Executive Summary

Income Tax

• Updated returns 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 the 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 a 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

• The 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 the 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 the 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 Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to subscription of shares. Further, the Ministry has inserted a new declaration in Form No. INC 32 (SPICe+), in part B, namely: “I, on behalf of proposed directors, hereby declare that the 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 the passing of Ordinary and Special resolution by the Companies under the Companies Act, 2013 read with the rules made thereunder on account of the 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 the 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: The information in this note is intended only to provide a general update on 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

Executive Summary

Income Tax

• Insertion of Additional list of conditions for furnishing mandatory return of Income.
• ITR forms have been notified for Assessment Year 2022-23.
• Relaxation from the requirement of TCS for a person who is not a resident in India and visiting India
• New Rule for Taxation of Income from retirement benefits account (RBA) maintained in a notified country

Goods & Services Tax (GST)

• New Functionalities made available for Taxpayers on GST Portal.
• BCD and AIDC from April 14, 2022, till September 30, 2022.

Companies Act 2013/ Other Laws.

• Ministry of Corporate Affairs (MCA) has once again extended the implementation of Audit Trail software to the financial year commencing on or after April 1, 2023.
• Ministry of Corporate Affairs (MCA) has notified the Companies Indian Accounting Standards Amendment Rules, 2022 w.e.f. April 01, 2022
• DGFT has extended the exemption of IGST and Compensation Cess for imports under the specified export incentive schemes till June 30, 2022.
• SEBI has issued a circular on a comprehensive risk management framework for Electronic Gold Receipts.

• CBDT vide Notification No. 37/2022, dated 21/04/2022, Notifies an additional list of conditions under section 139(1)(b) for furnishing mandatory return of income by inserting  new Rule 12AB in the Income Tax Rules, 1962 as below:

–  Annual Business Sales/Turnover/ Gross Receipts > Rs. 60 Lakh, or

– Annual Professional receipts > Rs. 10 Lakh, or

– TDS/TCS deducted >= Rs. 25,000 (Rs. 50,000 in case of senior citizen), or

– Annual deposit in one or more Saving accounts >= Rs. 50 Lakh.

• CBDT vide Notification No. 20/2022, dated 30/03/2022, has granted relaxation from the requirement of TCS to a person who is not a resident in India and visiting India.
• CBDT vide Notification No. 26/2022, 27/2022 dated April 05, 2022, prescribes the e-dispute Resolution scheme, 2022 and its rules along with the scope, a procedure for filing application, power, exchange of communication, and DRC rules.
• CBDT vide Notification No. 21/2022, 23/2022 dated March 30, 2022, and April 1, 2022, respectively,  notifies ITR forms for Financial Year 2021-22, corresponding to the assessment year 2022-23.
• CBDT vide Notification No. 24/2022 and 25/2022 dated April 4, 2022, notifies the new rule 21AAA for taxation of Income from retirement benefits account (RBA) maintained in a notified country along with Form 10EE for the purpose of section 89A of the Act relating to relief from taxation on income earned enables a resident person to exercise the option for deferral of taxation of income from such foreign RBA to the year of withdrawal/redemption from such RBA. Where a specified person has exercised the option provided under the Rule, the total income of such person for the year in which income is taxable shall not include the income as specified as per the rule if the option is exercised by the assessee through the form to be furnished electronically on or before the due date of filing original return of income u/s 139(1) of the Act.
• CBDT vide Notification No. 17/2020 dated March 29, 2022, and circular No. 7 of 2022 dated March 30, 2022, notifies extension in the time limit for taxpayers to intimate their Aadhaar number to the prescribed authority in the prescribed form and manner to avoid repercussions along with prescribed fees till March 31, 2023. After the allowed time period for the PAN of taxpayers who fail to intimate their Aadhaar, as required, shall become inoperative and all the consequences under the Act for not furnishing, intimating, or quoting the PAN shall apply to such taxpayers.

• CBIC introduced new functionalities made available for Taxpayers on GST Portal in March 2022 relating to the Home page, Registration, Return, Refund, and webinars.
• CBIC vide Notification No. 21/2022 – Customs dated April 13, 2022, exempts cotton from BCD (Basic Customs Duty) and AIDC (Agriculture Infrastructure & Development cess) from April 14, 2022, till September 30, 2022.
• CBIC vide Notification No. 19/2022 – Customs dated March 31, 2022, Seeks to extend the exemption from Integrated Tax and Compensation Cess by three (03) months i.e. up to 30.06.2022 on goods imported against AA/EPCG authorizations.
• CBIC vide Notification No. 18/2022 – Customs dated March 31, 2022 Amendment to Notification No. 52/2003 Customs dated 31.03.2003 for extending exemption from IGST and Compensation Cess to EOUs on imports till 30.06.2022.
• CBIC vide Notification No. 11/2022 – Customs (ADD) dated March 31, 2022, Seeks to extend the levy of Anti Dumping Duty on jute products originating in or exported from Nepal and Bangladesh.

MCA has issued a notification relating to the Companies (Accounts) Second Amendment Rules, 2022 to further amend the provisions of the Companies (Accounts) Rules, 2014, which shall come into force with effect from the date of its publication in the Official Gazette i.e 31-03-2022.

• MCA has once again extended the implementation of Audit Trail software to the financial year commencing on or after April 1, 2023.  Earlier the same was extended to April 1, 2022, from April 1, 2021. Further, MCA has also extended the due date of filing Form CSR-2 to May 31, 2022, from March 31, 2022. All companies which are eligible for CSR are required to file Form CSR-2 and shall ensure to file it separately for the preceding financial year i.e., 2020-2021, on or before May 31, 2022, after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as is applicable.
•  MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2022 which shall come into force with effect from April 01, 2022.

These amendments are issued in consultation with the National Financial Reporting Authority (NFRA) to provide clarifications regarding Annual Improvements to Ind AS (2021). An entity shall apply Annual Improvements to Ind AS (2021) to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. An entity shall apply that amendment for annual reporting periods beginning on or after 1st April 2022. The notification has brought a few additions and substitutions in Indian Accounting Standards (Ind AS), particularly in Ind AS 101- First-time Adoption of Indian Accounting Standards, Ind AS 103- Business Combinations, Ind AS 109- Financial Instruments, Ind AS 16- Property, Plant and Equipment, Ind AS 37- Provisions, Contingent Liabilities and Contingent Assets and Ind AS 41- Agriculture.

• MCA has notified the Companies (Management and Administration) Amendment Rules, 2022 to further amend the Companies (Management and Administration) Rules, 2014 which shall come into force on the date of their publication in the Official Gazette i.e 06-04-2022.

Through this amendment, MCA has inserted a new Rule 14(3) to restrict the inspection of register or index or return in respect of the members of a Company. According to the Amendment, particulars of the register or index or return in respect of the members of a Company related to Address or Registered Address (in case of a body corporate); e-mail ID; Unique Identification Number; PAN Number, shall not be made available for any inspection under sub-section (2) or for taking extracts or copies under sub-section (3) of Section 94 of the Companies Act.

• MCA has notified the Companies (Incorporation) Amendment Rules, 2022 which shall come into force from the date of their publication in the Official Gazette i.e 08-04-2022.

Amendments are carried out in Rule 12 of the Companies (Incorporation) Rules, 2014 to insert a new proviso to provide that in case of a Company being incorporated as a Nidhi, the declaration by the Central Government under Section 406 of the Act shall be obtained by the Nidhi before commencing the business and a declaration in this behalf shall be submitted at the stage of incorporation by the company. Through this amendment Form INC – 20A is also revised to specifically capture the notification declaration as a Nidhi Company as one of the mandatory attachments.

SEBI

• SEBI has issued guidelines for Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for transfer of securities towards deliveries/ settlement obligations and pledging/re-pledging of securities.

These Guidelines are issued to curb possible misuse of Power of Attorney (PoA) given by clients to stockbrokers. The fresh guidelines, which will be effective from July 1, also comes against the backdrop of instances of misuse of PoAs. Under DDPI, clients can explicitly agree to authorize the stockbroker and depository participant to access their beneficiary ownership account for the limited purpose of meeting pay-in obligations for the settlement of trades executed by them, according to a circular. The use of DDPI will be limited only to two purposes. One is for the transfer of securities held in the beneficial owner account of the client towards stock exchange-related deliveries or settlement obligations arising out of trades executed by such a client. The second purpose will be for pledging/re-pledging of securities in favor of the trading member(TM)/clearing member(CM) for the purpose of meeting the margin requirements of the client. Further, the existing PoAs will continue to remain valid till the time client revokes the same. Thus, the stockbroker and depository participant will not directly or indirectly compel the clients to execute the DDPI or deny services to the client if the client refuses to execute the DDPI.

• SEBI has issued a notification to extend the timeline for implementation of Standardisation of Rating Scales Used by Credit Rating Agencies.

SEBI in its earlier circular advised the credit rating agencies to either align their rating scales with the rating scales prescribed under the guidelines of respective financial sector regulator or authority in terms of Regulation 9(f) of SEBI (Credit Rating Agencies) Regulations, 1999, or in absence of the same, follow rating scales prescribed by the Board vide circular dated June 15, 2011, June 13, 2019, or any other circular issued by the Board from time to time by March 31, 2022. However, based on the Representation received from credit rating agencies requesting an extension of the date of applicability of the above provisions, it has been extended till June 30, 2022, instead of March 31, 2022.

• SEBI has revised the limits for investors applying in public issues of equity shares and convertibles through Unified Payment Interface (UPI) for application amount up to Rs 5 lakh

SEBI has also asked the investors to provide their UPI ID in the bid-cum-application form submitted with any of these entities including syndicate member, stockbroker, depository participant, and registrar to issue and share transfer agent. The decision has been taken after the National Payments Corporation of India (NPCI) reviewed the systemic readiness required at various intermediaries to facilitate the processing of applications with increased UPI limits. Earlier in December 2021, NPCI enhanced the per transaction limit in UPI from Rs 2 lakh to Rs 5 lakh for UPI-based Application Supported by Blocked Amount (ASBA) in Initial Public Offers (IPOs). The new guidelines will come into force for public issues opening on or after May 1, 2022.

• SEBI has issued Clarification on the applicability of Regulation 23(4) read with Regulation 3(3)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in relation to Related PartyTransactions

These clarifications are on the period of validity of the omnibus approval where the transactions are material and shareholders ’approval for material-related party transactions. As per Regulation 23(3)(e) of the SEBI LODR, the omnibus approval granted by the Audit Committee shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year. Regulation 23(4) of the SEBI LODR requires shareholder approval for material Related Party Transactions and Section 96(1) of the Companies Act, 2013 specifies that the time gap between two Annual General Meetings cannot be more than fifteen months, in order to facilitate listed entities to align their processes to conduct AGMs and obtain omnibus shareholders’ approval for material RPTs, it has been decided to specify that the shareholders’ approval of omnibus RPTs approved in an AGM shall be valid up to the date of the next AGM for a period not exceeding fifteen months. In the case of omnibus approvals for material RPTs, obtained from shareholders in General meetings other than AGMs, the validity of such omnibus approvals shall not exceed one year.

• SEBI has released the Standard Operating Procedures (SOP) for dispute resolution available under the stock exchange arbitration mechanism for disputes between a listed company and its shareholder(s)/investor(s).

Regulation 40 of SEBI LODR and bye-laws, listing agreements & regulations of the stock exchanges provide for dispute resolution under the stock exchange arbitration mechanism for disputes between a listed company and its shareholder. The stock exchanges to put in place by June 01, 2022, Standard Operating Procedures (SOP) for operationalizing the resolution of all disputes pertaining to or emanating from investor services such as transfer/transmission of shares, Demat/remat, issue of duplicate shares, transposition of holders, etc. and investor entitlements like corporate benefits, dividend, bonus shares, rights entitlements, credit of securities in the public issue, interest /coupon payments on securities, etc. Further, in respect of disputes in matters where Registrar and Share Transfer Agents (RTA) are offering services to shareholders on behalf of listed companies, the RTAs must continue to be subjected to the stock exchange arbitration mechanism. The recognized stock exchanges are directed to bring the provisions of this circular and the SOP put in place in this regard to the notice of listed companies and also to disseminate the same on their website.

• SEBI has issued a circular on a comprehensive risk management framework for Electronic Gold Receipts.

The circular pertaining to Electronic Gold Receipts (EGRs) covers various aspects, including margin collection, provision of early pay-in of funds for EGR, short-collection or non-collection of client margins, risk reduction mode, and settlement. As per the latest circular, the core of the risk management system is the liquid assets deposited by trading members with the Clearing Corporation (CC). These liquid assets will cover the requirements – Mark to Market (MTM) losses (MTM losses on outstanding settlement obligations of the member); Value at Risk (VaR) margins (VaR to cover potential losses for 99.9 percent of the days); and extreme loss margins (margins to cover the expected loss in situations that lie outside the coverage of the VaR margins). Stock exchanges and clearing corporations, in all segments, in consultation with one another, have been asked to devise a standard framework for the imposition of fines on the TM/CM for incorrect/false reporting of margins collected from the clients. The amount of fine to be charged upon the member may extend to 100 percent of such false/ incorrect amount of margin and/or suspension of trading for an appropriate number of days. With respect to risk reduction mode, the clearing corporations will have to ensure that stockbrokers and clearing members are mandatorily put in risk-reduction mode when 90 percent of the member’s collateral available for adjustment against margins gets utilized on account of trades that fall under a margin system including crystalized losses. The circular will come into force with immediate effect.

RBI

• RBI has issued a notification relating to the Compliance Function and Role of the Chief Compliance Officer (CCO) in NBFCs. 

The Non-banking finance companies in the Upper Layer and Middle Layer should put in place a board-approved policy and compliance function including the appointment of a Chief Compliance Officer latest by April 1, 2023, and October 1, 2023, respectively. As part of the overall structure for corporate governance, the compliance function serves a critical role. Accordingly, it has been decided to introduce certain principles, standards, and procedures for Compliance Function in NBFC-UL and NBFC-ML, keeping in view the principles of proportionality. A copy of this circular should be placed in the immediate next meeting of the Board of Directors for information and devising an implementation strategy, under the Board’s supervision, in a time-bound manner. Further, the board or board committee should prescribe the periodicity for review of compliance risk. The Chief Compliance Officer (CCO) would be the nodal point of contact between the NBFC and the regulators and supervisors and would be a participant in the structured or other regular discussions held with RBI, according to the circular. NBFCs would be expected to carry out an annual compliance risk assessment to identify and assess major compliance risks faced by them and prepare a plan to manage the risks. The annual review should cover aspects including compliance failures, if any, during the preceding year and consequential losses and regulatory action, the listing of all major regulatory guidelines issued during the preceding year and steps taken to ensure compliance; compliance with fair practices codes and adherence to standards set by self-regulatory bodies and accounting standards; and progress in the rectification of significant deficiencies and implementation of recommendations pointed out in various audits and RBI inspection reports.

Competition Commission of India

•  CCI has issued notified the Competition Commission of India (General) Amendment Regulations, 2022, which shall come into force on the date of their publication in the Official Gazette i.e 08-04-2022.

The amendment provides that the Commission shall maintain the confidentiality of the identity of an Informant on a request made to it in writing. A party seeking confidentiality over the information or the documents furnished by it shall set out cogent reasons for such treatment and shall self-certify that making the document or documents or information or a part or parts thereof public will result in disclosure of trade secrets or destruction or appreciable diminution of the commercial value of any information or can be reasonably expected to cause serious injury. Further, the party shall confirm the following, along with the date on which such confidential treatment shall expire, on a self-certification basis that the information is not available in the public domain; that the information is known only to limited employees, suppliers, distributors and others involved in the party’s business; that adequate measures have been taken by the party to guard the secrecy of the information; that the information cannot be acquired or duplicated by others.

DGFT

• DGFT has extended the exemption of IGST and Compensation Cess for imports under the specified export incentive schemes (i.e. Advance Authorisation, Export Promotion of Capital Goods and Export oriented units, etc.) till June 30, 2022.

Further, CBDT has also extended the exemption from payment of integrated tax and compensation cess on imports made under the Advance Authorisation (AA) and Export Promotion Capital Goods (EPCG) scheme from 31 March 2022 to 30 June 2022. A similar extension is also given for imports made by Export Oriented Units, Electronic Hardware Technology Parks, Software Technology Parks, and Bio-Technology Parks. The exemptions under Foreign Trade Policy 2015-20 include exemption from Integrated Tax and Compensation Cess under Advance Authorization under Para 4.14 of FTP 2015 -20 is extended up to 30.06.2022, Exemption from Integrated Tax and Compensation Cess under EPCG scheme under Para 5.01 (a) of FTP 2015-20 is extended up to 30.06.2022 and Exemption from Integrated Tax and Compensation Cess under EOU scheme under Para 6.01(d)(ii) of FTP 2015-20 is extended up to 30.06.2022.

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 25.03.2022 till 25.04.2022.

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

• Concessional Tax Rates u/s 115BAC of the Income-tax Act

• 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.

• The Ministry of Corporate Affairs has extended the period of exemption given to every person or enterprise who is a party to a combination that adversely affects the competition in India from compliance under the Competition Act. 

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

• SEBI has issued a Notification regarding Change in control of the Sponsor and/or Manager of the Alternative Investment Fund involving the scheme of arrangement under the Companies Act, 2013 which shall come into force on April 1, 2022.

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 issued a circular to further extend the coverage of automation of disclosure requirements under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011-System Driven Disclosures to promote Ease of doing business. 

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.

• SEBI has issued a circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper.

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.

• SEBI has issued a clarification on the Discontinuation of usage of pool accounts for transactions in the units of Mutual Funds. 

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.

• SEBI has issued a circular to revise the Orders Per Second limit for algorithmic trading in the Commodity Derivatives Segment of the Stock Exchange. 

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 issued a circular to revise the operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper for Standardization of industry classification. 

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.

• SEBI has issued a notification for the SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2022 to further amend the Securities and Exchange Board of India (Listing Obligations and disclosure requirements) Regulations, 2015 which shall come into force on the date of their publication in the Official Gazette i.e 22-03-2022. 

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.

• SEBI has issued Consultation Paper Streamlining the Timelines followed by Open Offers and Buy-back Tender Offers. 

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

• RBI has extended the Interest Equalization Scheme for Pre and Post Shipment Rupee Export Credit (‘Scheme’) up to March 31, 2024, or till further review, whichever is earlier. 

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 clarified that it has not authorized any third party to assist in the redressal of grievances of the central bank’s regulated firms, as alleged in messages distributed through some areas of social media. 

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 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.

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 Ministry of Labour and Employment has notified the implantation of the National Career Service (NCS) Project to provide a variety of employment related services like job search and matching, career counseling, vocational guidance, information on skill development courses, etc. 

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 Ministry of Micro, Small & Medium Enterprises has extended the Credit Guarantee Scheme for Subordinate Debt up to March 31, 2022.

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

• 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. 

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.

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It was mandated by DGFT that all IEC holders have to ensure that details in their IEC are updated electronically every year during the April-June period (for which no user charges were to be borne by the IEC holder). All IECs which have not been updated after 01.07.2021 shall be de-activated with effect from 01.02.2022.

For more details please refer to the update bulletin for January 2022 along with the Monthly compliance calendar for February 2022.

Updates December Month

Latest Update:

Ministry of Finance vide Press Release dated 24-11-2021, informed that India & USA agree on a transitional approach on Equalisation Levy 2020. As per the release, India and United States have agreed that the same terms that apply under the October 21 Joint Statement shall apply between the United States and India with respect to India’s charge of 2% equalization levy on e-commerce supply of services and the United States’ trade action regarding the said Equalisation Levy. However, the interim period that will be applicable will be from 1st April 2022 till implementation of Pillar One or 31st March 2024, whichever is earlier

For more details please refer to the update bulletin for November 2021 along with the Monthly compliance calendar for December 2021.

Latest Update:

Ministry of Corporate Affairs(“MCA”)  by General Circular No. 17/2021, dated 29th October, 2021 provided the relaxation on levy of Additional fees in filing of e- forms AOC-4, AOC-4(XBRL), AOC-4(CFS), AOC-4(Non- XBRL) and MGT-7/ MGT-7A for the financial year ended on 31.03.2021.  Due Date for filing of form AOC-4/AOC-4(XBRL)/AOC-4(CFS) is within 30 days from the date of Annual General Meeting of the Company & the due date of filing of Form MGT-7/ MGT-7A is 60 days from the date of Annual General Meeting. It has been issued that no additional fee shall be levied upto 31.12.2021 for filing of e- forms AOC-4, AOC-4(XBRL), AOC-4(CFS), AOC-4(Non- XBRL) and MGT-7/ MGT-7A in respect of the financial year ended on 31.03.2021.

For more details please refer the update bulletin for October 2021 along with Monthly compliance calendar for November 2021.

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Executive Summary

Income Tax

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

Goods & Services Tax (GST)

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

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

Companies Act 2013/ Other Laws

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

Income Tax

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

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

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

Goods & Services Tax (GST)

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

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

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

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

1. Recommendations relating to GST rates on Goods and Services

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

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

3. Recommendations relating to GST law and procedure

Measures for Trade facilitation:

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

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

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

Other Recommendations has been received as below:

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

Companies Act 2013

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

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

Other Laws.

SEBI

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

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

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

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

RBI

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

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

National Company Law Tribunal

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

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

IBBI

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

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

DGFT

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

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

FEMA

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

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

MSME

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

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

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

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

IFSCA

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

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

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Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates are for the period 26.08.2021 till 25.09.2021.