Legal Updates July 2020 Edition

Income Tax


CBDT vide Notification No. G.S.R. 415(E) [No. 38/2020/F. No.370142/15/2020-TPL], Dated 26-6-2020, has amended the Rule 2BB due to which now assessee is allowed to take benefits of allowances like Transport allowance etc. even the assessee has taken option under Section 115BAC.


  • CBDT vide Notification No. G.S.R. 421(E) [NO. 40 /2020/F. NO.370149/143/2019-TPL], Dated 29-6-2020 & Notification No. G.S.R. 423(E) [NO.42 /2020/F. NO.370149/143/2019-TPL], Dated 30-6-2020, has amended rule 11UAC to prescribed class of persons for the purpose of clause (XI) of the proviso to section 56(2)(x) & 50CA of the Income-tax Act, 1961.


  • CBDT vide Notification No. G.S.R. 429(E) [NO. 43/2020/F. NO. 370142/11/2020-TPL], Dated 3-7-2020, has made amendment in Rule 31A to incorporate provision of section 194N. As per 194N, 2%/5% TDS will be deducted on payment in excess of specified payment withdrawal from Bank/Post office/Co-op Bank from 01.07.2020 onwards. Further on Income Tax portal, a tool to verify the applicability of TDS is also notified. Form 26Q & Form 27Q is also updated.


  • CBDT vide Press release dated 08-07-2020 informed that a new MOU has been signed between Central Board of Direct Taxes (CBDT) and the Securities and Exchange Board of India (SEBI). The MoU will facilitate the sharing of data and information between SEBI and CBDT on an automatic and regular basis. In addition to regular exchange of data, SEBI and CBDT will also exchange with each other, on request and suo moto basis, any information available in their respective databases, for the purpose of carrying out their functions under various law.


  • CBDT vide Circular F. NO. 225/98/2000/ITA-II, Dated 10-7-2020, has given instruction to process the validly filed ITR with refund upto the AY 2017-18 . Last date of processing of such ITR will be 31-10-2020. Further this instruction will not be applicable on:

-returns selected in scrutiny;

– returns remain unprocessed, where either demand is shown as payable in the return or is likely to arise after processing it;

-returns remain unprocessed for any reason attributable to the assessee


  • CBDT vide Circular no. 3/2020 Dated 13-07-2020 given one time opportunity to taxpayers whose Income Tax Return’s was filed online but verification was pending FY 2014-15 to FY 2018-19. This verification can be done upto 30th September 2020.
    All such verified ITRs shall be processed on or before 31 December 2020.
    ITRs can be verified through EVC/OTP or by sending duly signed hard copy to CPC Bangalore.
    CBDT, also relaxes the time-frame for issuing the intimation as provided in second proviso to sub-section (1) of Section 143 of the Act and directs that such returns shall be processed by 31.12.2020 and intimation of processing of such returns shall be sent to the taxpayer concerned as per the laid down procedure. However, if any proceeding has been started against taxpayers considering that return for such year has not been filed by taxpayer then benefit of relaxation can not be availed


  • CBDT vide Press release dated 18-07-2020, has informed that start an e-campaign on voluntary compliance of Income-tax for the convenience of taxpayers from Monday, the 20th of July, 2020. The 11 days campaign ending on 31st July, 2020 focuses on the assessees/taxpayers who are either non-filers or have discrepancies/deficiency in their returns for the FY 2018-19.


  • CBDT vide Press release dated 20-07-2020 informed that a new MOU has been signed between the Central Board of Direct Taxes (CBDT) and the Ministry of Micro, Small and Medium Enterprises, Government of India (MoMSME) for sharing of data by CBDT to MoMSME. The MoU will facilitate seamless sharing of certain Income-tax Return (ITR) related information by the Income-tax Department to MoMSME. This data will enable MoMSME to check and classify enterprises in Micro, Small and Medium categories as per the criteria notified in the Notification No. S.O. 2119(E) dated 26/06/2020 of MoMSME


  • CBDT vide Press release dated 21-07-2020 informed that a new MOU has been signed between the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs(CBIC) today, for data exchange between the two organizations. This MoU will facilitate the sharing of data and information between CBDT and CBIC on an automatic and regular basis. In addition to regular exchange of data, CBDT and CBIC will also exchange with each other, on request and spontaneous basis, any information available in their respective databases which may have utility for the other organization.


  • CBDT vide Notification No. GSR.464(E) dated 24-07-2020, has amended rule 31AA with 206C to incorporate the provision amended by Finance Act 2020 which are applicable from 01-10-2020.



Goods & Services Tax (GST)


CBIC vide Notification No. 55/2020 – Central Tax dated 27th June 2020 has extended the date of specified compliance falling during the period 20th March 2020 to 30th August 2020 to 31st August 2020. Those specified compliances includes:


  • completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the Acts stated above; or
  • filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called, under the provisions of the Acts stated above.
  • CBIC vide Notification No. 57/2020 – Central Tax dated 30th June 2020 has waived off Late fee for the period July 2017 to September 2020 in the following manner:
  • If the turnover is more than 5 crore rupees in the preceding financial year and you need to file a return (GSTR-3B) with tax liabilities, the late fees payable is Rs. 500 per return (Rs. 250/ under CGST + Rs. 250/ under SGST per return) for the months of May 2020 to July 2020.
  • In case of NIL return (GSTR-3B) late fees is zero / waived off even if the turnover is more than Rs. 5 Crore.
  • If the Turnover is Less than 5 crore rupees in the preceding financial year, taxpayers have NIL return are liable for NIL late fees.
  • The important condition is that such returns should be filed before 30th September 2020.
  • CBIC has revamped its Grievance Portal and launched its Chatbot GITA (GST Interactive Technical Assistant). e Chatbot works on Artificial Intelligence (AI) based technology. 24×7 facility is available on GST portal for mobile user too. Link for the facility is
  • Vide Notification no. 34/2020 Central Tax dated 3rd April 2020, the date of filing return in Form GSTR-4- Annual return to be filed by composition taxpayers for the year 2019-20 had been extended to 15th July 2020. Now the same has further been extended from 15th July 2020 to 31st August 2020.
  • CBIC vide Circular No: 140/10/2020 – GST clarified the taxability of remuneration paid to the director by the company. In respect of the Independent director (Not being employees of company) there shall be levied GST on RCM basis, and in respect of Whole -time directors (being employees of the company) there shall be no GST liability as the same is covered in Schedule III of CGST Act.
  • CBIC vide Notification No. 48/2020 – Central Tax dated 29th June 2020 has facilitated filing of GSTR-3B and GSTR-1 through EVC for the return to be filed between the period 21st April 2020 to 30th September 2020.

Companies Act, 2013


The MCA has further decided to extend the period for names reserved and resubmission of forms.


Accordingly, in case of names reserved for 20 days for new company incorporation. SPICE+ Part B was supposed to be filed within 20 days of name reservation. Now names expiring any day between March 15, 2020 to July 31, 2020, would be extended by 20 days beyond July 31, 2020. Further, the names reserved for 60 days for change of name of the company, the Form INC-24 had to be filed within 60 days of name reservation. Now the period has been extended for names expiring any day between March 15, 2020 to July 31, 2020 by 60 days beyond July 31, 2020. MCA has also extended the RSUB validity for companies. The SRNs where the last date of Resubmission (RSUB) falls between March 15, 2020 to July 31, 2020, an additional 15 days beyond July 31, 2020 is allowed. MCA has allowed extended the names reserved for 90 days for new LLP incorporation or change of name and FiLLiP Form 5 needs to be filed within 90 days of the name reservation. Now, the names expiring any day between March 15, 2020 to July 31, 2020 would be extended by 20 days beyond July 31, 2020. The RSUB validity for LLPs. The SRNs where the last date of resubmission (RSUB) falls between 15th March 2020 to July 31, 2020, an additional 15 days would be allowed from July 31, 2020 for resubmission

The entities must apply these amendments to business combinations, whose acquisition date is on or after the start of the first annual reporting period beginning on 1st April, 2020, and to asset acquisitions that take place on or after that period. The new Rules amend Indian Accounting Standards 107 that relates to disclosures to be made in respect of financial instruments by introducing a provision specifying the disclosures to be made where there is uncertainty due to Interest Rate Benchmark Reform. The new Rules amend Indian Accounting Standards 109 providing detailed provisions for temporary exceptions from applying specific hedge accounting requirements and transition for hedge accounting. These must be applied by entities for annual periods starting on or after 1st April, 2020. Indian Accounting Standard 116 has been amended to provide that subject to specified conditions, any rent concession due to COVID-19 may, if the lessee so elects, not be assessed as a lease modification. This is subject to disclosures to be made by the lessee and shall apply to annual reporting periods on or after 1st April, 2020 or where the lessee has not approved the financial statements prior to this amendment, it may be applied for such periods from 1st April, 2019. Further, in Indian Accounting Standards 1 and 8, changes have been made to the definition of material in relation to material information

All information shall be furnished for the hall year ended 30th September and 31st March in every financial year for each ISIN separately. Accordingly, every unlisted public company governed by this rule shall submit Form PAS-6 to the Registrar with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 within sixty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice. The e Form PAS-6 is now available for filing as e Form w.e.f 15th July 2020. Stakeholders may please take note and plan accordingly

The Ministry of Corporate Affairs after a due examination has considered the extension of the last date of filing of Form NFRA-2, which is required to be filed under Rule 5 of the National Financial Reporting Authority Rules, 2018. MCA has decided to extend the time limit for filing Form NFRA-2 will be 270 days (earlier 150 days) from the date of deployment of this form on the website of National Financial Reporting Authority (NFRA).

The MCA has issued a notification for amendment in the Schedule VII of the Companies Act, 2013 which shall come into force on the date of its publication in the Official Gazette i.e. 23-06-2020. In exercise of the powers conferred by Section 467(1) of the Companies Act, 2013, the Central Government hereby makes the further amendments in Schedule VII to insert the words “Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows;” after the words “war widows and their dependents” in item (vi) of Schedule VII. The notification has widened the scope of CSR, which was earlier restricted activities benefiting the army, navy and air force veterans and their dependents and war widows.

Other Laws



The Amendment is brought under regulation 12(1) which deals with Recognition of Insolvency Professional Entities in which a limited liability partnership, a registered partnership firm or a company may be recognized as an insolvency professional entity if “its sole objective is to provide support services to insolvency professionals”. It is a welcome move by IBBI, as the IPE can now provide their services to any Insolvency professional as the restriction of providing services to Partners / Directors of entity is removed.



The Food Business Operators shall apply to concerned regional officers of FSSAI for reactivation of license application within 6 months from the date of rejection and the application may be rejected automatically by the system due to non-furnishing of information/documents by FBO within 30 days. The FBOs intending to change their user profile shall submit a representation in this regard to the joint director, regulatory compliance division and the application should be on the letterhead of the firm/company duly signed by the authorized person and a copy of photo identity card and a copy of an existing license shall be enclosed along with the application. In case, FBOs want new login credential, they have to create a new login ID and Password and the same would be indicated in their application so that the IT team can validate and map the licenses or registrations in new login credentials.


The Reserve Bank of India vide its notification has exempted Venture capital fund companies holding a certificate of registration obtained under section 12 of the Securities and Exchange Board of India Act, 1992 and not holding or accepting public deposit from the provisions of section 45-IA which deals with the Requirement of registration and net owned fund and 45-IC which specifies Reserve fund of the RBI Act, 1934. Further, RBI also exempts those venture capital fund companies from the applicability of guidelines issued by the Bank for NBFCs. Further, Consequent upon the repeal of Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 and enactment of Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, it has been decided to substitute the word “Venture Capital Fund Companies” with “Alternative Investment Fund Companies”, in exercise of the powers conferred under section 45NC of RBI Act, 1934.

RBI, in view of the on-going situation and taking in to account the feedback received from various stakeholders, has decided that every applicable NBFC shall finalise its balance sheet within a period of 3 months from the date to which it pertains or any date as notified by SEBI for submission of financial results by listed entities. As per RBI guidelines, every applicable NBFC is required to finalise its balance sheet within a period of 3 months from the date to which it pertains.

The Reserve Bank of India laid down the eligibility criteria for non-bank financiers and mortgage lenders to utilize a special liquidity scheme that was approved by the Union cabinet in May. To borrow funds, the RBI rules mandate that non-banking financial companies (NBFCs) and housing finance companies (HFCs) should not have net non-performing assets of more than 6% as on 31 March 2019 and the funds raised will have to be solely used to extinguish existing liabilities. It also stipulated that the CRAR/CAR of NBFCs/HFCs should not be below the regulatory minimum of 15 per cent and 12 per cent, respectively as on March 31, 2019. These companies should have made net profit in at least one of the last two preceding financial years – 2017-18 and 2018-19 – and should not have been reported under SMA-1 or SMA-2 category by any bank for their borrowings during the last one year prior to August 1, 2018. They should also be rated investment grade by a Sebi registered rating agency and should comply with the requirement of the SPV for an appropriate level of collateral from the entity which would be optional and to be decided by the SPV.

The FLA Return needs to be submitted by all Indian companies which have received Foreign Direct Investments (FDI) or made any FDI abroad (overseas investment) in the previous year(s) including the current year i.e. who holds Foreign Assets or Liabilities in their Balance Sheets. The due of filing the FLA Return for FY 2019-20 was 15th July, 2020 which now stands extended to 31st July, 2020. Non-filing of the return before the due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA. Further, the submission of annual return on FLA through the web-based FLAIR portal for the financial year 2019-20 has been started. Entities which are filing FLA return for the first time/ with revised UIN (Unique identification number) are required to register themselves first for generating login credentials and they can file FLA return. However, the entities which have already registered earlier may submit FLA-2020 using their login credentials.




SEBI has now received representations from listed entities seeking an extension of time for listing their Non-Convertible Debentures (NCDs)/Non-Convertible Redeemable Preference Shares (NCRPS)/Commercial Paper(s) (CPs), pending finalization of their annual accounts for the financial year ending March 31 2020. it has been decided to permit listed Issuers who have issued NCDs/NCRPS/CPs, on or after July 01 2020, and intend/propose to list such issued NCDs/NCRPS/CPs, on or before July 31, 2020, to use available financials as on December 31 2019.

SEBI in its earlier circular dated 19th March, had relaxed the requirement of the maximum stipulated time gap of 120 days between two meetings of the board and audit committees of listed entities as required under LODR (Listing Obligations and Disclosure Requirements) Regulations, 2015. This relaxation was provided for the meetings held or proposed to be held between the period December 1, 2019 to June 30, 2020. However, through this notification, SEBI has extended the relaxation till 31st July 2020. The board of directors and audit committees of listed entities shall, however, ensure that they meet at least four times a year, as stipulated under Regulations 17(2) and 18(2)(a) of the LODR Regulations. This Circular shall come into force with immediate effect i.e.  26-06-2020.

Due to the pertaining situation of COVID-19 in the country, the SEBI has decided to extend the timelines for certain compliances with regulatory requirements by DPs/ RTAs. Accordingly, compliance timelines have been extended for processing of the Demat request form by the issuer or RTA and the processing of the Demat request form by the participant’s timelines have been extended to July 31, 2020. Further, 15-day period after July 31, 2020 is given to all the depositories and DPs to clear the backlog. Further, the half-yearly Internal Audit Report shall be submitted by the DPs by July 31, 2020 for March 31, 2020. It is also provided that Closure of the Demat account shall be done by July 31, 2020. A 15-day period shall be provided after July 31, 2020 for the purpose of clearing the backlogs. Accordingly, a period of exclusion shall be from March 23, 2020 till July 31, 2020.

SEBI has amended Clause 4(1) of SEBI (IFSC) Guidelines, 2015 related to Eligibility and shareholding limit for stock exchange desirous of operating in IFSC. The amendments have been made in the eligibility and shareholding limit for stock exchange desirous of operating in IFSC. All the Indian recognized stock exchange willing to provide stock exchange services in the IFSC shall hold paid-up equity share capital of 51%, whether Indian or Foreign. Further, the remaining capital can be acquired by other people be it Indian or Foreign nationals, however, the total paid-up equity capital shall not be more than 5%. Further, Bank companies, insurance companies, stock exchange, depository, commodity derivatives exchange, etc. can acquire only 15% of the paid-up equity share capital only after prior approval from the Board, whether directly or indirectly

Under the revised framework, any Indian recognised stock exchange or a bourse of a foreign jurisdiction may form a subsidiary to provide the services of a stock exchange in IFSC wherein at least 51 percent of paid-up equity share capital is held by such exchange and remaining share capital may be offered to any other person, whether Indian or of a foreign jurisdiction. Further, such person will not at any time, directly or indirectly, either individually or together with persons acting in concert, acquire or hold over 5 percent in the exchange, subject to applicable law.

To enhance the transparency, additional guidelines have been provided which includes Mutual funds shall take at least 10 percent of their total secondary market trades by value monthly in the corporate bonds through RFQ platform by placing quotes and seeking one to one mode; All the transactions relating to corporate bonds and commercial papers where the mutual funds are involved shall be carried out through RFQ platform on a one to one basis; Any transaction entered by mutual fund in Corporate Bonds in one to many modes and gets executed with another mutual fund shall also be counted for the aforesaid 10% requirement. Further, it is decided for debt schemes that such disclosure shall be done on fortnightly basis within 5 days of every fortnight. This Circular shall come in force from October 01, 2020.

The amendments are done in the Regulation 3(5), which specifies the manner to handle price sensitive information has been substituted, stating that “the board of directors or head(s) of the organisation of every person required to handle unpublished price sensitive information shall ensure that a structured digital database is maintained containing the nature of unpublished price sensitive information and the names of such persons who have shared the information and also the names of such persons with whom information is shared under this regulation along with the Permanent Account Number or any other identifier authorized by law where Permanent Account Number is not available. Such database shall not be outsourced and shall be maintained internally with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database. Further, a new sub-regulation 3(6) has been inserted which specifies the handling of price sensitive database information and the preservation of database for a certain period. A new clause Regulation 7(2)(c) related to “Disclosures by certain persons” has been inserted, to deal with the disclosures shall be made in such form and such manner as may be specified by the Board from time to time

The Factories (Haryana Amendment) Act, 2018

Through this notification, amendments have been made to The Haryana Factories Act, 1948 which includes amendment in Section 2(m) which specifies the threshold limit of workmen has been substituted to “twenty” and “forty” instead of “ten” and “twenty”; Section 3, which specifies the number of hours of work by the workmen, the overtime work hours have been increased to “one hundred and fifteen” instead of “seventy five” to avail the exemption under section 65 which provides the power to the State Government to make exempting orders; Section 66(b) which specifies the hours of work for women has been substituted, stating that women can work in factories where proper security is provided from 7 PM to 6 AM. Further, a new Section 106 (B) has been inserted which provide relief through compounding of offenses, for the offenses specified in the Fourth Schedule, if committed for the first time, maybe compounded before the institution of the prosecution by such officer and for such amount, as may be notified by the State Government in the Official Gazette. However, the amount of fine shall not exceed the fine prescribed under section 92.


The appointment of Hon’ble Shri. BSV Prakash Kumar is extended for another one months with effect from 05.07.2020 or until a regular President is appointed or until further orders, whichever is earlier. Earlier, Hon’ble Kumar was appointed as acting President for a period of three months from January 5, 2020 after the retirement of Justice MM Kumar as the NCLT President and extended further upto July 5, 2020. Presently hearing of all the NCLT benches across India is closed, following the lockdown declared by the government to contain Covid-19 pandemic.

The regular proceedings at NCLT Delhi were stopped immediately after the lockdown was announced on 24-03-2020. The NCLT has earlier decided and fixed the dates of hearings for Principal Bench and for all its New Delhi Benches (Court No. II, III, IV, V & VI) effective from 15-06-2020 which was re-notified from 01-07-2020 and then 20-07-2020. However, NCLT has now decided that all matters listed for 20-07-2020, 21-07-2020 shall now be held on 05-08-2020, 06-08-2020, 07-08-2020 respectively, and so on. All stakeholders are requested to take note of the same.



The Employees State Insurance Corporation (ESIC) has instructed to make bank account details of an employee and mobile number registration mandatory for registering as an insured person.

Hence, bank account details and mobile number are now a prerequisite for an employee to be registered on an insured person. Accordingly, the Bank Details and Mobile Numbers would be required while registering a new insured person. Further, the Mobile No. should be available in the ESIC database and the number should be unique or it should be accessed through OTP. Further, in the case of updating of account details and mobile number of existing insured persons, Bank account details mandatory for availing cash benefits and claim reimbursements. The Bank details of existing insured persons can be updated by the employer by logging into employer portal accessing “Update particulars of existing persons” link. All the manuals pertaining to the above changes should be available on the ESIC website. This order shall come into effect from July 01, 2020

KNM India can assist you with a range of complete financial services that range from Corporate advisory to Transaction advisoryPre-incorporation to Post-incorporationInsolvency and bankruptcy code to Secretarial servicesAssurance 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 to get a quick response.


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