and value maximization in corporate insolvency proceedings. The Code puts in place a creditor-in-control process under the Corporate Insolvency Resolution Process (CIRP). The committee of creditors (COC) has a statutory role and it discharges a sort of public function. The committee and members of the committee shall discharge functions and exercise powers under the Code and these regulations in respect of the CIRP in compliance with the guidelines as may be issued by the Board. In regulation 36A, a new sub–regulation 4A has been inserted to provide any modification in the invitation for expression of interest may be made in the manner as the initial invitation for expression of interest was made and any such modification shall not be made more than once. Further, the committee shall not consider any resolution plan which is received after the time as specified by the committee under regulation 36B or received from a person who does not appear in the final list of prospective resolution applicants or does not comply with the provisions of sub-section (2) of section 30 and sub-regulation (1).

DGFT

• DGFT has granted a final opportunity to IEC holders (Import-Export code) to update their IEC in this interim period till 05.10.2021, failing which the given IECs shall be de-activated from October 6, 2021.

Any IEC where an online updation application has been submitted but is pending with the DGFT RA for approval shall be excluded from the de-activation list. It may further be noted that any IEC so de-activated, would have the opportunity for automatic re-activation without any manual intervention or a physical visit to the DGFT RA. For IEC re-activation after 06.10.2021, the said IEC holder may navigate to the DGFT website and update their IEC online. Upon successful updation the given IEC shall be activated again and transmitted accordingly to the Customs system with the updated status. Earlier DGFT mandated all the IEC holders to ensure that details in their IEC are updated electronically every year during the April-June period. However, based on representations received from the IEC holders who had not updated their IECs, the period of updation was extended up to July 31, 2021 and subsequently to August 31, 2021.

FEMA

• RBI has notified the Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2021

RBI has notified the Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2021 which shall come into force from the date of their publication in the Official Gazette 10-09-2021. Through this amendment Regulation 15 which deals with advance payment against exports has been amended. Regulation 15 pertains to Advance payment against exports which reads, where an exporter receives advance payment (with or without interest), from a buyer / third party named in the export declaration made by the exporter, outside India, the exporter shall be under an obligation to ensure that the rate of interest, if any, payable on the advance payment shall not exceed 100 basis points above the London Inter-Bank Offered Rate (LIBOR) or other applicable benchmarks as may be directed by the Reserve Bank, as the case maybe.

MSME

• The Ministry of Micro, Small & Medium Enterprises has launched the India Export Initiative and IndiaXports 2021 Portal of India SME Forum.

IndiaXports aims to orient MSMEs free of cost, with the objective of focussing on the untapped export potential in existing tariff lines and supporting MSMEs in order to grow the number of exporting MSMEs and increase MSME exports by 50% in 2022. This initiative features an Info Portal which serves as a knowledge base for exports by Indian MSMEs with the required information related to export potential for all the 456 tariff lines along with the potential markets as well as trends in exports, export procedures and lots more. Apart from an export help desk, instructor-led orientation will also be provided to MSMEs through a series of sessions for specific sectors highlighting the opportunities in specific products in international markets. Further, the initiative targets over 1 lakh MSMEs desirous of knowing more about exports and hand holding over 30,000 MSMEs to start exporting, doubling the base of active exporters.

• The Ministry of Micro, Small, and Medium Enterprises has decided to implement International Cooperation Scheme (IC) with an objective to provide International marketing opportunities to MSMEs as well as to integrate them into global value chains.

Financial assistance is provided to all eligible/State/ Central Government organizations, registered industries associations and Societies/Trusts involved in the promotion and development of MSME sectors. The IC Scheme has been recently revised and it now has three sub-components namely (i) Market Development Assistance of MSMEs (MDA), (ii) Capacity Building of First time MSE Exporters (FTE) and (iii) Framework for International Market Intelligence Dissemination (IMID). Further proposals are invited from all eligible organizations under the MDA (Market Development Assistance) Sub-Component of the IC Scheme. The proposals can be uploaded on the IC Scheme web portal https://ic.msme.gov.in, which will remain open for submission of proposals from September 14, 2021 to September 30, 2021. It is also informed that all proposals under the IC Scheme will be accepted via online mode only.

IFSCA

• The International Financial Services Centers Authority has issued a circular to notify the Code of Conduct and Code of Ethics for the Directors and Key Management Personnel (KMP) of recognized Market Infrastructure Institutions(MIIs) in GIFT-IFSC.

Every Director of the recognized MII shall ensure that the recognized MII abides by all the applicable provisions of International Financial Services Centres Authority Act, 2019, MIIs Regulations, Bullion Exchange Regulations, rules and regulations framed thereunder and the circulars, directions issued by the Authority from time to time; Ensure compliance at all levels so that the regulatory system does not suffer any breaches; Ensure that the recognized MII takes steps commensurate to honor the time limit stipulated by Authority for corrective action; Not support any decision in the meeting of the governing board which may adversely affect the interest of investors and shall report forthwith any such decision to the Authority. Further, the Code provides that its objective is to enhance the level of market integrity and investor confidence. It is emphasized that a written code of ethics may not completely guarantee adherence to high ethical standards. This can be accomplished only if Directors and Key Management Personnel of the recognized MIIs commit themselves to the task of enhancing the fairness and integrity of the system in letter and spirit.

View Monthly Compliance Calendar 

 

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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 26.08.2021 till 25.09.2021.