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

Executive Summary

Income Tax

  • Updated return of income can be filed in Form ITR-U relating to AY 2020-2021 and thereafter.
  • New transactions notified for quoting PAN are mandatory under rule 114BA.
  • Guidelines are provided under clause (23FE) of section 10 of the Income-tax Act.
  • Circular regarding amendment under section 206AB and 206CCA of the Act and its functionalities. 

Goods & Services Tax (GST) & Customs

  • Availability of Annual Aggregate Turnover (AATO) functionality on the portal for the FY 2021-22 
  • Temporary measures provided to taxpayers who have to report goods at 6% can select a 5% heading and then manually increase the system computed tax amount to 6%
  • Enabling export of Bangladesh goods to India by rail in closed containers. 

Companies Act 2013/ Other Laws.

  • Ministry of Corporate Affairs (MCA) notifies Companies (Incorporation) Second Amendment Rules, 2022.
  • Ministry of Corporate Affairs (MCA) notifies Companies (Share Capital and debentures) and (Prospectus and Allotment of Securities) Amendment Rules, 2014.
  • Ministry of Corporate Affairs (MCA) issued clarification of holding AGM through Video Conference (VC) or Other Audio Visual Means (OAVM)
  • Ministry of Corporate Affairs (MCA) issued a clarification on the passing of Ordinary and Special resolution by the Companies under the Companies Act, 2013
  • Relaxation has been given from some compliance under certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations

Income Tax

  • CBDT vide Notification No. 48/2022, dated 29/04/2022, a new rule inserted i.e.12AC stated that the updated return of income to be furnished by eligible person u/s 139(8A), relating to AY 2020-21 and subsequent years, shall be in the Form ITR-U and be verified in the indicated manner.
  • CBDT vide Notification No. 53/2022, dated 10/05/2022, inserted a new rule i.e.114BA for stating some transactions where quoting of PAN is mandatory. Every person should quote his PAN or Aadhar number for the following transactions:

a) cash deposit or deposits aggregating to twenty lakh rupees or more in a financial year, in one or more accounts of a person with a banking company or a co-operative bank or a Post Office;

b) cash withdrawal or withdrawals aggregating to twenty lakh rupees or more in a financial year, in one or more accounts of a person with a banking company or a co-operative bank or a Post Office;

c) opening of a current account or cash credit account by a person with a banking company or a co-operative bank or a Post Office.

Further, the person receiving the document i.e. a banking company or a co-operative bank, or a Post Master General shall ensure that the said number has been duly quoted and authenticated.

  • CBDT vide Circular No. 9/2022, dated 09/05/2022, has provided the guidelines under clause (23FE) of section 10 of the Income-tax Act, providing for an exemption to wholly owned subsidiaries of Abu Dhabi Investment Authority (ADIA), sovereign wealth funds (SWF) and pension funds (PF) on their income in the nature of dividend, interest and long-term capital gains arising from the investment made in infrastructure in India, during the period beginning with 01.04.2020 and ending on 31.03.2024 subject to fulfillment of certain conditions.
  • CBDT vide Circular No. 10/2022, dated 17/05/2022, explained the use of functionality under sections 206AB and 206CCA of the Income-tax Act. It can be seen that the tax deductor or collector was required to do the due diligence of satisfying himself if the deductee or the collected was a specified person for the applicability of a higher rate of tax. In order to ease this compliance, burden the Income-tax Department came out with the functionality “Compliance Check for Section 206AB & 206CCA”, which was made available through reporting portal of the Income-tax Department. It enabled the tax deductor or collector to feed the single PAN (PAN search) or multiple PANs (bulk search) of the deductee or collected. The functionality then gave a response if such deductee or collected was a specified person.

    Further, the non-applicability of section 206AB & 206CCA list is increased and these sections are added – 194IA, 194IB, 194M, 194S relating to payment on transfer of immovable property, payment of rent by certain individuals / HUF, payment of works contract/commission/brokerage/fee for technical services by individuals / HUFs > Rs.50 lakh a year and payment in lieu of transfer of virtual digital asset (VDA) respectively.

The definition of a specified person is also amended as below:

  • Condition for default in filing tax return has been reduced to last 1 year.
  • The monetary limit of TDS/TCS of Rs.50,000 shall apply for 1 year.

Goods & Services Tax

  • Functionality of Annual Aggregate Turnover (AATO) for the FY 2021-22 has been made live on taxpayers’ dashboards where taxpayers can view the exact Annual Aggregate Turnover (AATO) for the previous Financial Year (FY) along with facility of turnover updation as well.
  • CBIC vide Notification No. 07/2022, dated 26 May 2022, notifies to waive off late fee under section 47 for the period from 01.05.2022 till 30.06.2022 for delay in filing FORM GSTR-4 for FY 2021-22.
  • CBIC vide Circular No. 08/2022-Customs, dated 17 May 2022, Export of Bangladesh goods to India by rail in closed containers is enabled. The proper procedure is prescribed for movement and clearance of goods imported in containers on trains returning from Bangladesh.
  • A new tax rate reporting of 6% IGST or 3% CGST+ 3% SGST has been introduced on certain goods vide Notification No. 02/2022 dated 31st March 2022. Changes are being made to the GST portal to include this rate in GSTR-1. As a temporary measure, taxpayers who have to report goods at this rate may do so by reporting the entries in the 5% heading and then manually increasing the system computed tax amount to 6%.

 

 

 

Companies Act, 2013

  • The Companies (Incorporation) Second Amendment Rules, 2022 (May 20, 2022)

The Ministry of Corporate Affairs (MCA) vide its Notification dated May 20, 2022 has notified the Companies (Incorporation) Second Amendment Rules, 2022 which shall come into force with effect from June 01, 2022. As per the amendment, Form No. INC-9 (Declaration by Subscribers and First Directors) is substituted. The substituted Form inter alia consists declaration in respect of compliance under Foreign Exchange Management (Non-debt Instruments) Rules by inserting below checkboxes: I am required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to subscription of shares and the same has been obtained, and is enclosed herewith. or I am not required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to subscription of shares. Further, the Ministry has inserted new declaration in Form No. INC 32 (SPICe+), in part B, namely: “I, on behalf of proposed directors, hereby declare that person seeking appointment is a national of a country which shares a land border with India, necessary security clearance from Ministry of Home Affairs, Government of India shall be attached with the consent.

  • The companies (Share Capital and debentures) Amendment Rules, 2014 (May 04, 2022) 

The Ministry of Corporate Affairs (MCA) vide its Notification dated May 04, 2022, has notified the Companies (Share Capital and debentures) Amendment Rules, 2014 which shall come into force on the date of its publication in the Official Gazette. According to the amendment, in the annexure, in Form No. SH-4 (Securities Transfer Form), before the enclosures, the following declaration shall be inserted, namely:- Transferee is not required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the transfer of shares; or Transferee is required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) rules, 2019 prior to the transfer of shares and the same has been obtained and is enclosed herewith.

  • The Companies (Prospectus and Allotment of Securities) Amendment Rules, 2022 (May 05, 2022)

 The Ministry of Corporate Affairs (MCA) vide its Notification dated May 05, 2022, has notified the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2022 which shall come into force on the date of its publication in the Official Gazette. The amendments inter alia provide i) Insertion of the new proviso to Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 stating that no offer or invitation of any securities under rule 14 shall be made to a body corporate incorporated in, or a national of, a country which shares a land border with India, unless such body corporate or the national, as the case may be, have obtained Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and attached the same with the private placement offer cum application letter. ii) In Annexure, in Form PAS-4, in Part-B, after a serial number (vii), the following shall be inserted, namely: – “(viii) Tick whichever is applicable:- a. The applicant is not required to obtain Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to subscription of shares. b. The applicant is required to obtain Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to subscription of shares and the same has been obtained, and is enclosed herewith.”

  • The Ministry of Corporate Affairs (MCA) vide Circular Nos. 02/2022

Clarification of holding AGM through Video Conference (VC) or Other Audio Visual Means (OAVM), It has been decided to conduct to allow companies whose AGMs are due in the year 2022, to conduct their AGMs on or before 31st December 2022 in accordance with the requirements laid down in Para 3 and Para 4 of the General Circular No 20/2020 dated 05.05.2020. It is clarified that this circular shall not be constructed as conferring any extension of the time for holding of AGMs by the Companies Act 2013.

  • The Ministry of Corporate Affairs (MCA) vide Circular Nos. 03/2022

Clarification on passing of Ordinary and Special resolution by the Companies under the Companies Act, 2013 read with the rules made thereunder on account of COVID-19 Extension of timeline, It has been decided to conduct their EGMs through Video Conference or Other Audio Visual means (OAVM) or transit items through the postal ballot in accordance with framework provided to allow companies whose AGMs are due in the year 2022, to conduct their AGMs on or before 31st December 2022 in accordance with the requirements laid down in Para 3 and Para 4 of the General Circular No 20/2020 dated 05.05.2020. It is clarified that this circular shall not be constructed as conferring any extension of the time for holding of AGMs by the Companies Act 2013.

Other Laws

SEBI
  • Simplification of procedure and standardization of formats of documents for transmission of securities (May 18, 2022) As an ongoing measure to enhance ease of dealing in securities markets and with a view to making the transmission process more efficient and investor-friendly, the procedure for transmission of securities has been further simplified. For ease of reference, a ready reckoner listing out the documents required for transmission of securities, in case of demise of the sole holder, has been provided. SEBI has also provided the Operational Guidelines for processing investor’s service requests for the purpose of transmission of securities.
  • Relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (May 13, 2022) SEBI has provided the relaxation up to December 31, 2022, from Regulation 36 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) which requires sending hard copy of the annual report containing salient features of all the documents prescribed in Section 136 of the Companies Act, 2013 to the shareholders who have not registered their email addresses. Further, the notice of the Annual General Meeting published by advertisement in terms of Regulation 47 of LODR Regulations, shall contain a link to the annual report, so as to enable shareholders to have access to the full annual report. Further provided that, the requirement of sending proxy forms under Regulation 44 (4) of the LODR Regulations is dispensed with up to December 31, 2022, in case of general meetings held through electronic mode only.
  • Relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 – for entities with listed nonconvertible securities (May 13, 2022). SEBI has provided relaxation up to December 31, 2022, from the requirements of Regulation 58 (1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which prescribes that an entity with listed non-convertible securities shall send a hard copy of statement containing the salient features of all the documents, as specified in Section 136 of Companies Act, 2013 and rules made thereunder to those holders of non-convertible securities who have not registered their email address(es) either with the listed entity or with any depository.

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 25.06.2022 till 25.07.2022


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