Executive Summary
Income Tax
- Order u/s 119 of the Income Tax Act providing exclusions to section 144B of the Act.
- Condone the delay in filing Form 10-IC for A.Y. 2020-21
- Guidelines provided for the purpose of deduction of TDS on salary income for FY 2021-22.
Goods & Services Tax (GST)
- GST e-invoice limit reduced from 50cr to 20cr and it would apply from 1st April 2022 .
- Enhanced Registration application user interface (UI)
- Auto-Population of e-invoice details into GSTR-1.
- Implementation of automation in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 with effect from 01.03.2022.
Companies Act 2013/ Other Laws.
- The Ministry of Micro, Small & Medium Enterprises has extended the Credit Guarantee Scheme for Subordinate Debt up to March 31, 2022.
- Ministry of Corporate affairs (MCA) notifies changes regarding incorporation, signing of accounts & annual return under liquidation for Limited Liability Partnership.
- The Ministry of Labour and Employment has recommended an 8.10% annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2021-22.
- DGFT has issued a notification to operationalize
- A new online module for filing of electronic registration for Interest Equalisation Scheme w.e.f. April 01, 2022.
- SEBI has issued a clarification on the Discontinuation of usage of pool accounts for transactions in the units of Mutual Funds.
Income Tax
- AY 2020-21 is the 1st year for applicability of section 115BAA and filing of Form 10-IC is the statutory requirement and failure to submit the same results in denial of concessional rate tax. Many representations received from the industry and then delay is condoned. CBDT vide Circular No. 6/2022, dated 17/03/2022, has condoned the delay of filing Form 10-IC (Domestic Company chooses to pay tax at concessional rate of 22% under Section 115BAA of the Act) for AY 2020-21. It can be filed on or before 30/06/2022.
- CBDT vide Circular No. 4/2022, dated 15/03/2022, provides the guidelines and procedures for the purpose of deduction of TDS on salary income for FY 2021-22. All the relevant provisions related to taxation of salary income is explained properly.
The Circular is helpful in understanding under all the relevant provisions under the Income-tax Act, circulars, notifications, etc. which an employer and employee should be aware of and comply before the fiscal year end of 31st March. Following explanations are provided thereby:
- Rates of Income-tax as per Finance Act, 2021
- Broad scheme of TDS on salaries
- Person Responsible for Deducting Tax and Their Duties
- Computation of income under head salaries
- Deductions allowed while calculating taxable income
- Rebate of Rs.12,500 for Individual having Total Income Upto Rs 5 lakh
- TDS on payment of accumulated balance under recognized provident fund and contribution from approved superannuation fund
- Dos and Don’ts to obtain evidence / proof of claims
- Calculation of tax to be deducted
- CBDT vide Circular No. 5/2022, dated 16/03/2022 Relaxation from the requirement of electronic filing of application in Form No. 3CF for seeking approval under section 35(1)(ii)/(iia)/(iii) of the Income-tax Act till 30-09-2022 or form availability date whichever is earlier.
Section 35 of the Income-tax Act allows tax-deduction of expenditure on scientific research by way of, amongst others, sums paid to a research association or any other university, college or institution which has its main object as scientific research and development (R&D). For this purpose, an application needs to be submitted by such research association / university / college / institution electronically in Form 3CF with Commissioner / Director of Income-tax during the year relevant to AY from which the approval is sought. There is difficulty in filing it electronically and thus relaxation is provided.
- Tax rates under regular provisions of the Income-tax Act
| S. No. | Total Income (Rs.) | Normal Tax Rate |
| 1 | < 2,50,000 | Nil |
| 2 | 2,50,000 to 5,00,000 | 5% of the amount by which Total Income exceeds
Rs. 2,50,000 |
| 3 | 5,00,000 to 10,00,000 | Rs.12,500 + 20% of the amount by which Total Income exceeds Rs.500,000 |
| 4 | > 10,00,000 | Rs.112,500 + 30% of the amount by which Total Income exceeds Rs.1,000,000 |
| S. No. | Total Income (Rs.) | Tax Rate for Individuals being
(a) resident in India, & (b) age of 60 years or more but less than 80 years at any time during FY 2021-22 |
| 1 | < 3,00,000 | Nil |
| 2 | 3,00,000 to 5,00,000 | 5% of the amount by which Total Income exceeds
Rs. 3,00,000 |
| 3 | 5,00,000 to 10,00,000 | Rs.10,000 + 20% of the amount by which Total Income exceeds Rs.500,000 |
| 4 | > 10,00,000 | Rs.1,10,000 + 30% of the amount by which Total Income exceeds Rs.1,000,000 |
| S. No. | Total Income (Rs.) | Tax Rate for Individuals being
(a) resident in India, & (b) age of 80 years or more at any time during FY 2021-22 |
| 1 | < 5,00,000 | Nil |
| 2 | 5,00,000 to 10,00,000 | 20% of the amount by which Total Income exceeds Rs.500,000 |
| 3 | > 10,00,000 | Rs.100,000 + 30% of the amount by which Total Income exceeds Rs.1,000,000 |
- Concessional Tax Rates u/s 115BAC of the Income-tax Act
| S. No. | Total Income (Rs.) | Tax Rate |
| 1 | ≤ 250,000 | Nil |
| 2 | 2,50,000 to 5,00,000 | 5% |
| 3 | 5,00,000 to 7,50,000 | 10% |
| 4 | 7,50,000 to 10,00,000 | 15% |
| 5 | 10,00,000 to 12,50,000 | 20% |
| 6 | 12,50,000 to 15,00,000 | 25% |
| 7 | > 15,00,000 | 30% |
- CBDT vide circular No. F.No. 187/3/2020-ITA-I dated 17/0/2022 provide exclusion to faceless assessment section 144B of the Act from order u/s 119 of the Act only for the assessment cases in which limitation period expires on 31/03/2022.
CBIC vide Notification No. 01/2022 – Central Tax dated February 24, 2022 notifies GST e-invoice limit reduced from 50cr to 20cr and it would apply from 1st April 2022 .- CBIC vide Circular No.169/01/2022-GST, dated March 12, 2022 Amendment to Circular No. 31/05/2018-GST, dated 9th February, 2018 on ‘Proper officer under sections 73 and 74 of the Central Goods and Services Tax Act, 2017 and under the Integrated Goods and Services Tax Act, 2017.
- CBIC vide Notification No. 02/2022 – Central Tax dated March 11, 2022 notifies Appointment of Common Adjudicating authority for adjudicating the show cause notices issued by DGGI under GST.
- CBIC vide Circular No. 04/2022-Customs, dated February 27, 2022 Implementation of automation in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 with effect from 01.03.2022.
Companies Act, 2013
MCA has notified Limited Liability Partnership (Second Amendment) Rules, 2022 to further amend the existing Limited Liability Partnership Rules, 2009, which shall come into force on the date of its publication in the Official Gazette i.e. 04-03-2022.
According to the amendment, now the new LLP under incorporation can make an application for allotment of DPIN 5 (five) individuals in Form FiLLiP instead of two. In line with the incorporation of companies, now the Certificate of Incorporation of LLP shall be issued by the Registrar in Form 16 and shall mention Permanent Account Number and Tax Deduction Account Number issued by the Income Tax Department. Further, in cases where CIRP has been initiated against an LLP then the Statement of Account and Solvency may be signed by interim resolution professional or resolution professional, or liquidator or limited liability partnership administrator and in case any LLP is having turnover upto five crore rupees during the corresponding financial year or contribution upto fifty lakh rupees has come under liquidation under the said Code, 2016, the annual return may be signed on behalf of the limited liability partnership by interim resolution professional or resolution professional, or liquidator or limited liability partnership administrator and no certification by a designated partner shall be required. Through this amendment, Form 29 is merged into Form 28 and accordingly, Form 28 will be filed for alteration in the certificate of incorporation or registration; alteration in names and addresses of any of the persons authorised to accept service on behalf of a foreign limited liability partnership (FLLP); alteration in the principal place of business in India of FLLP; and cessation to have a place of business in India. Apart from the above, the following forms are also amended RUN LLP; FiLLiP; Form 3; Form 4; Form 5; Form 8; Form 9; Form 11; Form 12; Form 15; Form 16; Form 17; Form 18; Form 22; Form 23; Form 24; Form 25; Form 27; Form 28; Form 31 and Form 32.
Every person or enterprise who is a party to a combination that adversely affects the competition in India is required under the act to give notice within thirty days. As per the provisions of Section 54(a) of the Competition Act, 2002, the Central Government may, by notification, exempt from the application of this Act, or any provision thereof, and for such period as it may specify in such notification any class of enterprises if such exemption is necessary for the interest of the security of the State or public interest. MCA has earlier exempted all transactions falling under Section 54(a) for 5 years, which is now extended up to 10 years. This requirement for notice is relaxed for ten years from June 29, 2017.
SEBI
To streamline the process of providing approval to the proposed change in control of the Sponsor and/or Manager of the AIF involving scheme of arrangement which needs the sanction of National Company Law Tribunal (“NCLT”) in terms of the provisions of the Companies Act, 2013, it has been decided that the application seeking approval for the proposed change in control of the Sponsor and/or Manager of the AIF under Regulation 20(13) of AIF Regulations shall be filed with SEBI prior to filing the application with the NCLT. Upon being satisfied with compliance with the applicable regulatory requirements, in-principle approval will be granted by SEBI. The validity of such in-principle approval shall be three months from the date of issuance, within which the relevant application shall be made to NCLT. Within 15 days from the date of order of NCLT, the applicant shall submit the prescribed documents to SEBI for final approval.
SEBI has implemented the System Driven Disclosures in phases. SEBI has done away with manual filing for most of the transactions with effect from April 01, 2022, accordingly transactions undertaken in the depository system under Regulation 29 and Regulation 31 of Takeover Regulations do not require manual filing except for a few transactions where disclosure shall continue to be filed in manual. Further, in order to streamline the capture and dissemination of the information related to “encumbrances” and thus bring in more transparency, in consultation with the stock exchanges and depositories, it has been decided that all types of encumbrances as defined under Regulation 28 (3) of Takeover Regulations shall necessarily be recorded in the depository system. The depositories shall capture details of the ultimate lender along with the name of the trustee acting on behalf of such ultimate lender such as banks, NBFCs, etc. In case of issuance of debentures, the name of the debenture issuer shall be captured in the depository system and the depositories shall now capture the reasons for encumbrances in the depository system. The depositories shall also devise an appropriate mechanism to record all types of outstanding encumbrances in the depository system by June 30, 2022.
An investor may submit the bid-cum-application, for investment through the Unified Payments Interface (UPI) mechanism up to ₹5 in public issues of debt securities. The move comes after the National Payments Corporation of India (NCPI) increased per transaction limit to ₹5 lakh from earlier ₹2 lakh on December 09 last year, for UPI based Application Supported by Blocked Amount (ASBA) Initial Public Offer (IPO). The increased limit will be applicable on issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper. Earlier, Sebi provided an option to investors to apply in public issues of debt securities with the facility to block funds through the UPI mechanism for application value up to ₹2 lakh. Further, an investor may submit the bid-cum-application form with an SCSB or the mentioned intermediaries and use his/ her bank account linked UPI ID for the purpose of blocking funds, if the application value is Rs. 5lakh or less. The intermediary shall upload the bid on the stock exchange bidding platform. The application amount would be blocked through the UPI mechanism in this case.
Existing mandates being used for Mutual Fund transactions can continue to remain in the name of the stockbrokers/clearing members, subject to Stock Exchanges/ Clearing Corporations ensuring that Payment Aggregators (“PA”) puts in place mechanisms wherein beneficiary of the mandate can only be an Approved Account (which shall only be the bank account of the Clearing Corporation) such that PA shall directly credit the monies collected from the bank account of the investor only into an Approved Account, and PA shall not act on instructions of the stockbrokers/clearing members to alter or modify the list of Approved Accounts and in no case, the monies shall be credited to the bank account of the stockbrokers/clearing members. Further, here “Mandate” refers to an instrument, authorization, or order in any form, including electronic means, to effect a payment by a person for the purpose of mutual fund investment; and Payment Aggregators refers to Payment Aggregators authorized/permitted by RBI and scheduled commercial banks acting in the capacity of Payment Aggregators.
The Stock Exchanges are directed to sh all place a limit on the numbers of orders per second from a particular CTCL ID/ATS User-ID not exceeding one hundred and twenty orders per second. Compliance with the limit “X” so set by a particular CTCL ID/ATS User-ID shall be measured over a rolling period of five seconds (i.e., 5X orders for 0th –5th second, 5X orders for 1st-6th second, 5X orders for 2nd to 7th second and so on). For the number of orders exceeding the limit (X) set by the Stock Exchange, the Stock Exchange shall prescribe economic disincentives and inform the same to SEBI. Further, Stock Exchange shall ensure that the limits provided are subject to its ability to handle the load. The limit on OPS may be further relaxed by the Stock Exchanges based on the increased peak order load observed and corresponding upgrade of infrastructure capacity to ensure that the capacity of the trading system of the Stock Exchange remains at least four times the peak order load. The relaxation in limit shall be subject to the approval of SEBI. The circular shall be effective from April 01, 2022.
SEBI has developed a revised harmonized four-level industry classification framework for adoption by all stakeholders and for all relevant processes/ purposes in the Indian securities market. A standardized framework will help bring about uniformity in the classifications being used across sectors as of date. It is provided that Post listing of securities, the issuer shall submit information to any of the stock exchanges where their securities are listed on a periodical basis (within 30 days from the end of the financial year) and/ or ‘as and when basis (event-based), as applicable. The stock exchange shall indicate the format of filing to the issuers in this regard. The provisions of this circular shall be applicable to all issuances of debt securities, which open, on or after April 1, 2022.
The Amendment is brought under Schedule II, in PART E which deals with discretionary requirements in which a new clause D has been inserted to provide Separate posts of Chairperson and the Managing Director or the Chief Executive Officer in a listed company. The listed entity may appoint separate persons to the post of the Chairperson and the Managing Director or the Chief Executive Officer, such that the Chairperson shall be a non-executive director; and not be related to the Managing Director or the Chief Executive Officer as per the definition of the term “relative” defined under the Companies Act, 2013. Further, a listed entity may, at its discretion, comply with requirements as specified in Part E of Schedule II. The listed entity shall submit a quarterly compliance report on corporate governance in the format as specified by the Board from time to time to the recognized stock exchange(s)within fifteen days from the close of the quarter.
The paper seeks comments/views from various stakeholders including market intermediaries and the public on the procedure followed with respect to the timelines of various activities involved in Open Offers and Buy-back offers in terms of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and SEBI (Buyback of Securities) Regulations, 2018. The proposed changes in the timelines of procedural activities would help reduce the overall time taken for completion of Open Offer from 62 working days to 42 working days and the overall time for completion of Buyback from 43 working days to 36 working days, which would be investor-friendly and make the process more efficient. It is proposed that Post Offer PA may be made within two working days from the expiry of the offer period. It is also proposed that the period for payment of consideration may be reduced to five working days as against earlier of ten working days from the closure of tendering period. Further, the tendering period may start not later than ten working days from the date of receipt of comments from the Board and remain open for five working days. The comments may be sent by e-mail to dcrconsultation@sebi.gov.in or sent by post at the following address latest by April 15, 2022.
RBI
The extension takes effect from October 1, 2021, and ends on March 31, 2024. The scheme will not apply to telecom instruments and entities availing benefits under the Production Linked Incentive (PLI) scheme of the Government. The Revised interest equalization rates under the Scheme will now be 3 percent for MSME manufacturer exporters exporting under any HS lines, and 2 percent for manufacturer exporters and merchant exporters exporting under 410 HS lines. Banks, while issuing approval to the exporter, will necessarily furnish the prevailing interest rate, the interest subvention being provided, and the net rate being charged to each exporter, so as to ensure transparency and greater accountability in the operation of the Scheme. Further for the period from October 1, 2021, to March 31, 2022, banks shall identify the eligible exporters as per the Scheme, credit their accounts with the eligible amount of interest equalization and submit a sector-wise consolidated reimbursement claim for the said period to the Reserve Bank by April 30, 2022.
RBI has laid down a cost-free grievance redress mechanism under RB-IOS which does not involve payment of fees or charges in any form or manner. Customers having grievances against REs (Regulating entities) for deficiency in services, which is not redressed satisfactorily or in a timely manner by the REs can directly lodge their complaint on the Complaint Management System (CMS) portal (https://cms.rbi.org.in) or by e-mail at crpc@rbi.org.in or in physical mode at the ‘Centralised Receipt and Processing Centre’ (CRPC) set up at RBI, 4th Floor, Sector 17, Chandigarh – 160017. Further, the Complainants having queries on RB-IOS or desiring information relating to their complaints lodged through the above methods can reach the Contact Centre of RBI in Hindi, English, and nine regional languages (Bengali, Gujarati, Kannada, Odia, Malayalam, Marathi, Punjabi, Tamil and Telugu). The status of complaints can also be tracked on the CMS portal.
- RBI has notified the Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022 which shall be effective from April 01, 2022.
The provisions of these directions shall apply to the prescribed entities which include all Commercial Banks (including Small Finance Banks, Local Area Banks, and Regional Rural Banks) excluding Payments Banks; All Primary (Urban) Co-operative Banks/ State Co-operative Banks/ District Central Co-operative Banks; and All Non-Banking Financial Companies (including Microfinance Institutions and Housing Finance Companies). Through these directions, RBI has allowed microfinance lenders to fix interest rates on loans with a rider that those should not be usurious for the borrowers. A microfinance loan is defined as a collateral-free loan given to a household having an annual income of up to ₹3 lakh. Each regulated entity (RE) should put in place a board-approved policy regarding the pricing of microfinance loans and disclose pricing-related information to a prospective borrower in a standardized simplified factsheet. Further, a fair practice code (FPC) based on these directions shall be put in place by all REs with the approval of their boards. The FPC shall be displayed by the RE in all its offices and on its website. The FPC should be issued in a language understood by the borrower. Each RE shall also put in place a mechanism for identification of the borrowers facing repayment-related difficulties, engagement with such borrowers and providing them necessary guidance about the recourse available.
EPF
The interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into its subscribers’ accounts. For the Financial year 2022, EPFO decided to liquidate some of its investment in equities and the interest rate recommended is a result of combined income from interest received from debt investment as well as income realized from equity investment. This enabled EPFO to provide a higher return to its subscribers and still allowed EPFO with a surplus to act as a cushion for providing a higher return in the future also.
Ministry of Labour and Employment
The services are available online on the National Career Service Portal (www.ncs.gov.in). The portal also allows jobseekers to add their skill certificates on NCS through Digi locker. The certificate of candidates undertaking Pradhan Mantri Kaushal Vikas Yojana (PMKVY) training is also accessible to NCS through integrating with Skill India Portal. The candidate registered on the NCS portal can also provide information related to their key skills and education etc. based on which they can find relevant jobs. Further, the Government has also announced linking of the NCS portal with the ASEEM portal of Ministry of Skill Development and Entrepreneurship, e Shram portal of Ministry of Labour & Employment, and UDYAM portal of Ministry of Micro, Small, and Medium Enterprises. This will further enhance the skill-based database of candidates on the NCS portal.
MSME
The Credit Guarantee Scheme for Subordinate Debt was approved by the Government on June 01, 2020 and the scheme was launched on June 24, 2020 to provide credit facilities through lending institutions to the promoters of stressed MSMEs viz. SMA-2 (special mention accounts) and NPA (non-performing assets) accounts are eligible for restructuring as per RBI guidelines on the books of the Lending institutions. The Scheme is applicable for those MSMEs whose accounts have been standard as of 31.03.2018 and have been in regular operations, either as standard accounts or as NPA accounts during the financial year 2018-19 and financial year 2019-20. Fraud/ Wilful defaulter accounts will not be considered under the proposed scheme. Further, a personal loan will be provided to the promoters of the MSME units. The MSME itself may be Proprietorship, Partnership, Private Limited Company or registered company, etc.
DGFT
All exporters seeking benefit under the Interest Equalisation Scheme need to apply online by navigating to the DGFT website–Services–Interest Equalisation Scheme. A Unique IES Identification Number (UIN) will get generated automatically which is required to be submitted to the concerned bank when availing Interest Equalisation against their pre and post-shipment rupee export credit applications. The UIN generated shall have a validity of 1 year from the date of registration, during which an application for availing benefit of IES can be submitted to the concerned bank. The auto-generated Acknowledgement containing the UIN number needs to be submitted to the concerned bank along with the prescribed application by the bank, if any, for availing benefit under IES. Further, it is mandatory for exporters to submit UIN acknowledgment to the concerned bank for all applications made on or after 01.04.2022.
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 24.02.2022 till 25.03.2022.
