Executive Summary

Income Tax

• Amendment in Rule 12(1) & (5) related to Income Tax Return forms.
• Extensions in various dues dates considering the glitches in Income tax portal 2.0
• Insertion of New rule & Forms to give effect the amendment made by Finance Act 2021 in MAT provisions.

Goods & Services Tax (GST)

• Registered person having turnover of more than 5 Cr shall require to submit self-certified Reconciliation statement.
• Taxpayers having Aggregate Annual Turnover up to Rs. 2 crores exempt from the requirement of furnishing annual return for FY 2020-21.
• Applicability of section 110 and 111 of the Finance Act, 2021 w.e.f. from 01st August 2021.

Companies Act 2013/ Other Laws

• MCA has issued a general circular to release the Frequently Asked Questions (FAQs) on Corporate Social Responsibility (CSR).
• MCA has notified the Limited Liability Partnership (Amendment) Act, 2021 which shall come into force on such date as the Central Government may, by notification in the Official Gazette.

MCA through its Press Release has stated various disclosures to be made by companies in their financial statements under the Schedule III of the Companies Act, 2013 effective from April 01, 2021, which were amended vide notification dated March 24, 2021

Detailed

INCOME TAX

CBDT vide notification dated 82/2021, Dated 27^th July 2021 amending the rule 12 (1) & (5), that deals with “Return of income”.  Rule 12(1) was amended considering the section 148. Also amends Rule 12(5) which shall now read as “Where a return of income relates to the assessment year commencing on the 1st day of April, 2020 or any earlier assessment year, it shall be furnished in the appropriate form as applicable in that assessment year.

• CBDT vide Circular No. 15/2021 dated 03^rd August 2021 has decided to further extend the due dates for electronic filing of such Forms vide Circular No. 15/2021 dated 3-8-2021. The details are as under:

This is also clarified that above said forms, e-filed, after the expiry of time limits provided as per Circular No.12 of 2021 dated 25.06.2021 or as per the relevant provisions, till date, will stand regularised accordingly.

• CBDT vide Notification No. 92/2021 dated 09/08/2021 has introduced new Rule 10RB giving effect to the newly added sub-section (2D) of section 115JB to rationalize MAT provisions considering the adjustment to book profits on account of secondary adjustment and APAs.

As per Rule 10RB, MAT payable u/s 115JB by the company will be reduced by the relief calculated by below formula:

(A-B) – (D-C),

where,

A = tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of the previous year including the past income;

B = tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of the previous year after reducing the book profit with the past income;

C = Aggregate of tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of those past year or years to which the past income belongs;

D = Aggregate of tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of past year or years, referred to in item C, after increasing the book profit with the relevant past income of such year or years:

Provided that if the value of (A-B)-(D-C) in the formula is negative, its value shall be deemed to be zero.

For availing relief under the said rule 10RB, CBDT has introduced Form 3CEEA which needs to be uploaded and signed / verified electronically at the IT portal.

Goods & Services Tax

• CBIC vide Notification No. 31/2021 – Central tax dated 30^th July 2021 exempt taxpayers having Aggregate Annual Turnover up to Rs. 2 crores from the requirement of furnishing annual return for FY 2020-21.
• CBIC vide Notification No. 30/2021 – Central tax dated 30^th July 2021 amends the provision specifies a registered person having turnover of more than 5 Cr shall not require to get his accounts audited, as only self- certified Reconciliation statement shall be submitted with in prescribed Time limit.
• CBIC vide Notification No. 29/2021 – Central tax dated 30^th July 2021 notifies section 110 of the Finance Act, 2021 omits section 35 of CGST Act and section 111 of the Finance Act, 2021 to amend section 44 of CGST Act w.e.f. 01st August 2021.
• CBIC vide Notification no. 39/2021- customs dated 19^th August 2021 amends notification No. 57/2000-Customs dated 08.05.2000 provided that for the cases where the last date of exports falls between the 1st February, 2021 and the 30th June, 2021, the last date of exports stands extended by six months.
• CBIC vide Circular no. 19/2021- customs dated 16^th August, 2021 specify to amend in circular No. 38/2016 -Customs with the insertion of a new entry 5(d) to enable Pr. Commissioners/Commissioners of Customs to decide the amount of security required in certain cases of provisional assessments.
• CBIC vide Circular no. 20/2021- customs dated 16^th August, 2021 de-notifies the facility of Inland Container Depots/Container Freight Stations/Air Freight Stations registration fails to meet the prescribed minimum threshold requirements.
• CBIC vide Circular no. 18/2021- customs dated 31^st July, 2021 makes amendment in authorized economic operator programme relating to Auto-Renewal of AEO-T1 validity for continuous certification based on continuous compliance monitoring.
• CBIC vide Notification 41/2021 – (Customs ADD) dated 31^st July 2021 Seeks to further amend notification No. 23/2016-Customs (ADD) dated 6th June, 2016 to extend the levy of Anti-Dumping duty on Polytetrafluoroethylene originating in or exported from Russia, up to and inclusive of 30th November, 2021.
• CBIC vide Notification 42/2021 – (Customs ADD) dated 01^st August 2021 Seeks to amend notification No. 48/2017-Customs (ADD), dated the 9th October, 2017 to extend the levy of Anti-Dumping duty on ‘ Wire Rod of Alloy or Non-Alloy Steel ‘ originating in or exported from China PR up to and inclusive of 31st January, 2022.
• CBIC vide Notification 43/2021 – (Customs ADD) dated 09^th August 2021 Seeks to levy anti-dumping duty on imports of Phthalic Anhydride (PAN) originating in or exported from China PR, Indonesia, Korea RP and Thailand for a period of five years.
• CBIC vide Notification 44/2021 – (Customs ADD) dated 12^th August 2021 Seeks to rescind notification No. 43/2016-Cus (ADD) dated 8th August, 2016 to remove levy of ADD on Viscose Staple Fibre (VSF) originating in or imported from China PR and Indonesia.
• CBIC vide Notification 45/2021 – (Customs ADD) dated 24^th August 2021 Seeks to rescind notification No. 14/2016-Cus (ADD) dated 21st April, 2016 to remove levy of ADD on Barium Carbonate originating in or imported from China PR.

Companies Act, 2013

• MCA has issued a general circular to release the Frequently Asked Questions (FAQs) on Corporate Social Responsibility (CSR).

The broad framework of CSR has been provided in Section 135 of the Companies Act, 2013, Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. MCA had also issued clarifications including FAQs from time to time on various issues concerning CSR and notified the amendments in Section 135 of the Act as well in the CSR Rules on 22nd January 2021 with an aim to strengthen the CSR ecosystem, by improving disclosures and by simplifying compliances. In response to such amendments, Ministry has received several references and representations from stakeholders seeking clarifications on the various issues related to CSR. Accordingly, in suppression of clarifications and FAQs issued vide General Circular no. 21/2014 (dated 18th June 2014), 36/2014 (dated 17th September 2014), 01/2016 (dated 12th January 2016) ,05/2016 (dated 16th May 2016), the clarification issued vide letter dated 25.01.2018 and General Circular no. 06/2018 (dated 28th May 2018), a set of FAQs along with the response of the Ministry is provided herewith at Annexure for better understanding and facilitating effective implementation of CSR. Through these FAQs, MCA has clarified issues relating to the Applicability of CSR, CSR Framework, CSR Expenditure, CSR Activities, CSR Implementation, Ongoing Project, Treatment of Unspent CSR Amount, CSR Enforcement, Impact Assessment and CSR Reporting & Disclosure.

• MCA has notified the Companies (Creation and Maintenance of databank of Independent Directors) Second Amendment Rules, 2021 which shall come into force on the date of their publication in the Official Gazette i.e., 19-08-2021.

The amendments are carried out to insert Rule 6 in the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 and the Schedule of Annual Report on Capacity Building of Independent Directors. Accordingly, the institute shall within sixty days from the end of every financial year send an annual report to every individual whose name is included in the data bank and to every company in which such individual is appointed as an independent director in the format provided in the Schedule to these Rules. The schedule consists of various entries namely Director’s Name, DIN Number, IDDB Registration Number, Subscription (1 year or 5 year or Lifetime), Membership Validity, Online Self-Assessment Proficiency Test Status (N.A if exempted), Participation during the Financial Year, and Total Participation.

• MCA has notified the Limited Liability Partnership (Amendment) Act, 2021 which shall come into force on such date as the Central Government may, by notification in the Official Gazette.

Both houses of Parliament have approved LLP Amendment Bill, 2021. Finally, the same got the approval of President of India on 13th August 2021 and become LLP Amendment Act, 2021. MCA has introduced the concept of “small, limited liability partnership” in line with the concept of “small company” under the Companies Act, 2013. Certain sections of the Act are amended so as to convert offenses into civil defaults and to convert the nature of punishment provided in the said sections from fines to monetary penalties. A new section 34A has been inserted to empower the Central Government to prescribe the “Accounting Standards” or “Auditing Standards” for a class or classes of limited liability partnerships. Further, powers under Section 39 of the Act relating to “compounding of offenses” is granted to the Regional Director to compound any offense under this Act which is punishable with a fine only. A new section 67A empowering the Central Government to establish or designate as many “Special Courts” as may be necessary for the purpose of providing speedy trial of offenses under the Act, has been inserted.

• MCA has notified the Companies (Appointment and Qualification of Directors) Amendment Rules, 2021 to further amend the Companies (Appointment and Qualification of Directors) Rules, 2014,

which shall come into force on the date of their publication in the Official Gazette i.e 19-08-2021. The Amendment provides that an individual shall not be required to pass the online proficiency self-assessment test to be included in independent directors databank when he has served for a total period of not less than three years as on the date of inclusion of his name in the data bank in the pay scale of Director or equivalent or above in any Ministry or Department, of the Central Government or any State Government, and having experience in handling matters relating to commerce, corporate affairs, finance, industry or public enterprises; or the affairs related to Government companies or statutory corporations set up under an Act of Parliament or any State Act and carrying on commercial activities. It is further provided that an individual who are or have been, for at least ten years either as an advocate of a court or in practice as a chartered accountant or in practice as a cost accountant or in practice as a company secretary, shall not be required to pass the online proficiency self-assessment test.

• MCA through its Press Release has stated various disclosures to be made by companies in their financial statements under the Schedule III of the Companies Act, 2013 effective from April 01, 2021, which were amended vide notification dated March 24, 2021.

The new disclosures with respect to the virtual currency/cryptocurrency transactions and CSR spending was undertaken by companies during a financial year are to be provided in detail. Where the Company has traded or invested in Cryptocurrency or Virtual Currency during the year, the profit or loss on transactions involving Cryptocurrency or Virtual Currency, amount of currency held as at the reporting date, deposits or advances from any person for the purpose of trading or investing in Crypto Currency/virtual currency is required to be disclosed. Further, where the company covered under section 135 of the Companies Act, disclosures with regard to the amount required to be spent by the company during the year, amount of expenditure incurred, shortfall at the end of the year, a total of previous years shortfall, reason for the shortfall, nature of CSR activities, details of related party transactions, e-contribution to a trust controlled by the company in relation to CSR expenditure as per relevant Accounting Standard, where a provision is made with respect to a liability incurred by entering into a contractual obligation, the movements in the provision during the year should be shown separately.

• MCA exempts Foreign Companies from Dating of Prospectus, provisions as to Experts Consent, and Allotments as provided under the provisions of Sections 387 to 392 of the Companies Act, 2013.

MCA has exempted the foreign companies and companies incorporated or to be incorporated outside India, whether the company has or has not established, or when formed may or may not establish, a place of business in India, insofar as they relate to the offering for subscription in the securities, requirements related to the prospectus, and all matters incidental thereto in the International Financial Services Centre set up under section 18 of the Special Economic Zones Act, 2005. Further, Section 387 to 392 of the Companies Act, 2013 deals with the dating of prospectus and provisions as to experts’ consent and allotment, the registration of the prospectus, the offer of India depository receipts, and the punishment for contravention.

Other Laws

SEBI

• SEBI has issued a circular w.r.t Modalities for implementation of the framework for Accredited Investors

The regulator has issued guidelines on eligibility criteria for accredited investors (AIs), procedure as well as validation for accreditation, a procedure to avail benefits linked to accreditation and flexibility to investors to withdraw consent. A person will be identified as an accredited investor on the basis of net worth or income. Individuals, HUFs, family trusts, sole proprietorships, partnership firms, trusts and body corporates can get accreditation based on financial parameters specified by the regulator. Under the framework, AIs may avail flexibility in minimum investment amount (lower ticket size) or concessions from specific regulatory requirements applicable to investment products. Further, the subsidiaries of recognized stock exchanges can carry out the accreditation process. This is subject to the condition that the stock exchange should have a minimum of 20 years of presence in the Indian securities market and should have a net worth of at least Rs 200 crore and exchange needs to have nation-wide terminals and should have investor grievance redressal mechanisms in place, including arbitration and presence of Investor Service Centres (ISCs) in at least 20 cities. Further, the investors will have the flexibility to withdraw their consent and discontinue availing benefits of accreditation subject to certain conditions and client agreement will have to provide the modalities for withdrawal of consent and consequences of the investor withdrawing the consent.

• SEBI has imposed additional penalties for repeated delivery default in order to strengthen the delivery mechanism and ensure market integrity.

SEBI, in consultation with clearing Corporations (CCs), has decided that in the case of repeated defaults by a seller or a buyer, for each instance of repeated default an additional penalty shall be imposed. Which shall be 3 % of the value of the delivery default. Repeated Default shall be defined as an event, wherein a default on delivery obligations takes place 3 times or more during a six-month period on a rolling basis and the penalty levied shall be transferred to the Settlement Guarantee Fund (SGF) of the Clearing Corporation. Earlier in March, SEBI had fixed a penalty of 4 percent of the settlement price plus replacement cost on delivery default in agricultural commodities sellers. While in non-agricultural commodities, the penalty for delivery default by sellers will be at 3 percent of settlement price plus replacement cost. The new framework will be effective after one month from the date of issuance of the circular.

• SEBI has issued a circular on the Automation of continual Disclosure under Regulation 7(2) of SEBI (Prohibition of Insider Trading) Regulations, 2015.

SEBI with an intent of ease of doing has implemented the System Driven Disclosures (SDD) in phases, under PIT Regulations, 2015. It has been confirmed by Stock Exchanges and Depositories that they have implemented the SDD in line with the circular dated September 09, 2020, and the same has gone live from April 01, 2021. SEBI has clarified that for listed companies who have complied with requirements of the circular dated September 09, 2020, the manual filing of disclosures as required under Regulation 7(2)(a) & (b) of PIT Regulations is no longer mandatory. Further, the Stock Exchanges are advised to bring the provisions of this circular to the notice of all listed companies and also disseminate the same on their websites.

• SEBI has notified the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 which shall be applicable to employee’s stock option schemes, purchase schemes, stock appreciation rights schemes, general employee benefits schemes, sweat equity scheme etc.

The provisions pertaining to preferential issues as specified in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 shall not be applicable in case of a company issuing new shares in pursuance and compliance with these regulations except wherever specifically provided for in these regulations. Under this regulation, a company may implement a scheme either directly or by setting up an irrevocable trust(s), however the same has to be decided upfront at the time of taking approval of the shareholders for setting up the scheme(s). An employee shall be eligible to participate in the schemes of the company as determined by the compensation committee. The compensation committee shall frame suitable policies and procedures to ensure that there is no violation of securities laws including the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 2003, as amended from time to time, by the trust, the company, and its employees, as may be applicable. Further, the Board of Directors of every such Company shall at each Annual General Meeting place before the shareholders a certificate from the Secretarial Auditors of the company that the scheme(s) has been implemented in accordance with these regulations and in accordance with the resolution of the company in the general meeting.

• SEBI has revised the format for disclosure of shareholding pattern of promoters and promoter group entities.

Regulation 31(4) of LODR mandates that all entities falling under promoter and promoter group be disclosed separately in the shareholding pattern on the website of stock exchanges, in accordance with the format(s) specified by the Board. Currently, the shareholdings of the promoter(s) and promoter group entities are collectively disclosed under table II-Statement showing a shareholding pattern of the promoter and promoter group, which shall now be segregated into promoters and promoter group. Accordingly, in the interest of transparency to the investors, all listed entities shall now provide such shareholding, segregated into promoter(s) and promoter group. Through this circular SEBI has modified the Circular No. CIR/CFD/CMD/13/2015 dated November 30, 2015, and Circular no. SEBI/HO/CFD/CMD1/CIR/P/2018/149 dated December 07, 2018, which prescribed formats for disclosure of shareholding pattern including disclosure of holding of specified securities of promoter and promoter group, public shareholders, and significant beneficial owners, respectively.

• SEBI has decided that a lien shall be marked in the depository system by the Depositories in the Beneficial Owner’s Demat Account for the shares offered in tender offers.

The Details of shares marked as a lien in clients’ Demat account shall be provided by respective Depositories to Clearing Corporations (CC). Further, the details in respect of shareholder’ settlement for tender offer process shall be provided to CCs by Issuer /Registrar to an Issue and Share Transfer Agent (RTA) handling the respective tender offer. Under the existing mechanism, the shares tendered by the shareholders are required to be directly transferred to the account maintained by the Clearing Corporation and different tendering processes are being adopted by Depositories. Such transfer involves systematic risk, substantial time, and cost. The revised mechanism shall be applicable to all the tender offers for which Public Announcement is made on or after October 15, 2021.

• SEBI has notified the Securities and Exchange Board of India (Prohibition of Insider Trading) (Second Amendment) Regulations, 2021 to further amend the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015,

which shall come into force on the date of their publication in the Official Gazette. Through this amendment, a new Regulation 7D (1A), which specifies the reward payable has been inserted. It provides that if the total reward payable is less than or equal to Rupees One Crore, the Board may grant the said reward upon the issuance of the final order by the Board. Provided that in case the total reward payable is more than Rupees One Crore, the Board may grant an interim reward not exceeding Rupees One Crore upon the issuance of the final order by the Board and the remaining reward amount shall be paid only upon collection or recovery of the monetary sanctions amounting to at least twice the balance reward amount payable. Further, the words ‘one crore’ substituted by ‘ten crores’ in the Proviso of Regulation 7D.

• SEBI has notified the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, which shall come into force on the seventh day from the date of its publication in the Official Gazette i.e. 16-08-2021.

The Regulation merges SEBI (Issue & Listing of Debt Securities) Regulations, 2008 (ILDS Regulations) and SEBI (Issue & Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 (NCRPS Regulations). The new Regulations shall be applicable on issuance and listing of debt securities and non-convertible redeemable preference shares by an issuer by way of public issuance; issuance and listing of non-convertible securities by an issuer issued on a private placement basis which are proposed to be listed and listing of commercial paper issued by an issuer in compliance with the guidelines framed by the Reserve Bank of India. In all the above situations, in-principal approval shall be obtained by the issuer, making an application to the stock exchanges for a listing of its non-convertible shares and also to enter into an arrangement with the Depositories for dematerialization of the non-convertible securities in accordance with the Depositories Act, 1996. Further, public issue of debt securities and/or non-convertible redeemable preference shares not to be made unless a draft offer document has been filed with all the stock exchanges on which such securities are proposed to be listed, through the lead manager. The lead manager shall ensure that all comments received on the draft offer document are suitably addressed prior to the filing of the offer document with the Registrar of Companies. The lead manager shall, prior to the filing of the offer document with the Registrar of Companies, furnish to the Board a due diligence certificate in the format as per Schedule III of these regulations.

• SEBI Board has approved some major amendments to the existing securities laws in their meeting held on August 6, 2021.

The Board has approved the merger of SEBI (Issue of Sweat Equity) Regulations, 2002 and SEBI (Share Based Employee Benefits) Regulations, 2014 into a single regulation called the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. The Board has granted relaxation in lock-in requirements in certain cases where the promoter shareholding to the extent of minimum promoter contribution (i.e., 20% of post issue capital) shall be for a period of 18 months from the date of allotment in IPO/ FPO instead of existing 3 years and promoter shareholding in excess of minimum promoter contribution shall be locked-in for a period of 6 months instead of existing 1 year. The definition of promoter group shall be rationalized, in a case where the promoter of the issuer company is corporate body, to exclude companies having common financial investors. The disclosure requirements in the offer documents, in respect of Group Companies of the issuer company shall be rationalized to, inter-alia, exclude disclosure of financials of top 5 listed/unlisted group companies. These disclosures will continue to be made available on the website of the group companies. Further, the Board has approved amendments to SEBI (AIF) Regulations, 2012 to provide investment flexibility and streamline regulatory processes.

• SEBI has notified the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2021, which shall come into force on the date of their publication in the Official Gazette i.e 03-08-2021.

Through this amendment, the SEBI inserted a new provision which stated that no independent director, who resigns from a listed entity, shall be appointed as an executive / whole-time director on the board of the listed entity, its holding, subsidiary or associate company or on the board of a company belonging to its promoter group, unless a period of one year has elapsed from the date of resignation as an independent director. For every appointment of an independent director, the Nomination and Remuneration Committee shall evaluate the balance of skills, knowledge and experience on the Board and on the basis of such evaluation, prepare a description of the role and capabilities required of an independent director. Further, for the purpose of pecuniary relationship, it is now provided that it shall be construed when the person is holding securities of or interest in the listed entity, its holding, subsidiary or associate company during the three immediately preceding financial years or during the current financial year of face value in excess of fifty lakh rupees or two percent of the paid-up capital of the listed entity, its holding, subsidiary or associate company, respectively, or such higher sum as may be specified.

• SEBI has notified the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations,2021, which shall come into force on the date of their publication in the Official Gazette i.e 03-08-2021.

The amendment provides that the non-resident Indians or overseas citizens of India or resident Indian individuals maybe constituents of an applicant for FPI registration provided they meet the conditions specified by the Board from time to time. It is further provided that resident Indian other than individuals may also be constituents of the applicant, subject to the conditions, that Such resident Indian, other than individuals, is an eligible fund manager of the applicant, as provided under Section 9A(4) of the Income Tax Act, 1961 and the applicant is an eligible investment fund as provided under Section 9A(3) of the Income Tax Act, 1961 which has been granted approval under the Income Tax Rules, 1962.

• SEBI has notified the Securities and Exchange Board of India (Bankers to an Issue) (Amendment) Regulations, 2021 to further amend the Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994.

The amendment substitutes the term “banker to an issue” under the definition which means a scheduled bank, or such other banking company as may be specified by the Board from time to time, carrying on any of the activities, including acceptance of application and application monies; acceptance of allotment or call monies; refund of application monies; payment of dividend or interest warrants. Further, Regulation 22 now amended and specifies the action on inspection or investigation report by the Board which includes such activities as it may deem fit and appropriate including action under Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008. Chapter V of SEBI intermediaries’ regulation deals with Action in case of default and manner of suspension or cancellation of the certificate.

RBI

• RBI has issued a Notification as ‘Financial Institution’ under Section 2(1)(m)(iv) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

In Para 105 of the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 wherein certain criteria have been prescribed for notification of HFCs as ‘Financial Institution’ under Section 2(1)(m)(iv) of the SARFAESI Act. In this connection, Government has notified the HFCs registered under Section 29A (5) of the National Housing Bank Act, 1987 and having assets worth ₹100 crores & above, as ‘Financial Institution’ under Section 2(1)(m)(iv) of SARFAESI Act, 2002. In view of the revision of the criteria for notification as ‘Financial Institution’ the criteria prescribed under Para 105 of the aforesaid Master Direction are withdrawn with immediate effect. Accordingly, the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 is being modified accordingly.

• The Reserve Bank of India (RBI) has decided to align the provisions for Housing Finance Companies (HFCs) relating to the rating of deposits taken by them with provisions on the subject prescribed for non-banking finance companies (NBFCs).

The RBI has approved seven Credit Rating Agencies (CRAs) – Crisis, ICRA, CARE Ratings, Fitch Ratings India Pvt Ltd, Brickwork Ratings, Acuite Ratings & Research and Infomatics Valuation and Rating – and their respective minimum investment-grade credit rating. Accordingly, HFC’s fixed deposit program needs to have a minimum investment-grade credit rating of ‘FA-’ from Crisis or ‘MA–’ from ICRA or ‘BBB’ from CARE Ratings. Crisis’s ‘FA-’ rating indicates that the degree of safety regarding timely payment of interest and principal is satisfactory. Changes in circumstances can affect such issues more than those in the higher-rated categories. Likewise, CARE Ratings ‘BBB’ rating indicates that instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.

IBBI

• MCA has notified the Insolvency and Bankruptcy Code Amendment Act, 2021 which has enabled Pre-packaged Insolvency Resolution for MSMEs.

The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 was introduced in Lok Sabha on July 26, 2021.  It amends the Insolvency and Bankruptcy Code, 2016.  Insolvency is a situation where individuals or companies are unable to repay their outstanding debt. The Bill replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021, which was promulgated on April 4, 2021. The Code provides a time-bound process for resolving the insolvency of corporate debtors (within 330 days) called the corporate insolvency resolution process (CIRP).  The debtor himself or its creditors may apply for initiation of CIRP in the event of a default of at least one lakh rupees.  Under CIRP, a committee of creditors is constituted to decide on the insolvency resolution. Application for initiating PIRP may be filed in the event of a default of at least one lakh rupees.  The central government may increase the threshold of minimum default up to one crore rupees through a notification. During PIRP, the debtor will be provided with a moratorium under which certain actions against the debtor will be prohibited.  These include filing or continuation of suits, execution of court orders, or recovery of property. At any time from the PIRP commencement date but before the approval of the resolution plan, the committee of creditors may decide (with at least 66% of the voting shares) to terminate PIRP and instead initiate CIRP.

DGFT

• The Ministry of Commerce & Industry has announced guidelines and rates of the long-pending Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for export items.

Though the scheme for exporters which replaced the ongoing Merchandise Exports from India Scheme (MEIS) came into effect on January 1, 2021, the rates had not been finalized yet. Accordingly, the RoDTEP rates will vary from 0.5-4.3% of export value and will include sectors like marine, agriculture, leather, gems and jewellery, automobile, plastics, electrical, electronics and machinery. However, exporters in sectors like steel, pharmaceutical, chemicals have been kept out of the scheme. Products manufactured or exported at export-oriented units and special economic zones have been excluded from the scheme for the time being.  While most animal products including milk and freshwater fish will get a RodTEP rate of 0.5%, agri items such as tomatoes and onions will get benefits at a 4% rate. Textile items such as saree and shirting fabrics will get the highest benefit at 4.3% of export value.  RoDTEP has created a mechanism to reimburse such central, state, and local taxes, which are not being refunded under any other scheme. The refund would be credited to an exporter’s ledger account with the customs and will be used to pay basic customs duty on imported goods. The credits can also be transferred to other importers. The rebate will have to be claimed as a percentage of the Freight on Board value of exports. A monitoring and audit mechanism, with an information technology-based risk management system has been put a place in to physically verify the records of the exporters.

• DGFT has granted further extension in period of modification of IEC till 31.08.2021 and waiver of fees for IEC updation during August,2021.

All IEC holders must ensure that details in its IEC are updated electronically every year, during the April – June period. However, for the current year only, this period is extended by another month i.e., till August 31, 2021. In cases where there are no changes in IEC details the same also needs to be confirmed online. Further, fee to be charged for modification of IEC done during the month of August 2021 will remain ‘Nil”. Period of modification of IEC is extended for the year 2021-22 only till 31.08.2021, and no fee shall be charged on modifications carried out in IEC during the period up to August 31, 2021.

FEMA

• RBI has amended the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 to enable the increase in foreign direct investment limit in the insurance sector to 74 percent.

According to the Foreign Exchange Management (non-debt instruments) (second amendment) Rules, 2021, applications for FDI in private banks having joint ventures or subsidiaries in the insurance sector may be addressed to the Reserve Bank of India for consideration in consultation with the Insurance Regulatory and Development Authority of India to ensure that the limit of foreign investment of 74 percent for the insurance sector is not breached. It is also provided that in an Indian Insurance Company having foreign investment, a majority of its directors, a majority of its Key Management Persons and at least one among the Chairperson of its Board, its Managing Director, and its Chief Executive Officer, shall be Resident Indian Citizens. The rules also require such insurance companies to have 50 percent of their directors as independent directors unless the chairperson of its board is herself or himself one. In that case at least one-third of its board should have independent directors. It is further clarified that an Indian Insurance company having foreign investment shall comply with the provisions under the Indian Insurance Companies (Foreign Investment) Rules, 2015.

MSME

• The Ministry of Micro, Small & Medium Enterprises has notified the eligibility criteria for availing credit under Emergency Credit Line Guarantee Scheme.

The objective of the scheme is to help businesses including MSMEs to meet their operational liabilities and resume business in view of the distress caused by the COVID-19 crisis, by providing Member Lending Institutions (MLIs), 100 percent guarantee against any losses suffered by them due to non-repayment of the ECLGS funding by borrowers. The overall ceiling initially announced for ECLGS was Rs 3 lakh crore which was subsequently enhanced to Rs 4.5 lakh crore. However, ECLGS being a demand-driven scheme, sanctions/ disbursements are made by lending institutions based on an assessment of borrower’s requirement and their eligibility. Further, this scheme offers a one-year moratorium on payment of principal components.  In addition to this, the other scheme announced under the Atma Nirbhar Bharat package i.e. ‘Credit Guarantee Scheme for Subordinate Debt’ also has a moratorium clause of 7 years on the payment of principal component with the overall all repayment period of 10 years.

View Monthly Compliance Calendar

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Relief from MAT u/s 115JB with regard to adjustments made to book profit on account of Secondary Adjustment and APAs

Relief Provided

The Finance Act 2021 has introduce new sub-section (2D) of section 115JB to rationalize MAT provisions to consider the below situations in computing MAT liability:

• In case of income of past year is included in the books of accounts of the Assessee, on account of secondary adjustment made under Transfer Pricing on an application made by the Assessee to the AO in this behalf or as a result of APA, book profit shall be computed taking without into account such income;

Computation mechanism

CBDT vide Notification No. 92/2021 dated 09/08/2021 has introduced new Rule 10RB giving effect to the above provision.

As per Rule 10RB, MAT payable u/s 115JB by the company will be reduced by the relief calculated by below formula:

(A-B) – (D-C),

where,

A = tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of the previous year including the past income;

B = tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of the previous year after reducing the book profit with the past income;

C = Aggregate of tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of those past year or years to which the past income belongs;

D = Aggregate of tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of past year or years, referred to in item C, after increasing the book profit with the relevant past income of such year or years:

Provided that if the value of (A-B)-(D-C) in the formula is negative, its value shall be deemed to be zero.

Filing Mechanism

For availing relief under the said rule 10RB, CBDT has introduced Form 3CEEA which needs to be uploaded and signed / verified electronically at the IT portal.

Introduction of Taxation Laws (Amendment) Bill, 2021: Background

• The post 2012 scenario added fears of retrospective taxation to certain companies undergoing tax assessments on account of capital gains arising from transfer of shares of a foreign company. It is argued that such retrospective amendments militate against the principle of tax certainty and damage India’s reputation as an attractive destination.
• This was brought about as a reason of landmark verdict of the Hon’ble Supreme Court in 2012 in the matter of Vodafone International Holdings BV ([2012] 17 taxmann.com 202 (SC)), wherein it was held that such transfer of shares of a foreign company would not give rise to taxable capital gains.
• In the past few years, major reforms have been initiated in the financial and infrastructure sector which has created a positive environment for investment in the country. The country today stands at a juncture when quick recovery of the economy after the COVID-19 pandemic is the need of the hour and foreign investment has an important role to play in promoting faster economic growth and employment. Therefore, to attract the investment in India and to boost growth, this bill proposes to scrap a retrospective amendment.
• The bill has been passed by both houses of Parliament and now pending for Hon’ble President assent.

Brief Facts: The Vodafone Controversy

• In Vodafone International Holdings BV. case, Vodafone International Holdings (VIH), a Netherlands based Company procured 100% shares in CGP Investments (Holding) Ltd a company situated in Cayman Island, for USD 11.1 billion from Hutchison Telecommunications International Ltd in the year 2007. CGP, through different organizations and actions controlled 67% of Hutchison Essar Limited (HEL), an Indian Company. Vodafone got command over CGP and its downstream the subsidiaries including HEL through the acquisition.
• In 2007, the Tax authority issued a notice to Vodafone International Holdings (VIH) for not withholding tax in India. The said notice was challenged by Vodafone International Holdings (VIH) in the Bombay High Court however, the same was turned down citing [2010] 193 Taxman 100(Bombay).
• Thereafter, the matter was filed in the Hon’ble Apex court which held in the favor of Vodafone International Holdings (VIH) in view of the fact that the transfer of shares outside India does not amount to indirect transfer of any assets owned by the company in which the shares are so held. Accordingly, the Apex Court refused to lift the corporate veil of the foreign company holding shares in the Indian company.
• To overcome this ruling, the Government vide Finance Act, 2012 amended section 9(1) of the Income Tax Act (‘ITA’) by introducing the explanation 4 & 5 to tax the indirect transfer made of capital asset of a company having substantial value of asset in India.

There were a total seventeen cases which were under similar dispute and accordingly tax demands had been raised in these matters by the tax authority on similar lines.

Further, the dispute on account of two cases namely, Vodafone BV & Cairn Energy were referred to Arbitration Tribunal under Bilateral Investment Protection Treaty at the International Forum, which ruled in favor of the aforementioned taxpayers and against the Indian Income Tax Department.

Brief- The Taxation Laws (Amendment) Bill, 2021

In a bid to cover the phantom of review tax assessment, the tax authority on Thursday August 06, 2021, passed a Taxation Laws (Amendment) Bill, 2021 (“TLA Bill, 2021”) from the Lok Sabha to pull out all back tax requests on organizations, Cairn Energy and Vodafone and said it will refund the money gathered to authorize such levies (Without Interest).

The Bill accommodates the withdrawal of assessment request made on “Indirect Transfer of Indian resources if the exchange was executed before 28 May 2012 (i.e., the day the review tax enactment appeared).

Hence, after the existing 3^rd proviso to explanation 5 of section 9, additional three provisos i.e., proviso 4, 5 & 6 are proposed to be added to give effect of the new bill.

It is additionally proposed to refund the sum paid in these cases with no interest consequently u/s 244A of Income tax act. The Bill has an immediate bearing on long-running assessment questions with British firms Cairn Energy Plc and Vodafone Group.

Proposals in the Bill:

• Proposed new 4th proviso provides that nothing in Explanation 5 shall apply to—
• an assessment or reassessment to be made under section 143, section 144, section 147 or section 153A or section 153C
• an order to be passed enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154 o
• an order to be passed deeming a person to be an assessee in default under sub-section (1) of section 201.

in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside India made before the 28th day of May, 2012.

Analysis: It means, no demand will be raised in Future in context of any indirect transfer made till 27.05.2021. As retrospective amendment by Finance Act 2012 was made to cover all the indirect transfer done between April 01, 1961 till the date of getting President assent i.e. 28 May 2021, So for giving the relief it is proposed in this proviso that no order or demand can be raised in future for any indirect capital transfer covered by the section 9(1)(i) for any pending proceedings.

Proposed new 5th proviso provides that:

Where

• an assessment or reassessment has been made under section 143, section 144, section 147 or section 153A or section 153C; or
• an order has been passed enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154; or
• an order has been passed deeming a person to be an assessee in default under sub-section (1) of section 201; or
• an order has been passed imposing a penalty under Chapter XXI or under section 221,

in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside India made before the 28th day of May, 2012 and the person in whose case such assessment or reassessment or order has been passed or made, as the case may be, fulfils the ‘specified conditions’.

Analysis: It means, demand raised or order passed to the extent to any indirect transfer made till 27.05.2021 will be nullified. But this effect will be issued once the specified condition as mentioned below will be fulfilled.

• Further it is also proposed to new 6th proviso to Explanation 5 clarifies that
• where any amount becomes refundable to the person referred to in fifth proviso as a consequence of him fulfilling the ‘specified conditions’, then, such amount shall be refunded to him, but no interest under section 244A shall be paid on that amount.

Analysis: It means, any demand collected or refund adjusted, will be refunded.  But here it is pertinent to note that such refund will be without any interest i.e. without giving effect to section 244A.

Specified condition as used in aforesaid provisos 5 & 6 are reproduced as under:

• where the said person has filed any appeal before an appellate forum or any writ petition before the High Court or the Supreme Court against any order in respect of said income, he shall either withdraw or submit an undertaking to withdraw such appeal or writ petition, in such form and manner as may be prescribed;
• where the said person has initiated any proceeding for arbitration, conciliation or mediation, or has given any notice thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise, he shall either withdraw or shall submit an undertaking to withdraw the claim, if any, in such proceedings or notice, in such form and manner as may be prescribed;
• the said person shall furnish an undertaking, in such form and manner as may be prescribed, waiving his right, whether direct or indirect, to seek or pursue any remedy or any claim in relation to the said income which may otherwise be available to him under any law for the time being in force, in equity, under any statute or under any agreement entered into by India with any country or territory outside India, whether for protection of investment or otherwise; and
• such other conditions as may be prescribed.”.

Analysis: As per the condition the assessee or said person needs to withdraw any appeal filed or submit the undertaking to withdraw any initiation made against the order whether filed in India or outside India. The manner, form or other conditions will be notified in future.

Further in this proposed bill, a consequential amendment in section 119 is proposed by adding proviso same to the specified conditions mentioned above.

Concluding remarks:

Bringing the amendment retrospectively, provides an interim and much needed relief to the ongoing litigations created on account of indirect transfers in the aforesaid matters. However, it needs to be understood that as the amendment is only retrospective, hence prospective taxation shall continue to be taxed in the similar manner. Accordingly, on one hand it aims to end specific retrospective controversies created by executive parliamentary powers but however on the other hand, it also creates a dilemma for foreign investors with respect to Indian tax laws, as to the fact that such positions might recur in the future. However, as of now it is a much needed and welcome step for the companies involved in retrospective tax disputes pertaining to indirect transfers.

KNM India can assist you with a range of complete financial services that range from Corporate advisory to Transaction advisory, Pre-incorporation to Post-incorporation, Insolvency and bankruptcy code to Secretarial services, Assurance to Internal audit services, along with Market entry strategy to Foreign company registration in India. To discuss any of these please book your slot, or call us on +91-99105-04170 – or email us at services@knmindia.com to get a quick response.

The article has been contributed by

CA Kavita Arora

Sr. Manager-Direct Tax

Further, we shall be happy to assist in case of any clarifications. For a deeper discussion, feel free to revert us at services@knmindia.com

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

Executive Summary

Income Tax

• Manual filing of Form 15CA/CB further extended to 15^th August 2021.
• India Joined hands with OECD/G20 for Digital economy taxation in unified approach (Pillar I & Pillar II).
• Extension of time limits for processing of ITR validly filed upto AY 2017-18 till 30^th September 2021.

Guidelines issued considering difficulty in implementing the provision of Sec 194Q.

Goods & Services Tax (GST)

• Functionality to check and update status of bank account details updated on GST portal
• New functionality on Annual Aggregate Turnover deployed on GST Portal for tax payer’s dashboard
• Basic custom duty has been exempted on covid test kits and specified medicine products for specified period.

Clarification on applicability of Dynamic QR Code

Companies Act 2013/ Other Laws.

• MCA has issued a press release to highlight the various measures taken by the ministry to fight Covid-19 pandemic.
• SEBI has extended the timelines for compliance with the regulatory requirements by debenture trustees for the quarter/half-year/year ending March 31, 2021 by Debenture Trustees.
• DGFT extends Date for Mandatory Electronic Filing of Non-Preferential CoO through Common Digital Platform.

Detailed

Income tax

• CBDT vide Circular No.13/2021 dated 30^th June 2021 issued clarification/guidelines in compliance the provision of section 194Q. In the circular, CBDT has clarified the issues on threshold of TDS and application of TDS/TCS in case of dual applicability.
• CBDT vide Press release dated 02^nd Jul 2021 informs about joining of India in OECD/G20 discussion for consensus on Base erosion and profit shifting Digital economy taxation(Pillar I & Pillar II approach) Pillar I which is  about  reallocation of additional share of profit to the market jurisdictions and Pillar II consisting of minimum tax and subject to tax rules.
• CBDT vide Press release dated 05^th Jul 2021 further extends the manual filing of 15CA/CB considering the bugs/error on new Income Tax website till 15^th July 2021. By Press release dated 20^th Jul 2021, manually filing is further extended till 15^th August, 2021.
• CBDT vide ORDER F. NO.225/98/2020IITA-II, Dated 05^th July 2021 has further extended the dates for the processing of validly filed ITR upto AY 2017-19, considering the pending taxpayers’ grievances related to issue of refund and to mitigate genuine hardship being faced by the taxpayers these time limits, till 30^th September 2021 through order u/s 119 of IT Act, 1961.
• CBDT vide Notification No. 77/2021 dated 07^th July 2021 has makes rule 8AC for of short-term capital gains and written down value under section 50 where depreciation on goodwill has been obtained.

Goods & Services Tax

• CBDT vide Notification No. 28/2021 – Central tax dated 30^th June 2021 waives penalty payable for non-compliance of provisions of notification no. 14/2020 dated 21^st March, 2020 for certain class of registered persons capturing dynamic QR code and the implementation of QR code to be further extended to 30^th September 2021.
• GST portal has issued functionality to check and update status of bank account details dated 29^th June 2021 for the taxpayers who have taken new registration at GST Portal but have not yet furnished the same, has been introduced. Such taxpayers are required to update their Bank Account Details within 45 days through Non-core amendment in the manner as specified of the first login henceforth.
• GST portal has issued New functionality on Annual Aggregate Turnover (AATO) dated 27^th June 2021 deployed on GST Portal for tax payer’s dashboard with the facility of turnover update.
• CBIC vide Circular 157/13/2021 – GST dated 20^th July 2021 issue clarifications regarding the extension of timelines granted by Hon’ble Supreme Court vide its Order dated 27.04.2021 is applicable in respect of any appeal which is required to be filed before Joint/ Additional Commissioner (Appeals), Commissioner (Appeals), Appellate Authority for Advance Ruling, Tribunal and various courts against any quasi-judicial order or where proceeding for revision or rectification of any order is required to be undertaken, and is not applicable to any other proceedings under GST Laws
• CBIC vide Notification no. 35/2021- customs dated 12^th July 2021 exempt basic customs duty on various imports of specified API/ excipients for Amphotericin B and raw materials for manufacturing COVID test kits, till specified period.
• CBIC vide Circular no. 17/2021- customs dated 23rd July, 2021 specify to focus its efforts to reduce compliance burden for citizens and business activities. Various procedures and requirements stated under various provisions in the Customs Act,1962 are being revisited so that compliances under these laws can be simplified or dispensed with, in order to enhance ease of doing business and minimize regulatory compliances.
• CBIC vide Circular no. 16/2021- customs dated 19^th July, 2021 issues clarification on issue of applicability of IGST on repair cost, insurance and freight, on goods re-imported after being exported for repairs on the recommendation of the GST council made in its 43^rd
• CBIC vide Circular no. 15/2021- customs dated 15^th July, 2021 prescribe manner for implementation of Risk Management system for processing of Duty drawback claims in exports.
• CBIC vide Circular no. 14/2021- customs dated 07^th July, 2021 has decided to implement various measures in custom for Faceless Assessment and clearance process to enhance the uniformity in assessments with a view to reduce interface with the trade.
• CBIC vide Circular no. 13/2021- customs dated 01^st July, 2021 in relation to AEO (Authorized Economic operator) T1 decide to launch a new version (V 2.0) for on-boarding of AEO T2 and AEO T3 applicants by way of online filing, real- time monitoring and digital certification.
• CBIC vide Circular no. 12/2021- customs dated 30^th June, 2021 guide the trades relating to procedures for smooth implementation of Sea Cargo Manifest and Transhipment Regulations.
• CBIC vide Notification no. 34/2021 – (Customs ADD) dated 28^th June 2021 Seeks to further amend notification No. 29/2017-Customs (ADD) dated 14th June, 2017 ‘Glazed/Unglazed Porcelain/Vitrified tiles’ originating in or exported from China PR, up to and inclusive of 31st December, 2021.

• CBIC vide Notification no. 35/2021 – (Customs ADD) dated 29th June 2021 Seeks to further amend notification No. 11/2016-Customs (ADD) dated 29th March, 2016 ‘Tyre Curing Presses also known as Tyre Vulcanisers or Rubber Processing Machineries for tyres, excluding Six Day Light Curing Press for curing bi-cycle tyres originating in or exported from China PR, up to and inclusive of 30th November, 2021.

• CBIC vide Notification no. 36/2021 – (Customs ADD) dated 29th June 2021 Seeks to further amend notification No. 17/2017-Customs (ADD) dated 11th May, 2017 Hot-Rolled flat products of alloy or non-alloy steel’ originating in or exported from China PR, Japan, Korea RP, Russia, Brazil or Indonesia, up to and inclusive of 15th December, 2021.
• CBIC vide Notification no. 37/2021 – (Customs ADD) dated 29th June 2021 Seeks to further amend notification No. 18/2017-Customs (ADD) dated 12th May, 2017 ‘Cold-Rolled flat products of alloy or non-alloy steel’ originating in or exported from China PR, Japan, Korea RP or Ukraine, up to and inclusive of 15th December, 2021.
• CBIC vide Notification no. 38/2021 – (Customs ADD) dated 30th June 2021 Seeks to further amend notification No. 42/2016-Customs (ADD) dated 08th August, 2016 PVC Flex Film originating in or exported from China PR, up to and inclusive of 31st January, 2022.

• CBIC vide Notification no. 39/2021 – (Customs ADD) dated 30th June 2021 Seeks to further amend notification No. 43/2016-Customs (ADD) dated 08th August, 2016 relating to Viscose Staple Fibre (VSF) excluding Bamboo Fibre, Dyed Fibre, Modal Fibre & Fire-retardant Fibre originating in or exported from China PR and Indonesia.

• CBIC vide Notification no. 40/2021 – (Customs ADD) dated 30^th June 2021 Seeks to further amend notification No. 34/2016-Customs (ADD) dated 14th July, 2016 ‘Plain Medium Density Fibre Board (MDF) having thickness of 6mm and above’ originating in or exported from Vietnam, up to and inclusive of 13th March, 2022.
• CBIC vide Instruction no. 15/2021- customs dated 30^th June 2021 specify requirement of report of testing of Covid-19 in live animals by the exporters not more than 3 days old before export into India in addition to other existing requirements in this regard.

Companies Act, 2013

• MCA has issued a press release to highlight the various measures taken by the ministry to fight Covid-19 pandemic.
• The illustrative list issued by MCA has 23 entries and covers almost all benefits and relaxations extended due to Covid-19 pandemic, which includes the Companies Fresh Start Scheme, 2020 (CFSS), LLP Settlement Scheme, 2020, relaxation on levy of additional fees for companies / LLPs in filing Charge Related Forms, Condonation of Delay Scheme for Companies restored by NCLT between December 1, 2020 to December 31, 2020, conduct Board Meetings through Video Conference (VC) or other audio-visual means for passing resolutions in respect of the restricted matters, conduct of Extraordinary General Meetings (EGMs) through Video Conferencing (VC), conduct of Annual General Meetings (AGMs) by Video Conferencing (VC),  Extension of time in the holding of Annual General Meeting for the financial year ended on March 31, 2020 till December 31, 2020,  enhanced the period to thirteen months from December 1, 2019 within which existing Independent directors may apply online for inclusion of their names in the databank for Independent Directors, Independent Directors (IDs) of a company have been given relaxation from holding at least one mandatory meeting, mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (CA-13) (120 days) were extended by a period of 60 days, Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Act shall not be treated as a non-compliance for the financial year 2019-20 and 2020-21

Other Laws

• SEBI has extended the timelines for compliance with the regulatory requirements by debenture trustees for the quarter/half-year/year ending March 31, 2021 by Debenture Trustees.

The extended timelines for compliance include submission of Asset Cover Certificate, a statement of the value of pledged securities and a statement of value for Debt Service Reserve Account (DSRA) or any other form of security offered – August 31, 2021; Net worth certificate of guarantor (secured by way of personal guarantee), Financials/ value of guarantor prepared on basis of audited financial statement etc. of the guarantor (secured by way of corporate guarantee) and Valuation report and title search report for the immovable/ movable assets, as applicable – October 31, 2021 and Disclosure on the website of Monitoring of asset cover certificate and quarterly compliance report of the listed entity, Monitoring of utilization certificate, Status of information regarding breach of covenants/ terms of the issue, if any action was taken by debenture trustee and Status regarding maintenance of accounts maintained under the supervision of debenture trustee – August 31, 2021.

• SEBI has issued a circular to notify that the block mechanism in the Demat account of clients undertaking sale transactions would be available from 1st August 2021.

A facility of block mechanism in the Demat account of clients has been made available by the depositories. The securities lying in the client’s Demat account may be blocked in favour of Clearing Corporation either by the client himself using depository’s online system or eDIS mandate or through depository participant based on physical DIS given by client or Power of Attorney (POA) holder. In case the sale transaction is not executed, shares will continue to remain in the client’s demat account and will be unblocked at the end of the T (Trade) day. Blocking of shares will be on ‘time bases. If securities for sale are blocked in the depository system in favour of Clearing Corporation, all margins would be deemed to have been collected and penalty for short/non-collection of margins including other margins shall not arise. Further, the proposed facility of block mechanism is on an optional basis and the EPI mechanism will also continue.

• SEBI has issued a circular to introduce expected loss-based rating scale for rating agencies and standardization of rating scale used by credit rating agencies for ratings of projects/ instruments associated with the infrastructure sector.

All the Credit rating agencies will now be required to provide expected loss-based ratings for projects and instruments associated with the infrastructure sector, with SEBI putting in place a new framework. The new scale will be used by the credit rating agencies for ratings of projects or instruments associated with the infrastructure sector to begin with. Lowest expected loss, very low expected loss, low expected loss, moderate expected loss, high expected loss, very high expected loss and highest expected loss will be the seven levels on the new scale. Further for the existing outstanding ratings, the CRAs shall disclose new rating symbols and definitions on their websites; update their rating lists on their websites; and inform their clients about the change in the rating symbols and definitions and specify that this should not be construed as a change in the ratings. All the provisions in the latest circular except those pertaining to standardization of rating scales, will be applicable with “immediate effect” for Credit Rating Agencies (CRAs). The CRAs shall ensure compliance with the requirements of this circular, latest by March 31, 2022 and also place the compliance status of this circular before their Board of Directors.

• SEBI has come out with a new framework with regard to the valuation of securities, having multiple put options, held by mutual funds.

The new framework will be applicable with effect from October 1, 2021. In respect of valuation of securities with multiple put options present “ab-initio”, wherein put option is factored into the valuation of the security by the valuation agency, SEBI has taken certain decisions based on the recommendation of its mutual fund advisory committee. Under the framework, if the put option is not exercised by a mutual fund while exercising the put option would have been in favor of the scheme, fund houses will have to give justification for not exercising such option to the valuation agencies, board of AMC and Trustees. The explanation must be given on or before the last date of the notice period. The valuation agencies will not take into account the remaining put options for the purpose of valuation of the security. The put option will be considered as ‘in favor of the scheme’ if the yield of the valuation price ignoring the put option under evaluation is more than the contractual yield or coupon rate by 30 basis points.

• SEBI has released the Discussion Paper for Review of SEBI (Share Based Employee Benefit) Regulations, 2014 and SEBI (Issue of Sweat Equity) Regulations, 2002.

Through this discussion paper, SEBI has suggested combining two separate regulations, SEBI (Share Based Employee Benefits) Regulations, 2014, and SEBI (Issue of Sweat Equity) Regulations, 2002, that deal with employee compensation. It is recommended that the objectives for which issuance of sweat equity shares are permitted and the ceiling on the quantum issued by a company should be included in the sweat equity regulations. It also recommended that the lock-in period for sweat equity shares and its pricing formula should be consistent with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The committee recommended that even non-permanent employees be considered to receive share-based employee benefits falling under SBEB Regulations. Further, through these draft Regulations SEBI has recognised the Secretarial Auditor to certify that the scheme(s) has been implemented in accordance with these regulations and in accordance with the resolution of the company in the general meeting as per Regulation 13 and under Regulation 26(2) to certify compliance with this provision at the time of adoption of such balance sheet by the Company. Public comments are invited on the recommendations made by the Expert Group in its report, in the prescribed format.

• SEBI has issued a standard operating procedure for subsidiary companies planning to get delisted through a ‘Scheme of Arrangement’ wherein the listed holding companies and the listed subsidiaries are in the same line of business.

According to a circular, the ‘same line of business’, is defined as when least 50 per cent of revenue from the operations of the listed holding and listed subsidiary company must come from the same line of business, In addition, at least 50% of the net tangible assets of the listed holding company and the listed subsidiary must be invested in the same line of business. Further, the principal economic activities of both firms need to be under the same group as per the National Industrial Classification (NIC) Code. In case of change of name of the listed entities within the last one year, at least 50 per cent of the revenue, calculated on a restated and consolidated basis, for the preceding one full year has to be earned by it from the activity indicated by its new name. The listed holding company and the listed subsidiary have to provide self-certification with respect to both the companies being in the same line of business. Further, these need to be certified by the Statutory Auditor and Merchant Banker. To be eligible for the exemption under the route, shares of both companies should be listed for at least three years and the trading thereof should not have been suspended immediately before approval of the scheme by the Board of Directors of the companies.

• SEBI has issued a circular to reduces the time period for submitting an application to obtain NOC for release of 1% of the issued amount.

The time period for processing of NOC applications is also reduced to 2 months from the existing period of 4 months after listing for submitting the application. As per its earlier guidelines, the issuer company is required to submit an application on its letterhead addressed to SEBI in the specified format specified, after the lapse of 4 months from listing on the Exchange, which was the last to permit listing, for the purpose of obtaining the NOC. However, the time period of 4 months has now been reduced to 2 months. Further, the merchant banker shall submit a certificate confirming that all the SCSBs involved in the ASBA process have unblocked ASBA accounts. SEBI shall consider the application as incomplete if the application is not accompanied by a confirmation by merchant banker that all the accounts in ASBA have been ‘unblocked’.

RBI

• The Reserve Bank of India (RBI) has extended the last date for filing the Annual Return of Foreign Liabilities and Assets (FLA) to 31st July, 2021.

The Annual Return on Foreign Liabilities and Assets are required to be filed by an Indian Company and LLP to RBI within the prescribed due date. This Return is filed Online on RBI Portal. The portal on which you can file the return is https://flair.rbi.org.in/fla/. Generally, the filing of the FLA annual return has to be done before the 15 of July of the respective year and must include data of FDI or ODI received or made by the company for the previous year or current financial year. Entities that are filing FLA return for the first time/ with revised UIN (Unique identification number) are required to register themselves first for generating login credentials and afterward they can file an FLA return. However, the entities which have already registered earlier may submit FLA 2021 using their earlier login credentials. The Companies which have received FDI and/or made FDI abroad in any of the financial year are required to submit FLA Return to RBI. The Financial Statement of the company for such a particular FY can exactly explain the status of Inward FDI or Outward FDI.

• RBI has issued Instructions on Interest on overdue domestic deposits. 

RBI has instructed all banks that all unclaimed maturity proceeds of Term Deposits (TDs) with banks will attract the rate of interest as applicable to savings accounts or the contracted rate of interest on the matured TD, whichever is lower. This directive comes in the backdrop of Savings Bank (SB) rates (on deposits above ₹1 lakh) of some of the small finance banks being higher than the TD rates in the less than one-year and above five years maturity buckets. Earlier, the rule on overdue domestic deposits stated that if a Term Deposit matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as applicable to savings deposits. The amendment comes as unclaimed deposits with banks have been growing every year.

IBBI

• IBBI has specified the format of CIRP 8 under IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which needs to be filed in respect of every CIRP ongoing or commencing on or after July 14, 2021.

Regulation 35A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) requires the Resolution Professional to form an opinion on transactions covered under sections 43, 45, 50 and 66 by 75 day, make a determination on such transactions by 115 day, and file an application before the Adjudicating Authority by the 135 day of the insolvency commencement date. Further regulation 40B(IB) of the CIRP Regulations require the resolution professional to file Form CIRP 8 intimating details of his opinion and determination under Regulation 35A, by 140 day of the insolvency commencement date. For effective monitoring, the amendment requires the RP to file Form CIRP 8 on the electronic platform of the Board, intimating details of his opinion and determination in respect of avoidance transactions.

• IBBI has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2021 to further amend the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

Through this amendment, a new Regulation 4B has been inserted which deals with disclosure of change in name and address of the Corporate Debtor. Where a corporate debtor has changed its name or registered office address during the period of two years preceding the insolvency commencement date, the Interim Resolution Professional or Resolution Professional, as the case may be, shall disclose all the former name(s) and registered office address(es) so changed along with the current name and registered office address in every communication, record, proceeding or any other document. Further under Regulation 27 the resolution professional shall, within seven days of his appointment but not later than forty-seventh day from the insolvency commencement date, appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with Regulation 35.

• The IBBI has issued the has issued Information Brochure on Pre-Packaged Insolvency Resolution Process (PPIRP) for Micro, Small, and Medium Enterprises (MSMEs).

The PPIRP is required to be completed within a period of 120 days from its commencement date. The RP shall either file the resolution plan for approval or an application for termination of PPIRP, with the AA within 90 days from the PPIRP commencement date. A model timeline along with the activities to be undertaken and responsibilities of Resolution Professionals, creditors, and corporate debtors are provided in the brochure. It is designed for the sole purpose of creating awareness on the subject and must not be used as a guide for taking or recommending any action or decision, commercial or otherwise. The released brochure presents step-by-step activities from initiation till the closure of PPIRP. It annexes: (i) a typical process flow of a PPIRP (Annexure A); (ii) an indicative list of responsibilities of the CD, the RP, and the creditors in respect of a PPIRP (Annexure B); (iii) a model timeline for completion of PPIRP within the prescribed period of 120 days from the date of its commencement (Annexure C); and (iv) a list of Forms (Annexure D).

DGFT

• DGFT extends Date for Mandatory Electronic Filing of Non-Preferential CoO through Common Digital Platform.

The DGFT has issued notice to provide that the option of submission and issuance of CoO (Non-Preferential) by the issuing agencies through their paper-based systems may continue further up to 30th September 2021. However, the mandatory electronic filing of the Non-Preferential Certificate of Origin (CoO) shall be from October 1, 2021. The objective of this platform is to provide an electronic, contact-less single window for the CoO related processes. However, on the request of certain Chambers/Associations, the existing system of submitting and processing non-preferential CoO applications in manual/paper mode is being allowed for the time being and the online system is not being made mandatory. All Agencies as notified under Appendix-2E are required to ensure the onboarding exercise is completed latest by September 30, 2021.

• The Directorate General of Foreign Trade has revised para 2.96 from the Handbook of procedures 2015-2020 which deals with intimation regarding a change in the constitution of business of RCMC holders.

Accordingly, clause 2.96(b) w.r.t the Export shall furnish quarterly return /details of his exports of different commodities to the concerned registering authority has been deleted. However, status holders shall also send quarterly returns to FIEO in the format specified by FIEO. Further, the format of ANF-2C of foreign trade policy 2015-2020 mandating submission of monthly return of export including NIL return to the registering authority by 15^th of the month following the quarter deleted.

• DGFT has granted Extension in period of modification of IEC till 31.07.2021 and waiver of fees for IEC updation during July, 2021.

An IEC holder has to ensure that details in its IEC are updated electronically every year, during the April – June period. However, for the current year only, this period is extended by another month i.e., till 31st July, 2021. In cases where there are no changes in IEC details the same also needs to be confirmed online. Further, fee to be charged for modification of IEC done during the month of July, 2021 will remain ‘Nil”. Period of modification of IEC is extended for the year 2021-22 only till 31.07.2021, and no fee shall be charged on modifications carried out in IEC during the period upto 31st July, 2021.

MSME

• The Minister of Micro, Small and Medium Enterprise (MSME) has announced revised guidelines for MSMEs with inclusion of retail and wholesale trades as MSMEs.

With the revised guidelines the retail and wholesale trades will now be allowed to register on the Udyam Registration Portal. The Enterprises having Udyog Aadhaar Memorandum (UAM) under above three NIC Codes are now allowed to migrate to Udyam Registration Portal or they can file Udyam Registration afresh. The existing definition of MSMEs includes manufacturing and service enterprises whereas retail and wholesale trade were not classified under the same. However, benefits to Retail and Wholesale trade MSMEs are to be restricted to Priority Sector Lending only. Accordingly, the list of eligible additional activities under NIC Code 45- Wholesale and retail trade and repair of motor vehicle and motorcycles, NIC Code 46 – Wholesale trade except of motor vehicles and motor cycles and NIC Code 47 – Retail Trade Except of Motor Vehicles and motorcycles. Consequent upon above changes, para 2 including Table. 2 mentioned in O.M. no 5/2(1)/2020/E-P&G/Policy dated 01.12.2020, stands omitted.

View Monthly Compliance Calendar

KNM India can assist you with a range of complete financial services that range from Corporate advisory to Transaction advisory, Pre-incorporation to Post-incorporation, Insolvency and bankruptcy code to Secretarial services, Assurance to Internal audit services, along with Market entry strategy to Foreign company registration in India. To discuss about any of these please book your slot, or call us on +91-99105-04170 – or email us at services@knmindia.com to get a quick response.

As per the provisions mentioned in Income-tax Act, 1961, there is a requirement to furnish Form 15CA/15CB electronically. In the existing system on old Income Tax portal, taxpayers upload the Form 15CA, along with the Chartered Accountant Certificate in Form 15CB, wherever applicable, before submitting the copy to the authorised dealer for any foreign remittance.

Recently on 7^th June 2021, CBDT has launched new Income Tax portal. Considering the difficulties facing by the taxpayer of procedure & DSC issue, CBDT by Press release dated 14^th June 2021, has defer the uploading of online 15CA/CB on Income Tax Portal till 30^th June 2021.

Now by Press release Dated 05^th July 2021, CBDT has further extended the aforesaid date to 15^th July 2021. In view thereof, taxpayers can now submit the said Forms in manual format to the authorized dealers till 15th July, 2021. On other side, Authorized dealers are advised to accept such Forms till 15th July, 2021 for the purpose of foreign remittances.

A facility will be provided on the new e-filing portal to upload these forms at a later date for the purpose of generation of the Document Identification Number.

KNM India can assist you with a range of complete financial services that range from Corporate advisory to Transaction advisory, Pre-incorporation to Post-incorporation, Insolvency and bankruptcy code to Secretarial services, Assurance to Internal audit services, along with Market entry strategy to Foreign company registration in India. To discuss any of these please book your slot, or call us on +91-99105-04170 – or email us at services@knmindia.com to get a quick response.

The article has been contributed by:

CA Kavita Arora

Sr. Manager-Direct Tax

Further, we shall be happy to assist in case of any clarifications. For a deeper discussion, feel free to revert us at services@knmindia.com

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.

Under section 143(1) of Income Tax Act, 1961, an intimation for adjustment of refund/demand needs to be send within 9 months from the end of the financial year in which the return is made. Earlier this timeline was 12 months from the end of the financial year in which the return is made.

However, due to some technical issues or other reasons, of course not attributed to taxpayers several Income Tax returns up to the AY 2017-18 were not processed and consequently Intimations of the same were not sent to taxpayers. This has led to a situation where the taxpayer is unable to get his legitimate refund in accordance with provisions of the Act, although the delay is not attributable to him.

As per the earlier order dated 10^th July 2020, time frame was given till 31^st October 2020 to process such returns with refund claims but considering the pending taxpayers’ grievances related to issue of refund and to mitigate genuine hardship being faced by the taxpayers these time limits are further extended till 30^th September 2021 through order u/s 119 of IT Act, 1961.

The relaxation accorded above shall not be applicable to the following returns:

(a) returns selected in scrutiny.

(b) returns remain unprocessed, where either demand is shown as payable in the return or is likely to arise after processing it.

(c) returns remain unprocessed for any reason attributable to the assessee.

To ensure adequate safeguards, it has been decided that once administrative approval is accorded by the Pr. CCIT/CCIT, the Pr. CIT/CIT concerned would make a reference to the DGIT(Systems) to provide necessary enablement to the Assessing officer on a case-to-case basis.

KNM India can assist you with a range of complete financial services that range from Corporate advisory to Transaction advisory, Pre-incorporation to Post-incorporation, Insolvency and bankruptcy code to Secretarial services, Assurance to Internal audit services, along with Market entry strategy to Foreign company registration in India. To discuss any of these please book your slot, or call us on +91-99105-04170 – or email us at services@knmindia.com to get a quick response.

The article has been contributed by:

CA Kavita Arora

Sr. Manager-Direct Tax

Further, we shall be happy to assist in case of any clarifications. For a deeper discussion, feel free to revert us at services@knmindia.com

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.

EXECUTIVE SUMMARY

Income Tax

CBDT has come out with the following amendments as below: –

• Launching of New Income Tax Website.
• Compliance check Functionality for ease the usance of section 206AB/CCA.
• Extension of time limits of certain compliances to provide relief to taxpayers.
• Issuance of Cost Inflation Index for FY 2021-22.

GST

CBIC has come out with the following amendments as below: –

• GST notifications issued on June 1st 2021 to provide effect of 43rd GST council meeting
• GST rates reduced on Goods on specific items prescribed in 44th GST council meeting held on June 12th 2021
• Clarification on applicability of Dynamic QR Code

Companies Act 2013/ Other Laws

MCA has come out with the following amendments as below:

• MCA has issued the much-awaited clarification for passing general and special resolutions and convening an EGM in unavoidable circumstances and extended the validity of the existing circulars up to December 31, 2021, in light of the current social distancing norms.
• All companies are free to discuss and approve the matters related to the approval of the annual financial statements; the approval of the Board’s report; the approval of the prospectus; the Audit Committee Meetings for consideration of financial statement including consolidated financial statement if any;

To know in detail please continue reading…

• CBDT vide Press release dated 5^th June 2021 informed for launching of new Income tax website incometax.gov.in on 07^th June 2021 with an aim to providing better interface, free ITR preparation utility in some cases, new & functionalities and also for quick refunds etc.

• CBDT vide Notification No. 71/2021 / No. 370142/19/2021-TPL dated 8^th June 2021 amend the rule 31A (4) to comply with clauses amended according to 194A, 196D and 194Q. In addition to Appendix II has been changed in form 26Q to give effect to TDS sections.

• CBDT vide Circular F.NO.225/61/2021/ITA-I dated 10^th June 2021 has issued parameters for compulsory selection of returns for Complete Scrutiny during Financial Year 2021-22 and conduct of assessment proceedings.

• CBDT vide Press release dated 14^th June 2021 has informed that until fixation of bugs/error on new Income Tax website taxpayer can prepare 15CA/CB manually. This notification is applicable till 30^th June 2021. A facility will be provided on the new e-filing portal to upload these forms at a later date for the purpose of generation of the Document Identification Number.

• CBDT vide Notification No. 73/2021 / NO. 370142 / 10 / 2021-TPL dated 15^th June 2021 has issued Cost inflation index (CII-317) for the financial year 2021-22 and is applicable from AY 2022-23.

• CBDT vide Circular No.11/2021[F.NO. 370133/7/2021-TPL] dated 21^th June 2021 has issued circular regarding use of functionality u/s 206AB/CCA. For more details, please click the link: https://knmindia.com/tds-tcs-on-goods-along-with-deduction-collection-at-higher-rates-a-deep-insight/.

• CBDT vide Press release dated 23^rd June 2021 has informed about approves agreement between India and Saint Vincent and grenadines for exchange of information and assistance in collection with respect to taxes.

• CBDT vide circular No. 12 of 2021 dated 25th June 2021 has issued clarification that income-tax exemption will be given to the amount received by a taxpayer for medical treatment from employer or from any person for treatment of Covid-19 during FY 2019-20 and subsequent years. It has been decided to provide income-tax exemption to ex-gratia payment received by family members of a person from the employer of such person or from other person on the death of the person on account of Covid-19 during FY 2019-20 and subsequent years. The exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to Rs. 10 lakh in aggregate for the amount received from any other persons.

Further due to covid-19 provide various relaxations through extension of time limits of certain compliances to provide relief to taxpayers as below:

• CBDT vide Notification No. 74/2021/ F. No. 370142/35/2020-TPL dated 25th June 2021 & 75/2021/ No.IT(A)/01/2020-TPL Dated 25^th June,2021 has decided to extend the various dates as below:

For GST notifications dated 01^st June 2021 for Relaxations and effect to GST council notifications please refer the below link (https://knmindia.com/relaxations-by-gst-council/)

• The GST council in its 44th meeting held on 12th June, 2021 recommended reduction in GST rates on goods on specific items being used in COVID -19 relief and management. (Link /https://knmindia.com/relaxations-by-gst-council/)

• CBDT vide Circular No. 156/12/2021 – GST dated 21^st June 2021 issue various clarifications in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification 14/2020- Central Tax dated 21st March, 2020 as below:
• Dynamic QR Code is to be provided on an invoice issued to an Unique Identity Number holder.
• Bank account and IFSC details need not to be provided separately in the Dynamic QR Code along with UPI ID.
• where the payment is collected by some person other than the supplier (E-Commerce Operator or any other person authorized by the supplier on his/ her behalf) then in such cases UPI ID of such person who is authorized to collect the payment on behalf of the supplier, may be provided.
• Wherever an invoice is issued to a recipient located outside India, for supply of services where place of supply is in India and the payment is received by the supplier in foreign currency, through RBI approved mediums, then such invoice may be issued without having a Dynamic QR Code.
• In some instances, it may not possible for the supplier to provide details of invoice number in the dynamic QR code displayed to the customer on payment counter where payment received before generation of invoice then cross reference of such payment received along with unique order ID/ sales reference number to be provided on the invoice.
• When the part-payment for any supply has already been received from the customer/ recipient, in form of either advance or adjustment through voucher/ discount coupon etc. then the dynamic QR code may provide only the remaining amount payable by the customer/ recipient against “invoice value”. However, the total invoice value should be mentioned on invoice showing advance adjustment.

• CBIC vide Notification no. 34/2021- customs dated 29^th June 2021 seeks to reduce the basic custom duty on Crude Palm Oil [1511 10] and Palm Oil other than Crude Palm Oil [1511 90] till 30th September 2021.

• CBIC vide Notification no. 33/2021- customs dated 14^th June 2021 Seeks to rescind notification No. 30/2021-Customs, dated 01.05.2021 relating to reduce IGST on Oxygen Concentrators when imported for personal use.

• CBIC vide Notification no. 32/2021 – (Customs ADD ) dated 03rd June 2021 Seeks to further amend notification No. 23/2016-Customs (ADD) dated 6th June, 2016 extend the levy of Anti-Dumping duty on Polytetrafluoroethylene originating in or exported from Russia, up to and inclusive of 31st October, 2021.

• CBIC vide Notification no. 33/2021 – (Customs ADD ) dated 03^rd June 2021 Seeks to further amend notification No. 6/2016-Customs (ADD) dated 8th March, 2016 to extend the levy of Anti-Dumping duty on Phenol originating in or exported from European Union and Singapore, up to and inclusive of 31st October, 2021.

• MCA has issued the much-awaited clarification for passing general and special resolutions and convening an EGM in unavoidable circumstances and extended the validity of the existing circulars up to December 31, 2021, in light of the current social distancing norms

The MCA has earlier issued General Circular no 14/2020 (first circular) and 17/2020 (second circular) dated 13th April 2020 for providing relaxations and clarifying various difficulties in following the first circular. The circular details guidelines for conducting an EGM for companies that need to provide e-voting facility or have opted for e-voting as per section 108 of the Companies Act, 2013, every listed company and company not having less than 1000 shareholders must mandatorily provide e-voting facility and for companies that do not need to provide e-voting facilities. All other requirement and conditions provided in the said circulars shall remain unchanged.

• MCA has notified the Companies (Accounting Standards) Rules, 2021 which shall come into force on the date of their publication in the Official Gazette i.e 23-06-2021.

Through these Rules, MCA has notified the Accounting Standards for small and medium companies that revise the turnover and borrowing limits as well as help in making disclosure requirements less onerous. The definition of Small and Medium-Sized Companies (SMCs) under the standards has been revised and accordingly turnover limit has been increased from Rs 50 crore to not exceeding Rs 250 crore and with enhanced borrowing limits. This is in addition to the requirements that such entities should be unlisted companies, which are not banks, financial institutions, or insurance companies. The Accounting Standards 1 to 5, 7, and 9 to 29 as recommended by the Institute of Chartered Accountants of India shall be applicable on SMC and shall come into effect in respect of accounting periods commencing on or after 01-04-2021. Every company, other than companies on which Indian Accounting Standards as notified under Companies (Indian Accounting Standards) Rules, 2015 are applicable, and its auditor(s) shall comply with the Accounting Standards at the time of preparation of Financial Statements. Further, an existing Company which has subsequently become SMC can only claim the benefits of SMC under these Rules after two years.

• MCA has notified the Companies (Creation and Maintenance of Databank of Independent Directors) Amendment Rules, 2021,

Which shall come into force on the date of their publication in the Official Gazette i.e. 18-06-2021. The MCA has notified the much-awaited amendment and eased the requirement for aspiring as well as serving independent directors on the board of companies to get their names included in an official database of eligible professionals. As per a rule change notified by the ministry on Friday, in spite of any delay, a professional could get her name empaneled in the official database of independent directors maintained by the Indian Institute of Corporate Affairs (IICA) by paying ₹1,000/-. This is expected to give relief to those who have missed their deadline. Aspiring independent directors were expected to get their names included in the database before they took up the assignment while serving ones had time till last October as per an earlier instruction.

• MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2021,

Which shall come into force on the date of their publication in the Official Gazette i.e. 18-06-2021.  To enable users of financial statements to understand the effect of interest rate benchmark reform on an entity‘s financial instruments and risk management strategy, an entity shall disclose information about the nature and extent of risks to which the entity is exposed arising from financial instruments subject to interest rate benchmark reform, and how the entity manages these risks; and the entity‘s progress in completing the transition to alternative benchmark rates, and how the entity is managing the transition. Among others, there are changes in the basis for determining the contractual cash flows as a result of interest rate benchmark reform. The disclosures will enable users of financial statements to understand the effect of these changes, including an entity’s progress in completing the transition to alternative benchmark rates. Further, the amendments to Ind ASs are in terms of insertion of certain paragraphs, substituting definition of certain terms used in the standard along with aligning the bare text of Standards with Conceptual Framework of Financial reporting under IndAS.

The MCA has notified the Companies (Meetings of Board and its Powers) Amendment Rules, 2021 

Which shall come into force on the date of their publication in the Official Gazette i.e 15-06-2021. Through this Amendment, Rule 4 related to the matters not to be dealt with in a meeting through video conferencing or other audiovisual means has been omitted. Accordingly, now all companies are free to discuss and approve the matters related to the approval of the annual financial statements; the approval of the Board’s report; the approval of the prospectus; the Audit Committee Meetings for ²[consideration of financial statement including consolidated financial statement if any; and the approval of the matter relating to amalgamation, merger, demerger, acquisition, and takeover, in any meeting held through video conferencing or other audio visual means. Earlier, MCA has provided relaxation in this regard up to 30^th June 2021.

Other Laws

SEBI

• The Securities and Exchange Board of India has amended the SEBI (Alternative Investment Funds) Regulations, 2012(“AIF Regulations”), which were notified on May 05, 2021. 

The Amendment, 2021 notified on June 25, 2021 provides a framework for AIFs to invest simultaneously in units of other AIFs and directly in securities of investee companies. In terms of Regulation 15(1) (c) and (d) of the AIF Regulations, AIFs may invest in an Investee Company up to a specified limit, directly or through investment in the units of other AIFs. In terms of Regulation 20(1), the key management personnel of the AIF and the Manager shall abide by the Code of Conduct as specified in the Fourth Schedule of the AIF Regulations. In terms of provision to Regulation 20(8) of AIF Regulations, there is a requirement to furnish a waiver to AIF in respect of compliance with the said Regulation. The consent of the investors of the AIF or scheme may not be required for change in ex-officio external members (who represent the sponsor, sponsor group, manager group or investors, in their official capacity), in the investment committee set up by the Manager.

• SEBI has relaxed the vesting period requirement under the employee stock option schemes of listed companies in case of the death of an employee, a move aimed at providing relief to families of the deceased staff amid the coronavirus pandemic. 

The relaxation will be available to all such employees who died on or after April 1, 2020. The Share Based Employee Benefit (SBEB) Regulation provides that there will be a minimum vesting period of one year in case of employee stock options and Stock Appreciation Rights (SAR). In the event of death of an employee, all the options, SAR or any other benefit granted to him or her under a scheme till such date will vest in the legal heirs or nominees of the deceased employee. SEBI has now decided the provisions under the SBEB Regulations relating to minimum vesting period of one year shall not apply in case of death (for any reason) of an employee and in all such instances, all the options, SAR, or any other benefit granted to such an employee will vest with his/her legal heir or nominee on the date of death of the employee.

• SEBI has issued a circular regarding Automation of Continual Disclosures as per SEBI (Prohibition of Insider Trading) Regulations, 2015 for System driven disclosures for inclusion of listed Debt Securities.

It has now been decided to include the listed debt securities of equity listed companies under the purview of the said System Driven Disclosures for the entities. The Depositories and Stock Exchanges shall make necessary arrangements such that the disclosures pertaining to listed Debt Securities along with equity shares and equity derivative instruments are disseminated on the websites of respective stock exchanges with effect from July 01, 2021.

RBI

RBI with an intent to infuse greater transparency and uniformity in practice has notified a Guidelines on the Distribution of Dividends by NBFCs.

These guidelines shall be applicable on all NBFC’s and shall be effective for the declaration of dividend from the profits of the financial year ending March 31, 2022, and onwards. All NBFCs eligible to declare dividend may pay a dividend, subject to the Dividend Payout Ratio is the ratio between the amount of the dividend payable in a year and the net profit as per the audited financial statements for the financial year for which the dividend is proposed. The proposed dividend shall include both dividend on equity shares and compulsorily convertible preference shares eligible for inclusion in Tier 1 Capital. Further, in case the net profit for the relevant period includes any exceptional and/or extraordinary profits/ income or the financial statements are qualified (including ’emphasis of matter’) by the statutory auditor that indicates an overstatement of net profit, the same shall be reduced from net profits while determining the Dividend Payout Ratio. It has also made clear that the Reserve Bank shall not entertain any request for ad-hoc dispensation on the declaration of dividend.

IBBI

• The Insolvency and Bankruptcy Board of India has issued the provisional list of IPs prepared in accordance with ‘Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2021

For appointment as, IRP in a CIRP under section 16(4), liquidator in a liquidation process under section 34(6), RP in an individual insolvency resolution process under section 97(4) or 98(3), and bankruptcy trustee (BT) under section 125(4), 146(3) or 147(3) of the Insolvency and Bankruptcy Code, 2016. This list shall be in effect during the period between July 1, 2021 – December 31, 2021. The Board has prepared a common Panel of IPs for appointment as IRP, Liquidator, RP and BT and shall share the same with the Adjudicating Authority (‘AA’) (NCLT and DRT) in accordance with these Guidelines. The Panel will have validity of six months and a new Panel will replace the earlier Panel every six months. For example, the first Panel under these Guidelines will be valid for appointments during July – December 2021, and the next Panel will be valid for appointments during January – June 2022, and so on. The NCLT may pick up any name from the Panel for appointment of IRP, Liquidator, RP or BT, for a CIRP, Liquidation Process, Insolvency Resolution or Bankruptcy Process relating to a corporate debtors and personal guarantors to corporate debtors, as the case may be.

View Monthly Compliance Calendar

KNM India can assist you with a range of complete financial services that range from Corporate advisory to Transaction advisory, Pre-incorporation to Post-incorporation, Insolvency and bankruptcy code to Secretarial services, Assurance to Internal audit services, along with Market entry strategy to Foreign company registration in India. To discuss about any of these please book your slot, or call us on +91-99105-04170 – or email us at services@knmindia.com to get a quick response.

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 26.05.2021 till 25.06.2021.

A much-needed relief by the Ministry of Corporate Affairs (MCA) to conduct the Extra Ordinary General Meetings (EGM) through Video Conference (VC) or Other Audio-Visual Means (OAVM) in accordance with the framework provided till 31^st December 2021.

A. Background

The Ministry of Corporate Affairs had earlier provided relaxations for conducting EGM through Video Conference (VC) or Other Audio-Visual Means (OAVM) on account of COVID-19. The MCA had issued the First General Circular no. 14/2020 dated 8^th April 2020 for providing relaxation wherein the companies were allowed to conduct Extra-Ordinary General Meeting (EGM) for passing ordinary and special resolutions requiring approval of members through VC or OAVM considering the COVID 19 outbreak situation.

In furtherance to the above circular, the Second General Circular no. 17/2020 was issued on 13^th April 2020 clarifying the framework for conducting the EGM through VC or OAVM.

B. Relaxation

Now, it has been allowed to all the companies to conduct EGM’s through VC or OAVM or transact items through postal in accordance with the framework provided till 31^st December 2021 vide the General Circular No. 10/2021 dated 23^rd June 2021.

MCA had already allowed the companies to conduct the Annual General Meeting (AGM) through VC or OAVM till 31^st December 2021 vide circular dated 13^th January 2021.

C. Frequently Asked Questions (FAQs)

1. Is the Facility of conducting EGM through VC or OAVM is available for all companies?

Yes, all companies whether Listed, Private, Public or Small Companies are allowed to provide facility of VC or OAVM for conducting their EGM.

2. Are companies allowed to conduct Annual General Meeting through VC or OAVM?

Yes, the Companies are allowed to conduct Annual General Meeting (AGM) through VC or OAVM facility.

3. Is it necessary to maintain the recorded transcript of the General Meeting held through VC or OAVM facility?

Yes, it is necessary to keep the recorded transcript in the safe custody of the Company.

4. What is the time period allowed by MCA to conduct the EGM / AGM through VC or OAVM?

As per the recent circulars, the Companies can conduct their EGM / AGM through VC or OAVM till 31^st December 2021.

The article has been contributed by:

CS Anuradha Newatia

Executive Secretarial

Further, we shall be happy to assist in case of any clarifications. For a deeper discussion, feel free to revert us at services@knmindia.com

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.