Executive Summary
Income Tax
- Manual filing of Form 15CA/CB further extended to 15th August 2021.
- India Joined hands with OECD/G20 for Digital economy taxation in unified approach (Pillar I & Pillar II).
- Extension of time limits for processing of ITR validly filed upto AY 2017-18 till 30th September 2021.
Guidelines issued considering difficulty in implementing the provision of Sec 194Q.
Goods & Services Tax (GST)
- Functionality to check and update status of bank account details updated on GST portal
- New functionality on Annual Aggregate Turnover deployed on GST Portal for tax payer’s dashboard
- Basic custom duty has been exempted on covid test kits and specified medicine products for specified period.
Clarification on applicability of Dynamic QR Code
Companies Act 2013/ Other Laws.
- MCA has issued a press release to highlight the various measures taken by the ministry to fight Covid-19 pandemic.
- SEBI has extended the timelines for compliance with the regulatory requirements by debenture trustees for the quarter/half-year/year ending March 31, 2021 by Debenture Trustees.
- DGFT extends Date for Mandatory Electronic Filing of Non-Preferential CoO through Common Digital Platform.
Detailed
Income tax
- CBDT vide Circular No.13/2021 dated 30th June 2021 issued clarification/guidelines in compliance the provision of section 194Q. In the circular, CBDT has clarified the issues on threshold of TDS and application of TDS/TCS in case of dual applicability.
- CBDT vide Press release dated 02nd Jul 2021 informs about joining of India in OECD/G20 discussion for consensus on Base erosion and profit shifting Digital economy taxation(Pillar I & Pillar II approach) Pillar I which is about reallocation of additional share of profit to the market jurisdictions and Pillar II consisting of minimum tax and subject to tax rules.
- CBDT vide Press release dated 05th Jul 2021 further extends the manual filing of 15CA/CB considering the bugs/error on new Income Tax website till 15th July 2021. By Press release dated 20th Jul 2021, manually filing is further extended till 15th August, 2021.
- CBDT vide ORDER F. NO.225/98/2020IITA-II, Dated 05th July 2021 has further extended the dates for the processing of validly filed ITR upto AY 2017-19, considering the pending taxpayers’ grievances related to issue of refund and to mitigate genuine hardship being faced by the taxpayers these time limits, till 30th September 2021 through order u/s 119 of IT Act, 1961.
- CBDT vide Notification No. 77/2021 dated 07th July 2021 has makes rule 8AC for of short-term capital gains and written down value under section 50 where depreciation on goodwill has been obtained.
Goods & Services Tax
- CBDT vide Notification No. 28/2021 – Central tax dated 30th June 2021 waives penalty payable for non-compliance of provisions of notification no. 14/2020 dated 21st March, 2020 for certain class of registered persons capturing dynamic QR code and the implementation of QR code to be further extended to 30th September 2021.
- GST portal has issued functionality to check and update status of bank account details dated 29th June 2021 for the taxpayers who have taken new registration at GST Portal but have not yet furnished the same, has been introduced. Such taxpayers are required to update their Bank Account Details within 45 days through Non-core amendment in the manner as specified of the first login henceforth.
- GST portal has issued New functionality on Annual Aggregate Turnover (AATO) dated 27th June 2021 deployed on GST Portal for tax payer’s dashboard with the facility of turnover update.
- CBIC vide Circular 157/13/2021 – GST dated 20th July 2021 issue clarifications regarding the extension of timelines granted by Hon’ble Supreme Court vide its Order dated 27.04.2021 is applicable in respect of any appeal which is required to be filed before Joint/ Additional Commissioner (Appeals), Commissioner (Appeals), Appellate Authority for Advance Ruling, Tribunal and various courts against any quasi-judicial order or where proceeding for revision or rectification of any order is required to be undertaken, and is not applicable to any other proceedings under GST Laws
- CBIC vide Notification no. 35/2021- customs dated 12th July 2021 exempt basic customs duty on various imports of specified API/ excipients for Amphotericin B and raw materials for manufacturing COVID test kits, till specified period.
- CBIC vide Circular no. 17/2021- customs dated 23rd July, 2021 specify to focus its efforts to reduce compliance burden for citizens and business activities. Various procedures and requirements stated under various provisions in the Customs Act,1962 are being revisited so that compliances under these laws can be simplified or dispensed with, in order to enhance ease of doing business and minimize regulatory compliances.
- CBIC vide Circular no. 16/2021- customs dated 19th July, 2021 issues clarification on issue of applicability of IGST on repair cost, insurance and freight, on goods re-imported after being exported for repairs on the recommendation of the GST council made in its 43rd
- CBIC vide Circular no. 15/2021- customs dated 15th July, 2021 prescribe manner for implementation of Risk Management system for processing of Duty drawback claims in exports.
- CBIC vide Circular no. 14/2021- customs dated 07th July, 2021 has decided to implement various measures in custom for Faceless Assessment and clearance process to enhance the uniformity in assessments with a view to reduce interface with the trade.
- CBIC vide Circular no. 13/2021- customs dated 01st July, 2021 in relation to AEO (Authorized Economic operator) T1 decide to launch a new version (V 2.0) for on-boarding of AEO T2 and AEO T3 applicants by way of online filing, real- time monitoring and digital certification.
- CBIC vide Circular no. 12/2021- customs dated 30th June, 2021 guide the trades relating to procedures for smooth implementation of Sea Cargo Manifest and Transhipment Regulations.
- CBIC vide Notification no. 34/2021 – (Customs ADD) dated 28th June 2021 Seeks to further amend notification No. 29/2017-Customs (ADD) dated 14th June, 2017 ‘Glazed/Unglazed Porcelain/Vitrified tiles’ originating in or exported from China PR, up to and inclusive of 31st December, 2021.
- CBIC vide Notification no. 35/2021 – (Customs ADD) dated 29th June 2021 Seeks to further amend notification No. 11/2016-Customs (ADD) dated 29th March, 2016 ‘Tyre Curing Presses also known as Tyre Vulcanisers or Rubber Processing Machineries for tyres, excluding Six Day Light Curing Press for curing bi-cycle tyres originating in or exported from China PR, up to and inclusive of 30th November, 2021.
- CBIC vide Notification no. 36/2021 – (Customs ADD) dated 29th June 2021 Seeks to further amend notification No. 17/2017-Customs (ADD) dated 11th May, 2017 Hot-Rolled flat products of alloy or non-alloy steel’ originating in or exported from China PR, Japan, Korea RP, Russia, Brazil or Indonesia, up to and inclusive of 15th December, 2021.
- CBIC vide Notification no. 37/2021 – (Customs ADD) dated 29th June 2021 Seeks to further amend notification No. 18/2017-Customs (ADD) dated 12th May, 2017 ‘Cold-Rolled flat products of alloy or non-alloy steel’ originating in or exported from China PR, Japan, Korea RP or Ukraine, up to and inclusive of 15th December, 2021.
- CBIC vide Notification no. 38/2021 – (Customs ADD) dated 30th June 2021 Seeks to further amend notification No. 42/2016-Customs (ADD) dated 08th August, 2016 PVC Flex Film originating in or exported from China PR, up to and inclusive of 31st January, 2022.
- CBIC vide Notification no. 39/2021 – (Customs ADD) dated 30th June 2021 Seeks to further amend notification No. 43/2016-Customs (ADD) dated 08th August, 2016 relating to Viscose Staple Fibre (VSF) excluding Bamboo Fibre, Dyed Fibre, Modal Fibre & Fire-retardant Fibre originating in or exported from China PR and Indonesia.
- CBIC vide Notification no. 40/2021 – (Customs ADD) dated 30th June 2021 Seeks to further amend notification No. 34/2016-Customs (ADD) dated 14th July, 2016 ‘Plain Medium Density Fibre Board (MDF) having thickness of 6mm and above’ originating in or exported from Vietnam, up to and inclusive of 13th March, 2022.
- CBIC vide Instruction no. 15/2021- customs dated 30th June 2021 specify requirement of report of testing of Covid-19 in live animals by the exporters not more than 3 days old before export into India in addition to other existing requirements in this regard.
Companies Act, 2013
- MCA has issued a press release to highlight the various measures taken by the ministry to fight Covid-19 pandemic.
- The illustrative list issued by MCA has 23 entries and covers almost all benefits and relaxations extended due to Covid-19 pandemic, which includes the Companies Fresh Start Scheme, 2020 (CFSS), LLP Settlement Scheme, 2020, relaxation on levy of additional fees for companies / LLPs in filing Charge Related Forms, Condonation of Delay Scheme for Companies restored by NCLT between December 1, 2020 to December 31, 2020, conduct Board Meetings through Video Conference (VC) or other audio-visual means for passing resolutions in respect of the restricted matters, conduct of Extraordinary General Meetings (EGMs) through Video Conferencing (VC), conduct of Annual General Meetings (AGMs) by Video Conferencing (VC), Extension of time in the holding of Annual General Meeting for the financial year ended on March 31, 2020 till December 31, 2020, enhanced the period to thirteen months from December 1, 2019 within which existing Independent directors may apply online for inclusion of their names in the databank for Independent Directors, Independent Directors (IDs) of a company have been given relaxation from holding at least one mandatory meeting, mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (CA-13) (120 days) were extended by a period of 60 days, Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Act shall not be treated as a non-compliance for the financial year 2019-20 and 2020-21
Other Laws
The extended timelines for compliance include submission of Asset Cover Certificate, a statement of the value of pledged securities and a statement of value for Debt Service Reserve Account (DSRA) or any other form of security offered – August 31, 2021; Net worth certificate of guarantor (secured by way of personal guarantee), Financials/ value of guarantor prepared on basis of audited financial statement etc. of the guarantor (secured by way of corporate guarantee) and Valuation report and title search report for the immovable/ movable assets, as applicable – October 31, 2021 and Disclosure on the website of Monitoring of asset cover certificate and quarterly compliance report of the listed entity, Monitoring of utilization certificate, Status of information regarding breach of covenants/ terms of the issue, if any action was taken by debenture trustee and Status regarding maintenance of accounts maintained under the supervision of debenture trustee – August 31, 2021.
A facility of block mechanism in the Demat account of clients has been made available by the depositories. The securities lying in the client’s Demat account may be blocked in favour of Clearing Corporation either by the client himself using depository’s online system or eDIS mandate or through depository participant based on physical DIS given by client or Power of Attorney (POA) holder. In case the sale transaction is not executed, shares will continue to remain in the client’s demat account and will be unblocked at the end of the T (Trade) day. Blocking of shares will be on ‘time bases. If securities for sale are blocked in the depository system in favour of Clearing Corporation, all margins would be deemed to have been collected and penalty for short/non-collection of margins including other margins shall not arise. Further, the proposed facility of block mechanism is on an optional basis and the EPI mechanism will also continue.
All the Credit rating agencies will now be required to provide expected loss-based ratings for projects and instruments associated with the infrastructure sector, with SEBI putting in place a new framework. The new scale will be used by the credit rating agencies for ratings of projects or instruments associated with the infrastructure sector to begin with. Lowest expected loss, very low expected loss, low expected loss, moderate expected loss, high expected loss, very high expected loss and highest expected loss will be the seven levels on the new scale. Further for the existing outstanding ratings, the CRAs shall disclose new rating symbols and definitions on their websites; update their rating lists on their websites; and inform their clients about the change in the rating symbols and definitions and specify that this should not be construed as a change in the ratings. All the provisions in the latest circular except those pertaining to standardization of rating scales, will be applicable with “immediate effect” for Credit Rating Agencies (CRAs). The CRAs shall ensure compliance with the requirements of this circular, latest by March 31, 2022 and also place the compliance status of this circular before their Board of Directors.
The new framework will be applicable with effect from October 1, 2021. In respect of valuation of securities with multiple put options present “ab-initio”, wherein put option is factored into the valuation of the security by the valuation agency, SEBI has taken certain decisions based on the recommendation of its mutual fund advisory committee. Under the framework, if the put option is not exercised by a mutual fund while exercising the put option would have been in favor of the scheme, fund houses will have to give justification for not exercising such option to the valuation agencies, board of AMC and Trustees. The explanation must be given on or before the last date of the notice period. The valuation agencies will not take into account the remaining put options for the purpose of valuation of the security. The put option will be considered as ‘in favor of the scheme’ if the yield of the valuation price ignoring the put option under evaluation is more than the contractual yield or coupon rate by 30 basis points.
Through this discussion paper, SEBI has suggested combining two separate regulations, SEBI (Share Based Employee Benefits) Regulations, 2014, and SEBI (Issue of Sweat Equity) Regulations, 2002, that deal with employee compensation. It is recommended that the objectives for which issuance of sweat equity shares are permitted and the ceiling on the quantum issued by a company should be included in the sweat equity regulations. It also recommended that the lock-in period for sweat equity shares and its pricing formula should be consistent with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The committee recommended that even non-permanent employees be considered to receive share-based employee benefits falling under SBEB Regulations. Further, through these draft Regulations SEBI has recognised the Secretarial Auditor to certify that the scheme(s) has been implemented in accordance with these regulations and in accordance with the resolution of the company in the general meeting as per Regulation 13 and under Regulation 26(2) to certify compliance with this provision at the time of adoption of such balance sheet by the Company. Public comments are invited on the recommendations made by the Expert Group in its report, in the prescribed format.
According to a circular, the ‘same line of business’, is defined as when least 50 per cent of revenue from the operations of the listed holding and listed subsidiary company must come from the same line of business, In addition, at least 50% of the net tangible assets of the listed holding company and the listed subsidiary must be invested in the same line of business. Further, the principal economic activities of both firms need to be under the same group as per the National Industrial Classification (NIC) Code. In case of change of name of the listed entities within the last one year, at least 50 per cent of the revenue, calculated on a restated and consolidated basis, for the preceding one full year has to be earned by it from the activity indicated by its new name. The listed holding company and the listed subsidiary have to provide self-certification with respect to both the companies being in the same line of business. Further, these need to be certified by the Statutory Auditor and Merchant Banker. To be eligible for the exemption under the route, shares of both companies should be listed for at least three years and the trading thereof should not have been suspended immediately before approval of the scheme by the Board of Directors of the companies.
- SEBI has issued a circular to reduces the time period for submitting an application to obtain NOC for release of 1% of the issued amount.
The time period for processing of NOC applications is also reduced to 2 months from the existing period of 4 months after listing for submitting the application. As per its earlier guidelines, the issuer company is required to submit an application on its letterhead addressed to SEBI in the specified format specified, after the lapse of 4 months from listing on the Exchange, which was the last to permit listing, for the purpose of obtaining the NOC. However, the time period of 4 months has now been reduced to 2 months. Further, the merchant banker shall submit a certificate confirming that all the SCSBs involved in the ASBA process have unblocked ASBA accounts. SEBI shall consider the application as incomplete if the application is not accompanied by a confirmation by merchant banker that all the accounts in ASBA have been ‘unblocked’.
RBI
The Annual Return on Foreign Liabilities and Assets are required to be filed by an Indian Company and LLP to RBI within the prescribed due date. This Return is filed Online on RBI Portal. The portal on which you can file the return is https://flair.rbi.org.in/fla/. Generally, the filing of the FLA annual return has to be done before the 15 of July of the respective year and must include data of FDI or ODI received or made by the company for the previous year or current financial year. Entities that 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 afterward they can file an FLA return. However, the entities which have already registered earlier may submit FLA 2021 using their earlier login credentials. The Companies which have received FDI and/or made FDI abroad in any of the financial year are required to submit FLA Return to RBI. The Financial Statement of the company for such a particular FY can exactly explain the status of Inward FDI or Outward FDI.
RBI has instructed all banks that all unclaimed maturity proceeds of Term Deposits (TDs) with banks will attract the rate of interest as applicable to savings accounts or the contracted rate of interest on the matured TD, whichever is lower. This directive comes in the backdrop of Savings Bank (SB) rates (on deposits above ₹1 lakh) of some of the small finance banks being higher than the TD rates in the less than one-year and above five years maturity buckets. Earlier, the rule on overdue domestic deposits stated that if a Term Deposit matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as applicable to savings deposits. The amendment comes as unclaimed deposits with banks have been growing every year.
IBBI
- IBBI has specified the format of CIRP 8 under IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which needs to be filed in respect of every CIRP ongoing or commencing on or after July 14, 2021.
Regulation 35A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) requires the Resolution Professional to form an opinion on transactions covered under sections 43, 45, 50 and 66 by 75 day, make a determination on such transactions by 115 day, and file an application before the Adjudicating Authority by the 135 day of the insolvency commencement date. Further regulation 40B(IB) of the CIRP Regulations require the resolution professional to file Form CIRP 8 intimating details of his opinion and determination under Regulation 35A, by 140 day of the insolvency commencement date. For effective monitoring, the amendment requires the RP to file Form CIRP 8 on the electronic platform of the Board, intimating details of his opinion and determination in respect of avoidance transactions.
Through this amendment, a new Regulation 4B has been inserted which deals with disclosure of change in name and address of the Corporate Debtor. Where a corporate debtor has changed its name or registered office address during the period of two years preceding the insolvency commencement date, the Interim Resolution Professional or Resolution Professional, as the case may be, shall disclose all the former name(s) and registered office address(es) so changed along with the current name and registered office address in every communication, record, proceeding or any other document. Further under Regulation 27 the resolution professional shall, within seven days of his appointment but not later than forty-seventh day from the insolvency commencement date, appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with Regulation 35.
The PPIRP is required to be completed within a period of 120 days from its commencement date. The RP shall either file the resolution plan for approval or an application for termination of PPIRP, with the AA within 90 days from the PPIRP commencement date. A model timeline along with the activities to be undertaken and responsibilities of Resolution Professionals, creditors, and corporate debtors are provided in the brochure. It is designed for the sole purpose of creating awareness on the subject and must not be used as a guide for taking or recommending any action or decision, commercial or otherwise. The released brochure presents step-by-step activities from initiation till the closure of PPIRP. It annexes: (i) a typical process flow of a PPIRP (Annexure A); (ii) an indicative list of responsibilities of the CD, the RP, and the creditors in respect of a PPIRP (Annexure B); (iii) a model timeline for completion of PPIRP within the prescribed period of 120 days from the date of its commencement (Annexure C); and (iv) a list of Forms (Annexure D).
DGFT
- DGFT extends Date for Mandatory Electronic Filing of Non-Preferential CoO through Common Digital Platform.
The DGFT has issued notice to provide that the option of submission and issuance of CoO (Non-Preferential) by the issuing agencies through their paper-based systems may continue further up to 30th September 2021. However, the mandatory electronic filing of the Non-Preferential Certificate of Origin (CoO) shall be from October 1, 2021. The objective of this platform is to provide an electronic, contact-less single window for the CoO related processes. However, on the request of certain Chambers/Associations, the existing system of submitting and processing non-preferential CoO applications in manual/paper mode is being allowed for the time being and the online system is not being made mandatory. All Agencies as notified under Appendix-2E are required to ensure the onboarding exercise is completed latest by September 30, 2021.
- The Directorate General of Foreign Trade has revised para 2.96 from the Handbook of procedures 2015-2020 which deals with intimation regarding a change in the constitution of business of RCMC holders.
Accordingly, clause 2.96(b) w.r.t the Export shall furnish quarterly return /details of his exports of different commodities to the concerned registering authority has been deleted. However, status holders shall also send quarterly returns to FIEO in the format specified by FIEO. Further, the format of ANF-2C of foreign trade policy 2015-2020 mandating submission of monthly return of export including NIL return to the registering authority by 15th of the month following the quarter deleted.
- DGFT has granted Extension in period of modification of IEC till 31.07.2021 and waiver of fees for IEC updation during July, 2021.
An IEC holder has to ensure that details in its IEC are updated electronically every year, during the April – June period. However, for the current year only, this period is extended by another month i.e., till 31st July, 2021. In cases where there are no changes in IEC details the same also needs to be confirmed online. Further, fee to be charged for modification of IEC done during the month of July, 2021 will remain ‘Nil”. Period of modification of IEC is extended for the year 2021-22 only till 31.07.2021, and no fee shall be charged on modifications carried out in IEC during the period upto 31st July, 2021.
MSME
- The Minister of Micro, Small and Medium Enterprise (MSME) has announced revised guidelines for MSMEs with inclusion of retail and wholesale trades as MSMEs.
With the revised guidelines the retail and wholesale trades will now be allowed to register on the Udyam Registration Portal. The Enterprises having Udyog Aadhaar Memorandum (UAM) under above three NIC Codes are now allowed to migrate to Udyam Registration Portal or they can file Udyam Registration afresh. The existing definition of MSMEs includes manufacturing and service enterprises whereas retail and wholesale trade were not classified under the same. However, benefits to Retail and Wholesale trade MSMEs are to be restricted to Priority Sector Lending only. Accordingly, the list of eligible additional activities under NIC Code 45- Wholesale and retail trade and repair of motor vehicle and motorcycles, NIC Code 46 – Wholesale trade except of motor vehicles and motor cycles and NIC Code 47 – Retail Trade Except of Motor Vehicles and motorcycles. Consequent upon above changes, para 2 including Table. 2 mentioned in O.M. no 5/2(1)/2020/E-P&G/Policy dated 01.12.2020, stands omitted.
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