Income Tax

• • • • • • • • CBDT vide Circular No.21/2020[ F.No.IT(A)/1/2020-TPL] dated 04.12.2020 , has issued more clarification(34 FAQs) in Vivad se Vishwas scheme. Earlier 22nd April 2020, 55 FAQs are issued in support of the scheme.

             

            • • CBDT vide Circular No.20/2020[ F.No.275/192/2020-TPL] 03.12.2020 has issued annual circular in regards to TDS on salary. Annual circular contains slab rates etc. as complete set of guidance for deduction of TDS on salary.

             

            Goods & Services Tax (GST)

             

            

            • • CBIC vide Notification No 89 /2020 – Central Tax Dated 29th-Nov -2020 has waived the penalty payable by a registered person u/s 125 of CGST Act, 2017(i.e. general penalty under GST), in respect of non-compliance for the generation of e-invoice in case of B2C transactions. The Penalty has been waived off for the period from 1st December 2020 to 31st March 2021 subject to the condition that the said registered person complies with the QR code provisions with effect from 1st April 2021.

             

            • • CBIC vide Notification No 90 /2020 – Central Tax Dated 1st-Dec-2020 has mandated mentioning of 8-digit HSN code on invoices by taxpayers supplying 49 specified chemical items

             

          • CBIC videNotification No. 91/2020 – Central Tax dated 10th November 2020 CBIC vide Notification No. 91/2020 dated 14th December 2020 has extended the due date for completion or compliance of any action, by any authority u/s 171, i.e. Anti-profiteering measures, which falls during the period 20th March 2020 to 30th March 2021, till 31st March 2020. The Notification has been issued to amend the earlier Notification no. 35/2020-Central Tax dated 3rd April 2020.

         

        • • CBIC videNotification No. 92/2020 – Central Tax dated 22nd December 2020 has appointed 1st day of January, 2021 as the date on which the provisions of sections 119,120,121, 122,123,124,126,127 and 131 of the CGST Act shall come in force.

         

        • • CBIC vide Notification No. 94/2020– Central Tax, dated 22nd December 2020 has amended certain rules to give effect to amendments made to the CGST Act vide Finance Act,2020.

         

        • • 1. The Limit under Rule 36(4) for Input not reflecting in GSTR-2B has been reduced to 5% from 10% of the ITC available.

           

          • 2. Rule 59(5) has been inserted to provide that a registered person shall not be allowed to file GSTR-1, if he has not furnished GSTR-3B for preceding 2 months. Similarly, for quarterly return filers, the taxpayer failing to file Form GSTR 3B for the preceding quarter shall not be permitted to file Form GSTR 1 for the subsequent quarter.

           

          • 3. The time limit for granting GST registration has been increased from 3 days to 7 days. And in case applicant has not opted for Aadhar authentication or where department feels fit to carry out physical verification the time limit shall be 30 days instead of 7 days.

           

          • 4. New clause in Rule 21 has been inserted providing power to cancel GST registration of a person in the following cases:

           

          • a. Availment of ITC in violation of section 16 of CGST Act, 2017
          • b. Where outward supplies declared in GSTR-1 for one or more term are in excess of supplies declared in GSTR-3B
          • c. The taxpayer violets the conditions inserted by rule 86B of CGST Act, 2017

           

          • 5. Where the tax officer has significant reasons to believe or in case there are deviations in the supplies reported in GSTR-1 and GSTR-3B or ITC claimed in GSTR-3B and Form GSTR-2B, he can suspend the registration without giving a reasonable opportunity to the registered person.

           

          • 6. When GST registration is suspended, no refund under section 54 of CGST Act can be availed by the taxpayer.

           

          • 7. Validity of E-way bill has been reduced. Earlier, validity of E-way bill was 1 day for every 100 KM which now has been increased to 200 KM for 1 day. E.g. If the distance to be covered is 600 KM, validity of E-way bill shall be 3 days comparing to 6 days before amendment.

           

          • 8. New Rule 86B has been inserted and shall come into effect from 1st January 2021 onwards. The said rule has been inserted to restrict the claim of credits to 99% of the credits available in the electronic credit ledger. The restriction shall be imposed where the value of taxable supplies other than exempt supply and zero-rated supply in a month exceeds Rs. 50 lakhs. Certain exceptions have been provided to this rule which are as below:

           

          • a. Where the taxpayer has paid Income tax > Rs. 1 lakh in 2 preceding FY.
          • b. Where taxpayer has received refund exceeding Rs. 1 lakh in the preceding FY on unutilized ITC either on account of zero-rated supplies made without payment of tax or under inverted tax structure.
          • c. Where taxpayer has used electronic cash ledger to pay off liability on outward supplies which cumulatively makes 1% of the total liability up to the said month.
          • d. Where a person is a Government Department, Public Sector Undertaking (PSU), local authority or a statutory body.

           

          Companies Act, 2013

          • 
        • The Ministry of Corporate Affairs has issued Notification for Companies (Share Capital and Debentures) Second Amendment Rules, 2020

         

        • • Which shall come into force on the date of their publication in the official Gazette i.e 24-12-2020. The said rules amend the Companies (Share Capital and Debentures) Rules 2014 by substituting the Form SH-7. The Form SH-7 is used for filing a notice to the Registrar of any changes in Share Capital pursuant to section 64(1) of the Companies Act, 2013 and Rule 15. A new option has been inserted in Point 3 of the form to cater the need for Cancellation of unissued shares of one class and increase in shares of another class of shares.

       

      • The Ministry of Corporate Affairs has issued Notification for Companies (Share Capital and Debentures) Second Amendment Rules, 2020

       

      • Which shall come into force on the date of their publication in the official Gazette i.e 24-12-2020. The said rules amend the Companies (Share Capital and Debentures) Rules 2014 by substituting the Form SH-7. The Form SH-7 is used for filing a notice to the Registrar of any changes in Share Capital pursuant to section 64(1) of the Companies Act, 2013 and Rule 15. A new option has been inserted in Point 3 of the form to cater the need for Cancellation of unissued shares of one class and increase in shares of another class of shares.

       

      • The Ministry of Corporate Affairs has issued the Companies (Auditor’s Report) Second Amendment Order, 2020

       

      • • To further amend the Companies (Auditor’s Report) Order, 2020. The amendments have been made in Paragraph 2, which specifies the auditor’s report to contain matters specifies, has been substituted, to provide that every report made by the auditor under section 143 of the Companies Act on the accounts of every company audited by him, to which this Order applies, for the financial years commencing on or after April 01, 2021, shall in addition, contain the matters specified in paragraphs 3 and 4, as may be applicable.

       

      • MCA has notified the dates as 21-12-2020 as the date from which certain provisions shall come into force.

       

      • • The Companies (Amendment) Act, 2020 has introduced several measures to improve the ease of doing business and decriminalize certain offences. The Companies (Amendment) Act, 2020, which amends the Companies Act, 2013, has been published in the Official Gazette on September 28, 2020. The Amendment Act’ does away with imprisonment as a consequence of a violation of certain provisions of the Companies Act, 2013. It also reduces or modifies the fines/penalties for certain offences under the Companies Act, 2013. The Amendment Act has now reduced the one-time penalty payable by companies in case of contravention of failure to file an annual return to INR 10,000 from INR 50,000, and in case of continuing offences, a fine of INR 100 for every day subject to a reduced limit of INR 200,000 from INR 500,000. Further, Imprisonment has been removed as a punishment for contravention of the provisions in relation to (i) buy-back of securities; (ii) financial statements and board’s report; (iii) knowingly functioning as a director despite the seat being vacated due to disqualification; (iv) constitution of the audit committee, nomination and remuneration committee and stakeholders relationship committee; and (v) disclosure of interest by director and participation in relation to matters in which he is interested. In addition, the Amendment Act extends provisions of the Companies Act relating to reduced fines for certain offences presently applicable to one-person companies or small companies to producer companies and start-up companies as well.

       

      • MCA has published the Companies (Compromises, Arrangements and Amalgamations) Second Amendment Rules, 2020

       

      • • To further amend the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016. Through this amendment a new definition for the term corporate action has been inserted which means “any action taken by the company relating to the transfer of shares and all the benefits accruing on such shares namely, bonus shares, split, consolidation, fraction shares, and right issue to the acquirer”. Further a new Rule 26A has been inserted which deals with the Purchase of minority shareholding held in Demat form in which the company shall within 2 weeks from the date of receipt of the amount equal to the price of shares to be acquired by the acquirer, verify the details of the minority shareholders holding shares in dematerialised form. After following the prescribed procedure and upon successful payment to the minority shareholders, the company shall inform the depository to transfer the shares of such shareholders, kept in the designated DEMAT account of the company, to the DEMAT account of the acquirer.

       

      • MCA has notified the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2020

       

      • • Which shall come into force on the date of their publication in the Official Gazette i.e 18-12-2020. The amendment provides that an individual shall now pass an online proficiency self-assessment test within a period of two years instead of one year with only 50% as pass percentage. Further. An individual shall not be required to pass the online proficiency self-assessment test when he has served for a total period of not less than three years as of the date of inclusion of his name in the data bank as a Director or KMP, as on the date of inclusion of his name in the databank, in a listed public company, an unlisted public company having a paid-up share capital of rupees ten crores or more, body corporate listed on any recognized stock exchange, statutory corporations set up under an Act of Parliament or any State Legislature carrying on commercial activities. MCA has further extended exemptions to person above the Director in certain Ministries and having experience in handling the matters relating to corporate laws or securities laws or economic laws.

       

      • MCA has designated Special Courts in the States of Maharashtra, West Bengal (WB) and Tamil Nadu (TN) for the purposes of trial of offences under Companies Act, 2013, in respect of cases filed by the Securities and Exchange Board of India.

       

      • • In exercise of the powers conferred by Section 435(1) of the Companies Act, 2013, the Central Government hereby designates the Court Number 22, City Civil and Sessions Court, Mumbai; Court Number 39, City Civil and Sessions Court, Greater Mumbai; 5th Special Court, Calcutta; Principal Judge, City Civil Court, Chennai as Special Courts in the States of Maharashtra, West Bengal and Tamil Nadu for the purposes of trial of offences under this Act.

       

      • MCA has released a circular to provide Relaxation of additional fees and extension of last date of filing of CRA-4 (form for filing of cost audit report) for FY 2019-20 under the Companies Act, 2013.

       

      • • The Form CRA-4 Form is used for filing the cost audit report. Various Stakeholders have sent representations seeking the extension of the last date of filing of CTR-4 due to the impact of the COVID-19 outbreak. MCA decided that if the cost auditor submits the cost audit report for the financial year 2019-20 in front of the Board of Directors of the companies by 31st December 2020 then it will not be considered as a violation of rule 6(5) of Companies (cost records and audit) Rules, 2014.

       

      Other Laws

      • IBBI

       

      • MCA has extended the suspension of the Insolvency and Bankruptcy Code (IBC) till March 31, 2021

       

      • To help businesses cope with the lingering difficulties posed by the COVID-19 pandemic. All defaults arising on or after March 25, when the national lockdown was imposed to curb the pandemic, will effectively remain out of the insolvency net for a full year. The government has already obtained Parliamentary approval, through the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020, for an up to one-year suspension of the initiation of insolvency proceedings for fresh defaults from March 25. Initially, the suspension was kept valid for six months, which was then extended by three months. The government had suspended the invocation of three Sections – 7, 9 and 10 of the IBC for COVID related defaults. These sections deal with the initiation of the insolvency proceedings by financial and operational creditors and corporate debtors.

       

      • SEBI

       

      • SEBI has issued a Master Circular on Scheme of Arrangement by Listed Entities and Relaxation under Sub-Rule (7) of Rule 19of the Securities Contracts (Regulation) Rules, 1957.

       

      • In order to enable the users to have access to the applicable circulars at one place, a Master Circular in respect of Schemes of Arrangement has been prepared. This Master Circular is a compilation of relevant and updated circulars issued by SEBI which deal with Schemes of Arrangement and which are operational as of the date of this circular. Further, it is also clarified that in case of any inconsistency between the Master Circular and the applicable circulars, the content of the relevant circular shall prevail.

       

      • SEBI issues Consultation Paper on Review of framework of Innovators Growth platform (IGP) under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

       

      • The paper proposes recommendations on the Eligibility Criteria, Lock –In, Discretionary Allotment to Anchor Investors, Continuing Rights & Takeover requirements. The period of holding of 25% of pre-issue capital to be held by eligible investors for 2 years, may be reduced to 1 year. The issuer company may be allowed to allocate upto 60% of the issue size on a discretionary basis, prior to issue opening. The SAST stipulation for triggering open offers may therefore be relaxed to a higher threshold from existing 25% to 49%. The threshold for disclosure of the aggregate shareholding can be increased from the present 5% to 10% and whenever there is subsequent change of ± 5% (instead of present ± 2%) in the shareholding.

       

      • SEBI clears shareholding norms for stressed companies, relaxes FPO norms in its board meet.

       

      • The market regulator SEBI cleared some crucial regulations for companies that wish to re-list themselves after undergoing the Corporate Insolvency Resolution Process or CIRP. SEBI said that the companies wanting to re-list after coming out of CIRP will have to mandatorily achieve Minimum Public Shareholding (MPS) of 5 percent at the time of re-listing on the exchanges. Such companies will get a period of 12 months to achieve MPS of 10 percent and 3 years to achieve MPS of 25 percent. The move will ensure sufficient float in a listed entity and hence reduce any volatility which could happen otherwise due to the low float in the market. An adequate amount of float may also restrict any sort of price manipulation. SEBI has also made some crucial amendments to its ICDR Regulations for Follow-on Public Offer (FPO). SEBI’s board also approved the proposal to do away with the applicability of Minimum Promoters’ Contribution or MPC and the subsequent lock-in requirements for the issuers making a Follow-on Public Offer (FPO). The relaxations will be subject to the company’s equity shares being frequently traded on the exchanges for the last three years, also the company has to be in compliance with listing and disclosure rules for three years and has redressed 95 percent of investor complaints. Currently, promoters are mandated to contribute 20 percent towards an FPO.

       

      • The Securities and Exchange Board of India (SEBI) has issued a Consultation Paper on Compliance Standards for Index Providers for public comments.

       

      • SEBI with an intent to prescribe a set of compliance standards for index providers in order to ensure quality and integrity of the indices administered, maintained or calculated by the index providers. The attributes of Benchmark Indices in India vis-a-vis all listed stocks and notes that both (Nifty 50 and Sensex 30) indices represent the largest & most liquid companies and represents the majority of average free-float market capitalization, average total market capitalization and average daily turnover of all stocks traded. In respect of Indices based on which any product including derivatives, Exchange Traded Funds (ETFs), Market Linked Debentures (MLDs) are available/ traded on Indian stock exchanges. In respect of Indices which are constructed based on data provided by Indian stock exchange(s). In respect of Indices provided by the index providers that are used by Mutual Funds for benchmarking of funds performances or issuance of Index Funds. The suggested framework casts responsibility on Indian Stock Exchanges and Asset Management Companies, as applicable, to ensure that the Index provider is in compliance with IOSCO Principles on a continuous basis. In addition to ensuring compliance by the Index provider with the IOSCO principles, the stock exchange is also required to assess the impact of any product based on such indices on trading in the Indian market. SEBI releases a framework to monitor foreign holding in depository receipts.

       

      • SEBI has issued a circular with a mechanism to make the e-voting process more secure, convenient and simple for shareholders.

       

      • With an intent to increase the efficiency of the voting process, SEBI has decided to enable e-voting for all Demat account holders by way of a single login credential through their Demat accounts and websites of depositories. Demat account holders would be able to cast their votes without having to register again with the e-voting service providers (ESPs), thereby not only facilitating seamless authentication but also enhancing ease and convenience of participating in the e-voting process. This will be implemented in a phased manner, under phase 1, Shareholders can directly register with depositories wherein they would be able to access the e-voting page of various ESPs through the websites of the depositories without further authentication by ESPs. The depository may advise the Demat account holders to update their mobile number and e-mail ID in order to access the e-voting facility. Further, the listed company would have to ensure that the ESPs engaged by them also provide a dedicated helpline in this regard. In order to enable better deliberations and decision making by shareholders while casting their votes, ESP portals would have to provide specific weblinks to the disclosures by the company on the websites of the exchanges and report on the websites of the proxy advisors.

       

      • SEBI has introduced additional payment mechanism, including ASBA, for making subscription and payment of balance money for calls in respect of partly paid securities issued by listed entities.

       

      • The decision has been taken as payment through Application Supported by Blocked Amount (ASBA) mechanism is investor friendly and enables faster completion of the process. The additional payment methods provided by SEBI are online as well as physical ASBA and the facility of linked online trading, demat and bank account (three-in-one type) account offered by some brokers. Investors can apply through an online portal of the self-certified syndicate banks (SCSBs) or physically submit application at the branch of a SCSB. The SCSBs would then send the application to RTA and block funds in shareholders accounts. Further, the intermediaries including the issuer company and its RTA would provide necessary guidance to the specified security holders in use of ASBA mechanism while making payment of calls.

       

      •  SEBI has come out with operational guidelines to credit physical shares in Demat Account of investors following re-lodged transfer request.

       

      • SThe shares in demat form would help in maintaining a transparent record of shareholding of companies amid rising concerns over beneficial ownership of entities. Subsequent to processing of re-lodged transfer request, the RTA (registrar to an issue and share transfer agent) would retain physical shares and intimate the investor (transferee) about the execution of transfer through a letter of confirmation. Further, this letter will be sent through speed post or e-mail, with the digitally signed letter containing details of endorsement, shares, folio of investor as available on physical shares. The investor would have to submit the demat request, within 90 days of issue of letter of confirmation, to depository participant along with the letter of confirmation. In case of shares that are required to be locked-in, the RTA, while confirming the demat request, will also intimate the depository about the lock-in and its period. Such shares would be in lock-in demat mode for six months from the date of registration of transfer. Transfer of securities held in physical mode has been discontinued with effect from April 1, 2019, but investors have not been barred from holding shares in physical form. In March 2019, SEBI had clarified that transfer deeds lodged before the deadline of April 1, 2019, and rejected or returned due to deficiency in documents may be re-lodged with requisite documents.

       

      • SEBI has issued a circular for the relaxation in timelines for compliance with regulatory requirements, due to the prevailing COVID conditions.

       

      • The timelines have been extended for compliance with the regulatory requirements by the trading members/ clearing members and Depository Participants (DPs). Accordingly, the trading members/ clearing members is allowed to submit Internal Audit, System Audit and Half yearly net worth certificate for half year ended on September 30, 2020 till December 31, 2020 and Cyber Security and Cyber Resilience Audit for half year ended on September 30, 2020 has been extended till January 31, 2021. Further, the Depository Participants is allowed to submit half yearly Internal Audit Report by DPs, for the half year ended on September 30, 2020 has been extended till December 31, 2020. DP can submit KYC application form and supporting documents of the clients to be uploaded on system of KRA within 10 working days has been extended for the Period of exclusion shall be from March 23, 2020 till December 31, 2020. A 15-day period after December 31, 2020 can Depository / DPs, to clear the back log. Further, Systems audit on annual basis for the financial year ended March 31, 2020 is extended till December 31, 2020 for DP’s.

       

      • RBI

       

      • RBI has allowed banks to open specific accounts which are stipulated under various statutes and instructions of other regulators/regulatory departments, without any restrictions.

       

      • An indicative list of such accounts is also released by the RBI which includes Accounts for real estate projects mandated under Section 4 (2) l (D) of the Real Estate (Regulation and Development) Act, 2016 for the purpose of maintaining 70% of advance payments collected from the home buyers; Nodal or escrow accounts of payment aggregators/prepaid payment instrument issuers for specific activities as permitted by Department of Payments and Settlement Systems (DPSS), Reserve Bank of India under Payment and Settlement Systems Act, 2007; Accounts for settlement of dues related to debit card/ATM card/credit card issuers/acquirers; Accounts permitted under FEMA, 1999; Accounts for the purpose of IPO / NFO /FPO/ share buyback /dividend payment / issuance of commercial papers/allotment of debentures/gratuity, etc. which are mandated by respective statutes or regulators and are meant for specific/limited transactions only; Accounts for payment of taxes, duties, statutory dues, etc. opened with banks authorized to collect the same, for borrowers of such banks which are not authorized to collect such taxes, duties, statutory dues, etc; Accounts of White Label ATM Operators and their agents for sourcing of currency. The above permission is subject to the condition that the banks shall ensure that these accounts are used for permitted/specified transactions only. Further, banks shall flag these accounts in the CBS for easy monitoring. Lenders to such borrowers may also enter into agreements/arrangements with the borrowers for monitoring of cash flows/periodic transfer of funds (if permissible) in these current accounts.

       

      • RBI has issued a Press Release to announce the date for the launching of the Real-Time Gross Settlement System (RTGS) 24×7.

       

      • The RTGS will be available round the clock on all days of the year and RTGS 24x7x365 will be launched with effect from 00:30 hours on December 14, 2020. Round the clock availability of RTGS will provide extended flexibility to businesses for effecting payments and will enable the introduction of additional settlement cycles in ancillary payment systems. This can also be leveraged to enhance operations of Indian financial markets and cross-border payments.

       

      • The Reserve Bank of India has released Draft Circular on Declaration of Dividend by NBFCs

       

      • In order to infuse greater transparency and uniformity in practice. NBFCs may declare a dividend, subject to compliance with the guidelines laid down in the circular including Deposit taking Non-Banking Financial Company (NBFC-D) and Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC-ND-SI) should have CRAR of at least 15% for the last 3 years, including the accounting year for which it proposes to declare dividend. Further, Non-Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC-ND) should have a leverage ratio of less than 7 for the last 3 years, including the accounting year for which it proposes to declare dividend. The Core Investment Company (CIC) should have Adjusted Net Worth (ANW) of at least 30% of its aggregate risk-weighted assets on the balance sheet and risk-adjusted value of off-balance sheet items for the last 3 years, including the accounting year for which it proposes to declare a dividend.

       

      • The Reserve Bank of India RBI has issued a Notification to notify the Foreign Exchange Management (Export and Import of Currency) (Second Amendment) Regulations, 2020.

       

      • Which shall come into force from the date of their publication in the Official Gazette i.e 03-12-2020. Amendments to the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015, are carried out to insert new Regulation 10 which allows Reserve Bank’s power to restrict export or import of currency. Accordingly, the Reserve Bank, may, in public interest and in consultation with the Central Government, restrict the amount of Indian currency notes of Government of India and/or of Reserve Bank, and/or foreign currency, on case-to-case basis, that a person may bring into or take outside India and prescribe such conditions as it may deem necessary.

       

      • NCLT

       

      • The National Company Law Tribunal to Start Second Phase of E-Courts Mandatorily From 1st Jan 2020.

       

      • The National Company Law Tribunal, has decided to start the second phase of e-court which is Automatic Case Number Generation for all the benches wherein e-filing procedure has been implemented. The order was issued after the approval of the Hon’ble Acting President Shri BSV Prakash Kumar. In the order it was informed that the Competent Authority has decided that Automatic Case Number Generation should be mandatorily started from 1st January 2021 in all the branches across the country. It was further informed that an automatic number has to be generated from E- Filing portal i.e., efiling.nclt.gov.in. This Order came in to complete the E- court stages which include e-filing, Automatic Case Number Generation, e-scrutiny, Case allocation & e-cause list generation. The NCLT conceptualized e-courts in 2017 and now e-filing has been mandatorily started in all the benches of NCLT across the Country.

       

      • DGFT

       

      • The Directorate General of Foreign Trade has issued a notification for the amendment in Para 2.14 of Chapter 2 of the Handbook of Procedures, 2015-2020.

       

      • The amendments have been made in Para 2.14 (d), which specifies that the IEC can be obtained against the new PAN. It is now specifically provided that in case of change in constitution of the PAN based IEC by way of merger, acquisition, liquidation, inheritance etc. such that the PAN of the new entity so formed is different from the earlier one, an IEC can be availed against the new PAN, if not existing already. Previous IEC’s can also be linked operationally to the PAN/IEC of the new entity. Further, in Para 2.14 (e), which specifies the application procedure can be done online and an application for linking the obligations under the old/previous IEC may be submitted online to the jurisdictional RA of the new entity along with supporting documents. Concerned RA may sanction the given linkage after due scrutiny of the evidence provided by the applicant including submission of the affidavits etc. After RA’s approval, the previous IEC shall be treated as surrendered.

       

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      Monthly Compliance Calendar

      
      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 26.11.2020 till 25.12.2020.

      Prepared by
      KNM MANAGEMENT ADVISORY SERVICES PVT. LTD.

      E-mail: services@knmindia.com
      Web site: www.knmindia.com

Income Tax

• • • • • • • CBDT vide Notification No. S.O. 3865(E) [No. 87/2020 / F. No. 370142/21/2020-TPL], Dated 28-10-2020 , has amend the Equalisation Levy Rules 2016 and now rules may be called the Equalisation levy (Amendment) Rules, 2020. Changes are done in Rules 2, 3, 6, 7, 8, 9 and Form No. 2 and substitute Rules 4, 5, Form No. 1, Form No. 3 and Form No. 4.

           

          • • CBDT vide Press Release, Dated 29-10-2020, , has announced encashment of LTC scheme to non-central employees too, the Govt. has allowed the payment of cash allowance, subject to below:
              1. Maximum of Rs 36,000 per person as Deemed LTC fare per person (Round Trip).
              2. Applicable LTC for Block year 2018-21.
              3. The employee needs to spend amount on goods / services which carry a GST 12% or more through digital mode during the period from the 12th of October, 2020 to 31st of March, 2021 and produce the GST Invoice.
              4. An employee needs to spend three times of the deemed LTC fare on specified expenditure.
              Please note that the above benefit is not available if employee has opts for new tax regime u/s 115BAC.

           

          • • CBDT videNotification S.O. 3906(E) [No. 88/2020/ F. No. 370142/35/2020-TPL], Dated 29-10-2020,has extend the due date of filing of various audit reports & Income tax return to 31st December & 31st January respectively, however in other cases(non-audit) due date of filing of ITR will be 31st December only.

           

          • • CBDT vide Press Release, Dated 13-11-2020, , has increase the safe harbour from 10% to 20% under section 43CA of the Act for the period from 12th November, 2020 to 30th June, 2021 in respect of only primary sale of residential units of value up to Rs. 2 crore. Consequential relief by increasing the safe harbour from 10% to 20% shall also be allowed to buyers of these residential units under section 56(2)(x) of the Act for the said period. In order to provide relief to real estate developers and buyers, the Finance Act, 2018, provided a safe harbour of 5%. In order to provide further relief in this matter, Finance Act, 2020 increased this safe harbour from 5% to 10%.

           

        Goods & Services Tax (GST)

         

        

        • • • CBIC vide Notification No 80 /2020 – Central Tax Dated 28th-Oct-2020 has extended the due date of filing of form GSTR-9/9C for the financial year 2018-19.

           

          • • CBIC vide Notification No. 83/2020 – Central Tax dated 10th November 2020 has given certain relaxation in filing of form GSTR-1 as follows:

           

      • The time limit for furnishing the details of outward supplies in FORM GSTR-1 of the CGST Rules, 2017, for each of the tax periods extended till the 11th day of the month succeeding such tax period.

     

    • • The time limit for furnishing the details of outward supplies in FORM GSTR-1 of the CGST Rules, 2017 for the class of registered persons required to furnish quarterly return under proviso to section 39(1) of the CGST Act, 2017 extended till 13th of the month succeeding such tax period.

     

    • • Notification No. 88/2020 – Central Tax dated 10th November 2020 ― E-Invoicing in terms of rule 48(4) of the CGST Rules, 2017 in respect of supply of goods or services or both to a registered person (B2B) made mandatory for registered persons with aggregate turnover exceeding Rs. 100 crore w.e.f 1st January 2020.

     

    • • Quarterly Return Monthly Payment (QRMP) Scheme (Notifications No. 81, 82, 84 & 85/2020 – Central Tax, all dated 10.11.2020; Circular No. 143/13/2020)
      • Registered person having aggregate turnover up to five (5) crore rupees allowed to furnish return on quarterly basis along with monthly payment of tax, with effect from 01.01.2021.

       

      • The aggregate annual turnover for the preceding financial year shall be calculated in the common portal taking into account the details furnished in the returns by the taxpayer for the tax periods in the preceding financial year.

       

      • In case the aggregate turnover exceeds 5 crore rupees during any quarter in the current financial year, the registered person shall not be eligible for the Scheme from the next quarter.

       

      • Rule 61A of the CGST Rules, 2017 -A registered person can opt in for any quarter from first day of second month of preceding quarter to the last day of the first month of the quarter. The registered person must have furnished the last return, as due on the date of exercising such option.

       

      • The option to avail the QRMP Scheme is GSTIN wise and therefore, distinct persons as defined in Section 25 of the CGST Act (different GSTINs on same PAN) have the option to avail the QRMP Scheme for one or more GSTINs. In other words, some GSTINs for that PAN can opt for the QRMP Scheme and remaining GSTINs may not opt for the Scheme.

       

      • For the first quarter of the Scheme i.e. January, 2021 to March, 2021, all registered persons, whose aggregate turnover for the FY 2019-20 is up to 5 crore rupees and who have furnished the return in FORM GSTR-3B for the month of October, 2020 by 30th November, 2020, shall be migrated on the common portal.

       

      • GSTN has introduced auto-populated Form GSTR-3B in PDF format, for benefit of the taxpayers. The auto-populated PDF of Form GSTR-3B will consist of 1) Liabilities in Table 3.1(a, b, c and e) and Table 3.2 from Form GSTR-1. 2) Liability in Table 3.1(d) and Input Tax Credit (ITC) in Table 4 from auto-drafted ITC Statement from Form GSTR-2b.

       

      Companies Act, 2013

    • The MCA extends due date of defaulting LLP to file belated documents under LLP Settlement Scheme, 2020.
    • 
      • • TThe MCA has notified the extension for defaulting LLP to file belated documents under LLP Settlement Scheme, 2020 till Nov. 30, 2020. The Government issued this notification due to the prevailed COVID-19 pandemic, in continuation of the Ministry’s General Circular No. 13/2020 dated March 30, 2020, and in General Circular No. 31/2020 dated September 28, 2020, the scheme was extended till 31st December 2020. It has been decided to extend the date on applicability to defaulting LLP and therefore, in serial number 3, para 8A, sub-para (iii) of the said circular dated 30.03.2020, belated documents due for filing till 30th November 2020 shall be substituted instead of August, 2020. All other requirements provided in the said circulars shall remain unchanged. It is further clarified that, if a statement of account and solvency for the financial year 2019-2020 has been signed beyond the period of six months from the end of the financial year but not later than 30th November 2020, the same shall not be deemed as non-compliance.

       

      • • MCA has issued a Sensitizing General Public Notice about Nidhi Companies.

       

      • • In order to make regulatory regime for Nidhi Companies more effective and also to accomplish the objectives of transparency & investor friendliness in the corporate environment of the country, the Central Government has amended the provisions related to NIDHI under the Companies Act and the Rules (effective from 15.08.2019). The amended provisions of the Companies Act (Section 406) and Nidhi rules (as amended w.e.f. 15.08.2019) require that the companies have to apply to the Central government for updation/ declaration of their status as Nidhi Company in e-Form NDH-4. These companies are required to ensure strict adherence to provision of Companies Act, 1956/ 2013 and Nidhi Rules, 2014 as amended. Further, applications are being received by the Ministry of Corporate Affairs from such companies in e- form NDH-4 for either updation OR declaration as Nidhi Company. It has been noticed that many of these companies are not following the extant rules. Stakeholders are advised to verify/ ensure that the Nidhi Company in which they are planning to become member, has been declared as such under the amended provisions of Companies Act and is following the rules prescribed in this regard.

           

        Other Laws

        • IBBI

         

        • The Insolvency and Bankruptcy Board of India has issued the Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) (Second) Guidelines, 2020.

         

        • The Board will prepare a common Panel of IPs for appointment as IRP, Liquidator, RP and BT and share the same with the AA (Hon’ble NCLT and Hon’ble DRT) in accordance with these Guidelines. An IP will be eligible to be in the Panel of IPs, if there is no disciplinary proceeding, whether initiated by the Board or the IPA of which he is a member, pending against him; He has not been convicted at any time in the last three years by a court of competent jurisdiction; He expresses his interest to be included in the Panel for the relevant period; He undertakes to discharge the responsibility as IRP, Liquidator, RP or BT, as he may be appointed by the AA; He holds an Authorization for Assignment (AFA), which is valid till the validity of Panel. For example, the IP included in the Panel for appointments during January – June 30, 2021 should have AFA valid up to June 30, 2021.

         

        • The Insolvency and Bankruptcy Board of India has notified amendments in the regulations pertaining to the Insolvency Resolution Process for Corporate Persons Regulations.

         

        • The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2016 which shall come into force on the date of their publication in the Official Gazette i.e 13-11-2020. As per section 7 of the I&B Code, a Financial Creditor in order to substantiate the pre occurred default, has to furnish ‘evidence of the default’ recorded with the information utility along with the application made under Section 7. The Board in pursuance of this power has amended the Regulations to specify/add two ‘other record’ or ‘evidence of default’ such as Certified copy of entries in the relevant account in the bankers’ book, and Order of a Court or Tribunal that has adjudicated upon the non-payment of a debt. Further, to improve the level of transparency, the IBBI amended the Regulations to require the RP to intimate each claimant the principle or formulae for payment of debts under a resolution plan, within 15 days of the order of the AA approving such resolution plan. The IRP/RP are now required to submit the list of creditors on an electronic platform for dissemination on its website.

         

        • The Insolvency and bankruptcy board of India has notified the IBBI (Information Utilities) (Amendment) Regulations, 2020.

         

        • To further amend the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017, which shall come into force on the date of their publication in the Official Gazette i.e 13-11-2020. The amendment brings in new regulation 21A which deals with dissemination of public announcement in which an information utility shall disseminate every public announcement it receives or has access to, on the date of its receipt or access, to its registered users, who are creditors of the corporate debtor undergoing insolvency proceeding under the Code.

         

        • IBBI has issued a Facilitation Letter on Common Mistakes committed by Insolvency Professionals in conduct of Corporate Insolvency Resolution Process (CIRP).

         

        • The IBBI and Insolvency Professional Agencies (IPAs) have come across some mistakes being committed by a some of the IPs in conduct of CIRPs. These mistakes are costs to the CD and the economy, and often amount to contravention of provisions of the law. Most of these are probably unintentional and can be avoided with a little more care and diligence. This communication lists out a few such mistakes with a hope that these will not be committed by any IP, pre-empting the IBBI/IPA to initiate any disciplinary action. The IBBI has provided guidance on the matters relating to acceptance of Assignment without having Authorisation; Fee payable to IP; Application for cooperation; Public announcement; Updating of list of claims; Authority of CoC; Appointment of professionals; Appointment of registered valuers; Payment for professional services; Disclosure of fee and relationship; Fee for authorised representatives; Representation in judicial proceedings; Related party transactions; Payment to creditors during CIRP; Avoidance transactions; Supply of information; Confidentiality undertaking; Disclosure of information; Window for views; Circulation of minutes; Inclusion of costs in IRPC; Compliance with applicable laws; Timeline; Compliance with orders; Maintenance of records and Co-operation with the Inspecting Authority. It is further clarified that, the observations made herein are only indicative. An IP must refer to the Code, the Rules/Regulations/Circulars under the Code and relevant case laws and / or may seek professional advice if he intends to take any action or decision, in any matter dealt with in this communication.

         

        • SEBI

         

        • The Securities and Exchange Board of India (SEBI) has issued a Circular introducing Unified Payments Interface (UPI) mechanism and Application through Online interface and Streamlining the process of Public issues of securities

         

        • Under SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (ILDS Regulations), SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 (NCRPS Regulations), SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008 (SDI Regulations) and SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015 (ILDM Regulations). The Process flow for applying though UPI mechanism data required and roles of the stakeholders includes the modes of application in public issue of securities as mentioned in this circular: Through Self-Certified Syndicate Bank (SCSB) or intermediaries or Through Stock Exchanges (App/ Web interface). Further, there are three processes for investor application submitted with UPI as mode of payment; Bidding and validation process, The Block process and Post issue closure. The data fields required in Application and Bidding Form relating to UPI include; Payment details–UPI ID with maximum length of 45 characters, acknowledgement Slip for SCSB / Broker / RTA / DP, and acknowledgement Slip for bidder. The Role of the Stock Exchange is to provide a platform for making applications. The Stock Exchange shall be responsible for addressing investor grievances arising from applications submitted online through the App based/ web interface platform of stock exchange or through their Trading Members.

         

        • SEBI proposes proposed to change the minimum threshold required for reclassification of promoters as public shareholders.

         

        • Promoters seeking re-classification should not hold 15 per cent or more of the total voting rights in a Company. At present, the minimum threshold requirement is 10 per cent. The review comes in the wake of feedback from market participants that promoters who are no longer in day-to-day control and have less than 15 per cent stake in the company may opt out from being classified as promoters without having to reduce their shareholding. The regulator also proposed exemption from the procedure for reclassification following an open offer provided the intent of the existing promoter to reclassify has been disclosed in the letter of offer. It also proposed exemption from the procedure for re-classification following an open offer, where a listed entity intends to reclassify former promoter entities but they are not traceable or are not co-operative. Further, all entities falling under promoter and promoter group should be disclosed separately even in case of ‘nil’ shareholding. Besides, companies should obtain a declaration on a quarterly basis from their promoters on the entities and persons forming part of the promoter group.

         

        • The Securities and Exchange Board of India has issued a circular on Non-compliance with provisions related to continuous disclosures which shall come into force for compliance period ending on or after December 31, 2020.

         

        • SEBI has prescribed continuous disclosure norms for issuers of listed Non-Convertible Debt Securities, Non-Convertible Redeemable Preference Shares (NCRPS) and Commercial Papers. Further, to ensure effective enforcement of continuous disclosure obligations by issuers of listed Non-Convertible Debt Securities or NCRPS or Commercial Papers, it has been decided to lay down a similar uniform structure for imposing fines for non-compliance with continuous disclosure requirements after discussion with market participants. Therefore, in the interest of the investors and the securities market, the Stock Exchanges shall levy fines and take actions in case of non-compliance. In case a non-compliant entity is listed on more than one recognized stock exchange, the concerned recognized stock exchanges shall take uniform action under this circular in consultation with each other.

         

        • SEBI has released the Consultation Paper on the Applicability and role of the Risk Management Committee.

         

        • With an objective to solicit public comments / views on the proposed amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as “LODR Regulations “or “LODR”) regarding the applicability and role of the risk management committee. Considering the multitude of risks faced by listed entities, risk management has emerged as a very important function of the board. In light of the increasing importance of the risk management function, a need is thus felt to extend the requirement of formation of a Risk Management Committee to a larger number of listed entities and define the role and responsibilities of the Risk Management Committee in the LODR Regulations and increase the frequency and define a quorum for the meetings of the Risk Management Committee.

         

        • The SEBI has issued a circular with an intent to strengthen the Investor Grievance Redressal Mechanism.

         

         

        • The SEBI has issued a Circular wherein it has enhanced the investment limits per mutual funds.(Prohibition of Insider Trading) Regulations, 2015.

         

        • A mutual fund launching a New Fund Offer (NFO) and intending to invest overseas will be required to specify the amount it will invest outside India and use the limit specified within six months. SEBI has doubled the foreign investment limit per mutual fund house to $600 million, from the existing $300 million. $50 million would be reserved for each mutual fund individually, within the overall industry limit of US $ 7 billion. Mutual Funds can invest in overseas Exchange Traded Fund (ETFs) subject to a maximum of US $ 200 million per mutual fund, within the overall industry limit of US $ 1 billion. For existing schemes, SEBI specified a headroom of 20% of the assets under management (AUM) in the previous three months in overseas securities, for investment in foreign securities subject to the overall limit of $600 million. Further, AMCs would have to report the utilization of the foreign limit to Sebi on a monthly basis, within 10 days from the end of each month. The changes come into force with immediate effect.

         

        • SEBI has come out with a framework for creation of security for listed debt securities and ‘due diligence’ that needs to be carried out by Debenture Trustees.

         

        • The new framework will become effective from January 1, 2021. In respect of creation of charge of security by issuer, before making the application for listing of debt securities, the issuer will have to create charge as specified in the offer document in favour of the Debenture Trustee (DT) and also execute Debenture Trust Deed (DTD) with the DT. Stock exchanges have been directed to list the debt securities only upon receipt of a due diligence certificate from DT confirming creation of charge and execution of the DTD. The charge created by issuer will be registered with sub-registrar, registrar of companies, depository, among others, as applicable, within 30 days of creation of such charge. In case the charge is not registered anywhere or is not independently verifiable, then the same will be considered a breach of terms of the issue by issuer. Under the norms, DTs will have to exercise independent due diligence and it places obligations on the DTs to ensure that the assets of the issuers are sufficient to discharge the interest and principal amount with respect to debt securities of issuers at all times. DTs will have to maintain records and documents pertaining to due diligence exercised for a minimum period of five years from redemption of debt securities. With regard to disclosures in the offer document, all terms and conditions of DT agreement including fees charged by DTs, details of security to be created and process of due diligence carried out by the DT should be disclosed.

         

        • SEBI has issued Circular to provide Relaxation under Sub -rule (7) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 for Schemes of Arrangement by Listed Entities.

         

        • SEBI has laid down the framework for Schemes of Arrangement by listed entities and relaxation under Rule 19(7) of the Securities Contracts (Regulation) Rules, 1957. This Circular shall be applicable for all the schemes filed with the stock exchanges after November 17, 2020. The amendment indicated at Para 7 of the Annexure shall be applicable for all listed entities seeking listing and/or trading approval from the stock exchanges after November 3, 2020. SEBI has inserted a new condition that a Report from the Committee of Independent Directors recommending the draft Scheme, taking into consideration, interrail, that the scheme is not detrimental to the shareholders of the listed entity. Further, it is now mandated that all listed entities are required to submit a valuation report from a Registered Valuer as specified in Section 247 of the Companies Act, 2013. It also clarified that the expression “substantially the whole of the undertaking” in any financial year shall mean twenty percent or more of value of the company in terms of consolidated net worth or consolidated total income during previous financial year as specified in Section 180(1)(a)(ii) of the Companies Act, 2013.

         

        • SEBI has issued a Public notice in respect of Extension of the SEBI Settlement Scheme 2020.

         

        • SEBI has earlier introduced the Settlement Scheme (“the Scheme”) which proposes to provide a onetime settlement opportunity to those entities that have executed trade reversals in the stock options segment of BSE during the period from April 01, 2014 to September 30, 2015 and against whom enforcement proceedings have been approved by SEBI. The period of the Scheme commenced on August 01, 2020 and was to end on October 31, 2020. In view of the large scale disruption caused by the Covid-19 Pandemic, many representations were received by SEBI, seeking extension of the period of the Scheme. Upon consideration of the same, the competent authority has approved the extension of the period of the Scheme till December 31, 2020.

         

        • RBI

         

        • The Reserve Bank of India has issued a Notification to exempted Housing Finance Companies from certain provisions of the RBI Act, 1934.

         

        • RBI in supersession of its earlier notification dated November 19, 2019 has amended the provisions and notifies that that the provisions of Sections 45-IA on Requirement of registration and net owned fund, Section 45-IB on Maintenance of percentage of assets, and Section 45-IC on Reserve fund, of the RBI Act, 1934 shall not apply to a Non-Banking Financial Company which is a Housing Finance Institution as defined in clause (d) of section 2 of the National Housing Bank Act, 1987.

         

        • RBI has issued a circular on Delegation of Powers for Compounding of Contraventions under FEMA.

         

        • In terms of the Master Direction on “Compounding of Contraventions under FEMA, 1999” the powers to compound certain contraventions have been delegated to the Regional Offices/Sub-Offices of the Reserve Bank. The Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 i.e. Notification No. FEMA.395/2019-RB, both notified on October 17, 2019, by Government of India and Reserve Bank of India respectively have since been superseded and the compounding powers stand delegated to the Regional Offices/ Sub Offices of the Reserve Bank to compound the contraventions under FEM (Non –Debt Instruments) Rules, 2019 and FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations. Further, with respect to the classification of a contravention under FEMA by the Reserve Bank as ‘technical’ or ‘material’ or ‘sensitive/serious in nature’. On a review it has been decided to discontinue the classification of a contravention as ‘technical’ that was dealt with by way of an administrative/ cautionary advice and regularize such contraventions by imposing minimal compounding amount as per the compounding matrix as contained in the ‘Master Direction – Compounding of Contraventions under FEMA, 1999’ dated January 01, 2016. On partial modification of earlier circular, it has been also decided that in respect of the Compounding Orders passed on or after March 01, 2020 a summary information, instead of the Compounding Orders, shall be disclosed publicly by publishing on the Bank’s website

         

        • The Reserve Bank of India has notified the discontinuation of Returns/Reports under the Foreign Exchange Management Act, 1999.

         

        • In order to improve the ease of doing business and reduce the cost of compliance, the existing forms and reports prescribed under FEMA, 1999, were reviewed by the Reserve Bank. Accordingly, it has been decided to discontinue the 17 returns/reports namely Category-wise transaction where the amount exceeds USD 5000 per transaction; Category-wise, transaction-wise statement where the amount exceeds USD 25,000 per transaction; Statement of Purchase transactions of USD 10,000 and above (including transactions of their franchisees); Extension of Liaison Offices (LOs); Extension of Project Offices (POs); Daily inflow/outflow of foreign fund on account of investment by FPIs; Data relating to actual inflow/outflow of remittances on account of investments by Foreign Institutional Investors (FIIs) in the Indian Capital market; Reporting of Inflow/Outflow details in respect of Mutual Fund by Asset Management Companies; Market value of FII Investment in India on fortnightly basis; Market value of FII Investment in India on Monthly basis; FII holdings as percentage of floating stock; Form DRR for Issue / transfer of sponsored / unsponsored Depository Receipts; ADR/GDR Movement Report- two way fungibility; Repatriation of Sales proceeds of underlying shares represented by FCCBs/GDRs/ADRs; GDR/ADR underlying shares issued, re deposited and released monthly reporting and Monitoring of disinvestments by Overseas Corporate Bodies

         

        • RBI Reviews regulatory framework for Housing Finance Companies (HFCs).

         

        • The Reserve Bank of India has issued a revised set of guidelines for housing finance companies after it took over regulation of these lenders last year. The draft regulatory framework for HFCs was issued for seeking comments from stakeholders based on the examination of the inputs received, RBI has decided to issue the revised regulatory framework for HFCs with the changes in the Principal business and housing finance i.e. the definition of “Housing finance company” and “Housing Finance”; Net Owned Fund (NOF) Requirement; Applicability of directions issued by Reserve Bank and Exposure of HFCs to group companies engaged in real estate business. HFCs are exempted from section 45-IB (prescribing maintenance of percentage of assets) and section 45-IC (prescribing Reserve fund) of the Reserve Bank of India Act. Necessary Notification in this regard will be issued in due course. Further harmonization between the regulations of HFCs and NBFCs will be taken up in a phased manner in the next two years by RBI.

         

        • NCLT

         

        • The benches of the National Company Law Tribunal (NCLT) have been reconstituted with effect from 1 December 2020.

         

        • The benches shall hear matters of respective jurisdiction as were hearing before location (before 23 March 2020). All matters including pending before lockdown and filed during the lockdown shall be heard regularly on all working days. The benches shall sit as per Rule 9 of NCLT Rules, 2016. The Tribunal has 28 benches, six at New Delhi (one being the principal bench) and Three at Ahmedabad (One being the Indore Bench), One at Allahabad, one at Bengaluru, one at Chandigarh, two at Chennai, one at Guwahati, three at Hyderabad of which one is at Amaravathi, One at Cuttack, one at Jaipur, one at Kochi, Two at Kolkata and five at Mumbai. Except the Bench at Allahabad, Amaravathi & Kochi all other benches have been notified as division benches.

         

        • Labour Laws

         

        • The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 for comments from stakeholders.

         

        • The draft rules are linked to provisions relating to Employees’ Provident Fund Organisation (EPFO), Employees’ State Insurance Corporation (ESIC), National Social Security Board for un-organised workers, gig workers and platform workers outlined in the Code on Social Security. The draft rules provide for Aadhaar-based registration including self-registration by un-organised workers, gig workers and platform workers on the portal of the Central government. For availing any benefit under any of the social security schemes framed under the Code, an un-organised worker or a gig worker or platform worker shall be required to be registered on the portal with details as may be specified in the scheme. Provision has also been made in the rules regarding gratuity to an employee who is on fixed-term employment. The rules also provide for single electronic registration of an establishment, including cancellation of the registration in case of closure of business activities. Further, under the draft rules, the assessing officer can visit the construction site only with prior approval of the secretary of the Building and Other Construction Workers Board. The rules also provide for the manner of payment of contribution by the aggregators through self-assessment.

         

        • The Ministry of Labour and Employment has notified the draft rules under the Occupational Safety, Health and Working Conditions Code, 2020,

         

        • Inviting objections and suggestions, if any, from the stakeholders within 45 days i.e upto January 3, 2021. The draft rules provide for operationalisation of provisions in the Code related to safety, health and working conditions of the dock workers, building or other construction workers, and mines workers, among others. The draft rules provide for appointment letter in prescribed format including designation, category of skill, wages, avenue for achieving higher wages or higher position to every employee of an establishment within three months of coming into force of the rules. According to the draft rules, no employee shall be employed in any establishment unless he has been issued a letter of appointment. It also made provision for annual health examination to be conducted by the employer free of cost for every worker of factory, dock, mine and building or other construction work, who has completed 45 years of age. Provision has also been made in the rules for journey allowance once a year. It also provides for single electronic registration, licence and annual integrated return for an establishment. An all-India single licence for contractor supplying or engaging contract labour in more than one state for five years has been provided as against work order-based licensing at present. Further, Under the rules, safety committees have been made mandatory for every establishment employing 500 or more workers to provide an opportunity for the workers to represent their concern on occupational safety and health matters. Rules have been provided for composition and functions of safety committees. The rules has been made regarding conditions related to safety of women employment in all establishment for all type of work before 6 am and beyond 7 pm with their consent.

         

        • FSSAI

         

        • FSSAI extends timeline for modification of licence by existing FSSAI licenced manufacturer without modification fee.

         

        • The Food Safety and Standards Authority of India has extended period for modification of licence by existing FSSAI licenced manufacturer without modification fee. The period for modification of licence by existing FSSAI licensed manufacturers without any modification fee extended till June 30, 2021.

         

        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.

         

        Monthly Compliance Calendar

        
        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 26.10.2020 till 25.11.2020.

        Prepared by
        KNM MANAGEMENT ADVISORY SERVICES PVT. LTD.

        E-mail: services@knmindia.com
        Web site: www.knmindia.com

Income Tax

• • CBDT vide Press release dated 26/09/2020 has informed that now there is no requirement of scrip wise reporting for day trading and short-term sale or purchase of listed shares.

• • CBDT vide Circular No. 17 OF 2020 [F. No.370133/22/2020-TPL], Dated 29-9-2020, has issued guidelines for section 194-O & 206C(1-I) of the income tax act. Impact of guidelines was already circulated in our last mail dated September 30, 2020.

• • CBDT vide Circular No. F. NO. 225/150/2020-ITA-II, Dated 30-9-2020, has further extend the date for furnishing of belated and revised returns for the Assessment Year 2019-20 from 30th September 2020 to 30th November, 2020.

• • CBDT vide Notification G.S.R. 610(E) [NO. 82/2020/F.NO.370142/30/2020-TPL], DATED 1-10-2020, has amend the rule 5, FORM NO. 3CD, FORM NO. 3CEB AND FORM ITR-6; INSERTION OF RULES 21AG, 21AH, FORM NO. 10-IE AND FORM NO. 10-IF to incorporate the provision of section 115BAA, 115BAB, 115BAC, 115BAD.

• • CBDT vide Notification G.S.R. 664(E) [NO. 84/2020/F. NO. 370149/76/2019-TPL], DATED 22-10-2020, has reduced the minimum rating from AA to A for certain funds mentioned in Rule 67(2) of the Income-tax Rules, 1962. Rule 67 prescribes an investment pattern for provident funds which is to be followed mandatorily to avail tax benefits. The said amendment shall be effective from Assessment Year 2021-22 and subsequent years.

• • CBDT Press release DATED 24-10-2020, has extended the date for furnishing of Various audits report & Income tax returns for the Assessment Year 2020-21 from 31st October & 30th November to 31st December & 31st January respectively.

Goods & Services Tax (GST)

• • CBIC vide Notification No 74 & 75 /2020 – Central Tax Dated 15-Oct-2020 has extended the due date of filing of GSTR-1 (Quarterly) for the Quarter October 2020 to December 2020 to 13th January 2020.

• • CBIC Notification No 76 /2020 – Central Tax Dated 15-Oct-2020 has extended the due date of filing of GSTR-3B for the taxpayer having turnover below 5 Cr. to 22nd of subsequent month for category A states and 24th of subsequent month for category B states for the tax period October 2020 to March 2021. For taxpayer having turnover more than 5 cr. Will file GSTR-3B on 20th of the subsequent month.
  • CBIC vide Notification No. 77 & 79/2020 – Central Tax dated 15th October 2020 has given certain relaxation in Annual return and GST Audit as follows:

• • Relaxation for registered taxpayers who have aggregate turnover below Rs 2 Crores to not to file GSTR 9 – Annual Return for the FY 2017-18 and FY 2018-19 extended to include registered taxpayers for the FY 2019-20 as well.

• • Relaxation for the registered taxpayers who have aggregate turnover below Rs 5 Crores to not to file GSTR 9C – Reconciliation Statement for the FY 2017-18 and FY 2018-19, extended to include registered taxpayers for the FY 2019-20 as well.

• • CBIC vide Notification No. 78/2020 – Central Tax dated 15th October 2020 ― has given new HSN disclosure rules with effect from 01st April 2021 as follows:

Aggregate Turnover in the preceding FY Number of Digits of HSN
Below Rs 5 Crores 4 (Not required for B2C invoices)
Above Rs 5 Crores 6

• • CBIC vide Notification No. 79/2020 – Central Tax dated 15th October 2020 amended The Rule 138E ( Blocking of E-way bill generation facility if returns are not filed for two consecutive tax periods) has been amended so as to provide relaxation in cases where E-way bills are generated during the period from 20th March 2020 till 15th October 2020, for all such class of person who have not furnished return in FORM GSTR-3B or FORM GSTR-1 or the statement in FORM GST CMP-08 for the tax period from February 2020 to August 2020.

• • Notification No. 05/2020 – Central Tax (Rate) dated 16th October 2020 -Satellite launch services supplied by Indian Space Research Organisation, Antrix Corporation Limited or New Space India Limited ( S. No. 19C of Notification No.12/2017- Central Tax (Rate) dated 28th June 2017) exempted from GST.

Companies Act, 2013

The Lok Sabha has passed the Companies (Amendment) Bill, 2020 through voice vote

• MCA has extended the Relaxation in minimum residency requirements of 182 days in India by at least one director in every Company.

MCA has clarified that relaxation of the residency norms of minimum stay of 182 days in India, by at least one director of every Company, for the financial year 2020-2021 and that non-compliance of residency norms of minimum stay of 182 days in India, by at least one director of every Company, shall not be treated as a violation of Section 149 of the Companies Act, 2013 for the financial year 2020-2021. Earlier, MCA had relaxed the aforesaid residency norms for the financial year 2019-2020 vide General Circular No. 11/2020 dated March 24, 2020.

• • The Ministry of Corporate Affairs has notified the Companies (Meetings of Board and its Powers) Third Amendment Rules, 2020 to further amend the Companies (Meetings of Board and its Powers) Rules, 2014 which shall come into force on the date of their publication in the Official Gazette i.e 28-09-2020.

The amendment is brought under Rule 4(2) which specifies certain matters to be not dealt in a meeting through video conferencing or other audio-visual means, however, it has now allowed matters like approval of the annual financial statements, the approval of the Board’s report, and the approval of the prospectus etc which shall be held through video conferencing or other audio-visual until 31st December 2020. The MCA has relaxed this provision up to 30/09/2020 initially and now extended the same up to 31/12/2020.

• MCA has issued a circular for Extension of the period for the creation of deposit repayment reserve, investment of debentures under the provisions of Section 72(2)(c) of the Companies Act, 2013.

• In continuation of earlier issued by the MCA and keeping in view the requests received from various stakeholders seeking an extension of time for compliance of the subject requirements on account of Covid-19, it has been decided to further extend the time in respect of matters referred to in Paras V, VI of the original circular, up to 31st December, 2020. All other requirements shall remain unchanged. Accordingly, the time is extended for the creation of a deposit repayment reserve of 20% u/s. 73 (2) (C) of the Companies Act 2013 and to invest or deposit 15% of the amount of debentures u/r.18 of Companies (Share Capital and Debentures) Rules 2014 up to 31/12/2020.

• MCA has decided to extend the timeline for Companies Fresh Start Scheme, 2020 & LLP Settlement Scheme, 2020.

• for filing of all pending statutory documents till December 31 this year. These decisions came on the back of continued disruption faced by the companies on account of the COVID-19 pandemic. MCA has extended the timeline for Companies Fresh Start Scheme, 2020, which was originally valid from April 1, 2020 to September 30, 2020. The scheme, rolled out in March this year, granted immunity to companies from legal action and penalties over delay in filing statutory documents like annual returns and financial statements. Companies Fresh Start Scheme also allowed inactive companies to get themselves declared as ‘dormant company’ under provisions of the Companies Act. A similar facility for LLPs, the LLP Settlement Scheme, 2020, has also been extended till December 31. Originally valid from April 1 June 13, the scheme was extended till September 30 to allow LLPs to make good on their defaults.

• • • MCA has announced ‘Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013’ has been extended till December 31.
      Companies that raised funds via loans or debentures have to create a charge on their assets or undertakings within or outside India to acquire these instruments. The scheme, introduced on June 17, pardoned delay in regulatory filings of charges on property, assets, or any undertaking created on March 1, 2020. Further. the MCA has allowed companies to hold their extraordinary general meetings (EGMs) through video conference or other audio-visual means till the same date.

   

  • Special Measures under the Companies Act, 2013 and Limited Liability Partnership Act, 2008 in view of COVID-19 outbreak- Extension- reg. Relaxation in minimum residency requirements of 182 days in India by at least one director in every company

• • • On receipt of various representation from the stakeholders, Ministry of Corporate Affairs (‘MCA’) had vide General Circular No. 36/2020 dated 20th October, 2020, relaxed the residency norms of minimum stay of 182 days in India, by at least one director of every Company, for the financial year 2020-2021 and has clarified that non-compliance of residency norms of minimum stay of 182 days in India, by at least one director of every Company, shall not be treated as violation of Section 149 of the Companies Act, 2013 for the financial year 2020-2021.
    • In continuation of General Circular No. 11/2020 dated 24th March 2020, keeping in view the requests received from various stakeholders seeking relaxation from the residency requirement of 182 days in a year and after due examination, it is hereby clarified that non-compliance of minimum residency in India for a period of at least 182 days in a year, by at least one director in every company, under section 149 of the Companies Act, 2013 shall not be treated as non-compliance for the financial year 2020-21 also.

• • • • The Complete text of the Circular No. 36/2020 dated 20th day of October, 2020 can be viewed at below link:

      http://www.mca.gov.in/Ministry/pdf/GeneralCircularNo.36_20102020.pdf

Other Laws

IBBI

• IBBI has issued a circular to standardises meetings norms of the Disciplinary Committee and Appellate Panel of RVOs.

• With a view to bring uniformity in conducting meetings, the IBBI has come up with directions to be followed by the Disciplinary Committee (DC) and Appellate Panel (AP) of the Registered Valuers Organisations (RVOs) RVOs. The guidelines prescribe that meeting of the DC and AP should be held only if there is an agenda for the meeting. Meetings to be held preferably, through Video Conferencing (VC) facility, keeping in view the current pandemic. The quorum of the conferences must be as offered within the Bye Legal guidelines of the RVO however must be a minimum of two members together with the Chairperson. Additionally, if a member of the committee is expounded to the particular person in opposition to whom the motion is proposed by the DC or AP, or there’s every other subject of the battle of curiosity, the member must recuse himself/herself from the proceedings. The IBBI has now stated that will probably be the governing Board of the RVO that might be the only real authority for fixing the quantity of sitting charge to be paid to the members of the DC and the AP. Nonetheless, this can’t be lower than the quantity payable to the impartial director as sitting charges. Additionally, the tenure of the IBBI’s nominee shall, usually, be for 2 years from the date of appointment, until determined in any other case by IBBI.

• IBBI has issued Guidelines on Use of Caveats, Limitations, and Disclaimers by the Registered Valuers in Valuation Reports.

• These Guidelines may be called the Insolvency and Bankruptcy Board of India (Use of Caveats, Limitations and Disclaimers in Valuation Reports) Guidelines, 2020 and shall come into force in respect of valuation reports in respect of valuations completed by Registered Valuers (RVs) on or after 1st October, 2020. These Guidelines are divided into three sections, viz. the first section elaborates on the need for Caveats, Limitations, and Disclaimers in a valuation report; the second section provides a guidance note on the use of Caveats, Limitations, and Disclaimers, while the third section provides an illustrative list of Caveats, Limitations, and Disclaimers for each asset class provided in the Rules. These Guidelines provide guidance to the RVs in the use of Caveats, Limitations, and Disclaimers in the interest of credibility of the valuation reports. These also provide an illustrative list of the Caveats, Limitations, and Disclaimers which shall not be used in a valuation report. All Registered Valuers shall prepare valuations reports under rule 8 of the Rules in adherence to these Guidelines.

• SEBI

• SEBI has issued a circular to all issuers of listed or proposed to be listed debt securities would have to deposit 0.01% of the issue size or maximum of Rs 25 lakh towards creation of recovery expense fund.

• In order to enable the debenture trustees to take prompt action for enforcement of security in case of default in listed debt securities, a ‘Recovery Expense Fund’ (REF) shall be created which shall be used in the manner as decided in the meeting of the holders of debt securities. In order to enable the debenture trustees to take prompt action for enforcement of security in case of default in listed debt securities, a ‘Recovery Expense Fund’ (REF) shall be created which shall be used in the manner as decided in the meeting of the holders of debt securities. The balance in the recovery expense fund should be refunded to the issuer on repayment to holders of debt securities on their maturity or at the time of the exercise of call or put option, for which a No Objection Certificate (NOC) should be issued by the debenture trustee to the stock exchange.

• The SEBI has issued the clarification on the procedure for handling certain types of complaints by the Stock Exchanges as well as the standard operating procedure for actions to be taken against listed companies in case of failure to redress investor grievances.

• The SEBI has encouraged the Investors to initially take up their grievances directly with the listed company and the investors can use the SCORES platform to submit their complaints. If the complaints are not addressed by the listed company within a period of 30 days from the date of receipt of the complaint, the complaints are to be forwarded to the Designated Stock Exchange through the SCORES platform. Now the SEBI has clarified that in respect of Paras 16, 27, 32 and Point 2C, the words “promoter and promoter group” and promoter/ promoter group” shall be read as “promoter(s)” and restricting the provisions only to the promoters.

• SEBI has notified the Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2020 which shall come into force on the date of their publication in the Official Gazette i.e October 19, 2020

• The amendment prescribes for the qualifications to the key investment team of the Manager of the Alternative Investment Fund. Accordingly, adequate experience, with at least one key personnel having not less than five years of experience in advising or managing pools of capital or in fund or asset or wealth or portfolio management or in the business of buying, selling, and dealing of securities or other financial assets. Further, at least one key personnel with professional qualification in finance, accountancy, business management, commerce, economics, capital market or banking from a university or an institution recognized by the Central Government or any State Government or a foreign university, or a CFA Charter from the CFA Institute or any other qualification as may be specified by the Board. Furthermore a new sub-Regulation 20(6) on General Obligations for an Alternative Investment Fund of the Principle Rules has been inserted, which provide that the Manager shall be responsible for investment decisions of the Alternative Investment Fund: Provided that the Manager may constitute an Investment Committee (by whatever name it may be called), to approve investment decisions of the Alternative Investment Fund subject to certain conditions.

•  The Securities and Exchange Board of India has issued the SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2020.

• To further amend the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. In a bid to improve transparency in sharing information, markets regulator SEBI has mandated all listed companies to make disclosures about their forensic audit reports to stock exchanges. The companies will be required to disclose their final forensic audit report, other than the forensic audit initiated by regulatory or enforcement agencies, on receipt by the listed entity, along with comments of the management, if any. All listed entities will now have to maintain 100 percent asset cover or asset cover as per the terms of the offer document, sufficient to discharge the principal amount at all times for the non-convertible debt securities issued. The regulator has removed the framework that said maintenance of 100 percent asset cover will not be applicable in case of “unsecured debt securities issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators. Furthermore, the listed entities will have to promptly forward to debenture trustees a half-yearly certificate regarding maintenance of 100 percent asset cover, or asset cover as per the terms of the offer document, in respect of listed non-convertible debt securities, by the statutory auditor along with the half-yearly financial results. The submission of half-yearly certificates will be exempted only where bonds are secured by a government guarantee.

• The Securities and Exchange Board of India has issued a Circular to extend the facility for conducting extraordinary meetings of unit holders INVIT’s and REIT’s through video conferencing or other audio-visual means under the InvIT Regulations and REIT Regulations.

• The InvITs or REITs were permitted to conduct meetings of unitholders through VC or OAVM. SEBI had received representations for extending the facility of VC or OAVM for conducting extraordinary meetings of unitholders for some more time due to the pandemic. Therefore, SEBI has decided to extend the timeline for this purpose till December 31, 2020 due to the COVID-19 pandemic.

• SEBI has issued Revised FAQs on SEBI (Prohibition of Insider Trading) Regulations, 2015.

• The SEBI Regulation 2015 for insider trading covers all insiders and their immediate relatives which include spouse, parent, siblings, and child of a person any of whom is either dependent financially on such person or consults such person in taking decisions relating to trading in securities. Through these FAQ’s SEBI has clarified that there is no requirement of pre-clearance is applicable for the exercise of employee stock options. Further, trading in ADRs and GDRs by employees of Indian companies who are foreign nationals is covered under provisions of PIT Regulations on code of conduct, and for such disclosures by such designated persons, a unique identifier analogous to PAN may be used. Furthermore, in case a designated person resigns, all information that is required to be collected from designated persons should be collected till the date of service of such employees with the company. Upon resignation from the service of a designated person, a company/ intermediary/ fiduciary should maintain the updated address and contact details of such designated person. The company/intermediary/ fiduciary should make efforts to maintain the updated address and contact details of such persons for one year after resignation from service. Such data should be preserved by the company/ intermediary/ fiduciary for a period of 5 years.

• SEBI issues guidelines for inter-scheme transfers of securities in mutual funds whereby no such transfer will be allowed in case of negative news in the mainstream media about the security.

• If security gets downgraded following Inter-Scheme Transfers (ISTs) within a period of four months, the fund manager of the buying scheme has to provide detailed justification to the trustees for purchasing such security. Presently, ISTs are allowed only if such transfers are done at the prevailing market price for quoted instruments on a spot basis and the securities so transferred are in conformity with the investment objective of the scheme to which such transfers have been made. In order to ensure that transfers of securities from one scheme to another scheme in the same mutual fund are in conformity with the investment objective. Further, Asset Management Companies (AMCs) will have to ensure that compliance officer, chief investment officer, and fund managers of transferor and transferee schemes have satisfied themselves that ISTs has undertaken are in compliance with the regulatory requirements and documentary evidence in this regard will be maintained by them for all ISTs. With regard to meeting liquidity, AMCs need to have an appropriate liquidity risk management model at the scheme level, approved by trustees, to ensure that reasonable liquidity requirements are adequately provided for. The guidelines will be applicable from January 1, 2021.

• The SEBI has come up with a uniform timeline for listing of securities on the basis of a private placement, which shall come into force from 1st December 2020.

• SEBI has been receiving requests from various market participants for clarification on the time period within which securities issued on private placement basis under SEBI ILDS, SEBI NCPRS, SEBI SDI, and SEBI ILDM Regulations need to be listed after completion of allotment, therefore after taking feedback from market participants, it has been decided to stipulate the timelines relating to the day of closure of issue is considered the ‘T’ day; the allotment of securities will be completed by ‘T+2’ trading days after receiving funds; the listing permission from the stock exchanges should be received by ‘T+4 and T day refers to the closure of the issue. Further, in case of delay in listing of securities issued on a private placement basis beyond the timeline, the issuer will pay penal interest of 1 percent per annum over the coupon rate for the period of delay to the investor (i.e. from date of allotment to the date of listing).

• SEBI releases a framework to monitor foreign holding in depository receipts.

• Under the framework, a listed company will appoint one of the Indian depositories as the designated depository for the purpose of monitoring of limits in respect of depository receipts. The designated depository in co-ordination with domestic custodian, other depositories and foreign depository (if required) will compute, monitor and disseminate the DRs’ information as prescribed in the framework. Further, the information will be disseminated on the websites of both the Indian depositories. For this purpose, the designated depository will act as the lead depository and the other depository shall act as a feed depository. The investor group may appoint one FPI to act as a nodal entity for reporting such grouping information to its DDP in the prescribed format. Similarly, the FPIs who do not belong to the same investor group would report such investment holding details to their custodian on a monthly basis. However, in respect of FPIs which do not belong to the same investor group, responsibility of monitoring the investment limits of FPI will be with the respective DDP or custodian.

• SEBI has issued a Circular reviewing its provisions on valuation of debt and money market instruments due to COVID-19 pandemic. This Circular was issued on 1st October, 2020 and its provisions are effective immediately and will be in force till 31st December, 2020.

• It may be noteworthy that on 31st August 2020, SEBI issued a Circular providing relaxation to Credit Rating Agencies in recognition of default for restructuring by the lender/ investors solely due to COVID -19 related stress. SEBI has now decided to extend discretion to valuation agencies to recognise defaults in cases where the proposal of restructuring of debt is only due to COVID-19 related stress. This discretion is granted to valuation agencies engaged by Asset Management Companies (AMCs) or the Association of Mutual Funds of India (AMFI). The valuation agency may not consider the restructuring or non-receipt of dues as default for the purpose of valuation of money market or debt securities held by mutual funds. Furthermore, any restructuring proposal received by debenture trustees must be immediately communicated to the investors. Any proposal received by mutual funds from lenders or issuers or debenture trustees must be immediately reported to the valuation agencies, credit rating agencies and the AMFI. The AMFI shall then disseminate such information to its members immediately. Moreover, valuation agencies must ensure that any changes in the terms of the investments, the financial stress of the issuers and the capabilities of the issuers to repay the dues on the extended dates are reflected in its valuation of the securities. The Circular also clarifies that in case of differences in the valuation of securities by two valuation agencies, the conservative valuation, among the two, will be accepted. Additionally, AMCs will continue to be responsible for the true and fair valuation of the securities.

• SEBI has issued a circular to extend the relaxations till March 31, 2021 pertaining to the validity of regulatory approval for launching IPO and rights issue, in view of the prevailing conditions due to the Covid-19 pandemic.

• In addition, the relaxation has been extended in respect of the filing of fresh offer documents in case of an increase or decrease of issue size by 50%. The validity of SEBI’s observations, expiring between Oct. 1, 2020, and March 31, 2021, has been extended up to March 31, 2021. This is subject to an undertaking from the lead manager of the issue confirming compliance with the Issue of Capital and Disclosure Requirements Regulations while submitting the updated offer document to SEBI. Earlier in April, the validity of SEBI’s observation, where the same has expired or will expire between March 1, 2020, and Sept. 30, 2020, was extended by 6 months from the date of expiry of such observation.

• SEBI has amended the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 to rationalize eligibility criteria and disclosure requirements for Rights Issues’ with an objective to make the fundraising through this route, easier, faster, and cost-effective.

• The mandatory 90% minimum subscription would not be applicable to those issuers where the object of the issue involves financing other than the financing of capital expenditure for a project, provided that the promoters and promoter group of the issuer undertake to subscribe fully to their portion of rights entitlement. SEBI has also allowed truncated disclosures for rights issues and now companies can file financial statements and periodic reports for last year instead of the last three years as required earlier. That is also applicable to cases where three years have passed after the change in management following the acquisition of control. SEBI has also increased the threshold to Rs 50 crore from Rs 10 crore for prospective issuers to file with SEBI the rights issue draft letter of offer for the regulator’s observations. Further, the issuer shall be eligible to make a fast-track rights issue in case of pending show- cause notices in respect to adjudication, prosecution proceedings, and audit qualification, provided that necessary disclosures along with the potential adverse impact on the issuer are made in the letter of offer.

• Pension Fund Regulatory and Development Authority (PFRDA)

• The Pension Fund Regulatory and Development Authority (PFRDA) has issued a Circular on Launch of D-Remit.

• which is proposed as an additional option/mode of contribution wherein existing NPS Subscribers under Government, Non-Government, All Citizens Model would be able to deposit their voluntary contributions by creating a Virtual ID linked to their Permanent Retirement Account Number (PRAN). It is to ease the mode of deposit and to optimize the investment returns. The generation of Virtual ID is a one-time exercise and the virtual ID remains static and can be used to deposit voluntary contributions in the future also. Subscribers will get the same-day NAV if the contribution is made through this mode before 8.30 am, on any bank working day. The creation of a virtual identification number is a one-time activity and can be obtained by visiting the e-NPS link in the websites of the respective Central Record Keeping Agency. The ID will be attached to the PRAN for D-Remit. The subscriber will have to give an online declaration for compliance under the Prevention of Money-Laundering Act, 2002 at the time of generating the virtual ID.

• NCLT

•  The NCLT has further notified that the Regular Proceedings at NCLT shall now start from 02-11-2020 instead of 12-10-2020.

• The regular proceedings at NCLT Delhi were stopped immediately after the lockdown was announced on 24-03-2020. The NCLT has earlier decided and fixed the dates of hearings for the Principal Bench and for all its New Delhi Benches (Court No. II, III, IV, V & VI) effective from 15-06-2020 which was re-notified from 01-07-2020, 20-07-2020, 05-08-2020, 20-08-2020, 07-09-2020 and 29-09-2020. However, NCLT has now decided that all matters listed for 12-10-2020, 13-10-2020 shall now be held on 02-11-2020, 03-11-2020, 04-11-2020 respectively, and so on. All stakeholders are requested to take note of the same.

Monthly Compliance Calendar

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 26.09.2020 till 25.10.2020.

Prepared by
KNM MANAGEMENT ADVISORY SERVICES PVT. LTD.

E-mail: services@knmindia.com
Web site: www.knmindia.com

Income Tax

• CBDT vide Circular No.16/2020 DATED 30-08-2020, has advised to bank to immediately refund the charges collected, if any, on or after 1″ January, 2020 on transactions carried out using the electronic modes prescribed under section 269SU of the IT Act and not to impose charges on any future transactions carried through the said prescribed modes.
• CBDT vide Circular F. NO. 225/126/2020/ITA-II,DATED 17-09-2020, has issued guidelines for compulsory selection of returns for complete scrutiny during Financial Year 2020-21 and conduct of assessment proceedings under Faceless Assessment Scheme 2020.
• Taxation and other laws (Relaxation and amendment of certain provisions) bill, 2020 has been presented in The Parliament for approval on 18-09-2020. 
• CBDT vide Notification S.O. 3303 (E) [NO. 78 /2020. F. NO. 187/4/2020 ITA -I], DATED 25-9-2020, has launched Faceless Income-tax Appeals as Hon’ble PM on 13th August, 2020 had announced while launching the Faceless Assessment and Taxpayers’ Charter as part of “Transparent Taxation – Honoring the Honest” platform. 

And in exercise of the powers conferred by sub-section (6B) of section 250 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the procedure with respect to faceless appeal scheme, 2020.

• CBIC vide Notification No. 64/2020 – Central Tax dated 31th Aug 2020 has extended the due date  of filing FORM GSTR-4 (Composition taxpayers) for  financial year 2019-20 to 31.10.2020.

• CBIC vide Notification No. 65/2020 – Central Tax dated 1st September 2020 has extended the due date of compliance which falls during the period from “20.03.2020 to 29.11.2020” till 30.11.2020. CBIC Amended notification no. 35/2020- Central Tax dated 03.04.2020.   

• CBIC vide Notification No. 66/2020 – Central Tax dated 21st September 2020 has extended the time limit for complying with the compliance requirement under section 31(7) of the said act  in respect of goods being sent or taken out of India on approval for sale or return, which falls during the period from the 20th day of March, 2020 to the 30th day of October, 2020, and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action, to the 31st day of October, 2020.

• CBIC vide Notification No. 67/2020 – Central Tax dated 21st September 2020 ―Provided that late fee payable under section 47 of the said Act, shall stand waived which is in excess of two hundred and fifty rupees and shall stand fully waived where the total amount of central tax payable in the said return is nil, for the registered persons who failed to furnish the return in FORM GSTR-4 for the quarters from July, 2017 to March, 2020 by the due date but furnishes the said return between the period from 22th day of September, 2020 to 31st day of October, 2020.

• CBIC vide Notification No. 68/2020 – Central Tax dated 21st September 2020 waived the amount of late fee payable under section 47 of the said Act which is in excess of two hundred and fifty rupees, for the registered persons who fail to furnish the return in FORM GSTR-10 by the due date but furnishes the said return between the period from 22 th day of September, 2020 to 31st day of December, 2020.

New Functionalities on the GST Portal

• • New functionality GSTR-2B has been made available on the GST Portal. GSTR-2B is an auto-drafted Input Tax Credit (ITC) statement generated for every recipient, on the basis of the information furnished by their suppliers, in their respective Form GSTR-1 & 5 and Form GSTR-6 filed by ISD. Taxpayers can now reconcile data generated in Form GSTR-2B, with their own records and books of accounts.
  • A functionality to generate PDF statement has been made available to taxpayers, registered as a Normal taxpayer, SEZ Developer, SEZ unit and casual taxpayer, filing monthly GSTR-1 statement, on their GSTR-3B dashboard. The PDF contains system computed values of Table 3 of Form GSTR-3B, prepared on the basis of values reported by the taxpayer, in their GSTR-1 statement, for the said tax period.
  • Provision to make amendment, multiple times, in Table 4 of Form GSTR-8.  Earlier, if no action was taken on TCS details, auto-populated in TDS/TCS credit form, by the supplier or if the same were rejected by them in the said form, the TCS (e-commerce operators) could amend the details only once. Based on requests received from stakeholders, the restriction of amending the transaction details only once, in the table 4 (i.e. amendment table) of Form GSTR-8, has now been removed.
  • TCS facility extended to composition taxpayer: The taxpayers under composition scheme, who are permitted to make supplies through E-Commerce Operators, e.g. Restaurant Services, will now be able to view and take necessary actions in their TDS/TCS credit received form. The amount of tax collected at source, reported by E Commerce Operators in their Form GSTR-8, will now be populated to ‘TDS /TCS credit received’ form of respective composition taxpayers.

• Delinking of Credit Note/Debit Note from invoice, while reporting them in Form GSTR: Till now, original invoice number was mandatorily required to be quoted by the taxpayers, while reporting a Credit Note or Debit Note in Form GSTR. Debit /Credit Notes can be declared with tax amount, but without any taxable value also i.e. if credit note or debit note is issued for difference in tax rate only, then note value can be reported as ‘Zero’. Only tax amount will have to be entered in such cases.  

• The Lok Sabha has passed the Companies (Amendment) Bill, 2020 through voice vote. 

The Bill to further amend 48 sections of the Companies Act, 2013 by decriminalizing various non-compoundable offences in case of defaults, but not involving frauds, omitting imprisonment for various offences which were considered procedural and technical in nature. The bill removes the penalty, imprisonment for 9 offenses which relate to non-compliance with orders of the national company law tribunal (NCLT), and reduces the amount of fine payable in certain cases. These include matters relating to winding-up of companies, default in publication of NCLT order relating to the reduction of share capital, the rectification of registers of security holders, the variation of rights of shareholders, and payment of interest and redemption of debentures. Further, the bill seeks to allow public companies to directly list certain prescribed classes of securities in foreign jurisdictions. Under the current legal framework, Indian companies cannot directly list their securities abroad without getting themselves listed in domestic bourses. This Bill also stipulates that specified classes of unlisted companies will have to prepare and file their periodic financial results. Furthermore, the Bill provides that Companies that have CSR spending obligation up to ₹50 lakh would not be required to constitute a CSR committee. Also, eligible companies under CSR provision will be allowed to set off any amount spent in excess of their CSR spending obligation in a particular financial year towards such obligation in subsequent financial years. Besides introducing a separate chapter for “Producer Companies”, the Bill also pave the way for setting up of Benches of the National Company Law Appellate Tribunal.

• MCA has issued a circular to provide Relaxation of additional fees and extension of the last date of filing of CRA-4 (form for filing of the cost audit report) for FY 2019-20 under the Companies Act, 2013. 

MCA has extended the last date of filing of CRA-4 (form for filing of the cost audit report) for the financial year 2019-20 and also relaxed the additional fees of filing CRA-4. MCA has decided that if cost audit report for the financial year 2019-20 by the cost auditor to the Board of Directors of the companies are submitted by 30th November, 2020 than the same would not be viewed as a violation of rule 6(5) of Companies (cost records and audit) Rules, 2014. Consequently, the cost audit report for the financial year ended on 31st March, 2020 shall be filed in e-form CRA-4 within 30 days from the date of receipt of the copy of the cost audit report by the company. However, in case a company has availed extension of time for holding Annual General Meeting then e-form CRA-4 may be filed within the timeline provided under the proviso to rule 6(6) of the Companies (Cost Records and Audit) Rules, 2014. On the receipt of the Cost audit report from Cost auditors, the company has to submit the same to Central Government in form CRA-4.

• The Ministry of Corporate Affairs has directed all Registrar of Companies (RoC) to accord its approval of three months extension to companies who have not able to hold their Annual General Meetings (AGMs) for the financial year ended March 31, 2020. 

In terms of the power vested under the third proviso to sub-section (1) of Section 96 of the Act, the Registrar of Companies extended the time to hold AGM, other than the first AGM, for the financial year ended on March 31, 2020, for Companies within the jurisdiction of this office, which are unable to hold their Annual General, without requiring the for such period within the due date of holding the AGM by a period of three months from the due date by which the AGM ought to have been held in accordance with companies to file applications for seeking such extension by filing the prescribed Form No. GNL-1. The ROC clarified that the extension granted under this Order shall also cover the pending applications filed in Form No. GNL-1 for the extension of AGM for the financial year ended on 31.03.2020, which is yet to be approved. Further, the applications filed in Form No. GNL-1 for the extension of AGM for the financial year ended on March 31, 2020, which were rejected, where the approval for the extension of AGM up to 3 months from the due date of the AGM shall be deemed to have been granted without any further action on the part of the Company.

• The MCA notifies Companies (Acceptance of Deposits) Amendment Rules, 2020 which shall come into force on the date of their publication in the Official Gazette i.e 07-09-2020. 

The amendment is made in the existing Rule 2(1)(c)(xvii) of Companies (Acceptance of Deposits) Rules, 2014, which deals with the amount received by a Start-up Company by way of the convertible notes. Accordingly, a start-up company is now allowed to receive an amount of twenty-five lakh rupees or more, by way of a convertible note (convertible into equity shares or repayable within a period not exceeding Ten years from the date of issue) in a single tranche, from a person. Earlier this period was up to 5 years which is now extended up to 10 years.

• MCA has notified the Companies (Management and Administration) Amendment Rules, 2020 which shall come into force on the date of their publication in the Official Gazette i.e28-08-2020.

Through this amendment, a new proviso has been added to Rule 12(1) as provided that a company shall not be required to attach the extract of the annual return with the Board’s report in Form No. MGT.9, in case the web link of such annual return has been disclosed in the Board’s report in accordance with sub-section (3) of section 92 of the Companies Act, 2013. Accordingly, every company is required to place a copy of the annual return on their website, if any, and shall also put the weblink of the same in their Board’s Report. Companies would not be required to attach the Extract of Annual Return in Form MGT-9 with its Board’s Report, if the Annual Return is hosted on the website of the Company.

IBBI

• The IBBI has released the Discussion Paper on Corporate Liquidation Process and invited public comments on the same. 

The Corporate liquidation process may not get unduly delayed in the coming days if the insolvency regulator IBBI has its way. On the anvil are two steps— enabling liquidator to assign ‘Not Readily Realisable Assets’ (NRRA) through public auction to third parties and allowing creditors to transfer or assign their debt during the liquidation process to any other person, that will help expedite the liquidation process and complete it within prescribed timelines under IBC. Allowing the assignment of debt by a creditor under liquidation process to a third party would lead to Pareto improvement in allocation of resources in the economy, and it would benefit the stakeholders involved in the liquidation process by providing them with an additional option of exit at an earlier stage. NRRAs are those assets that require an indefinite time for their realisation on account of the peculiar nature of such assets or special circumstances. Such assets fall in the category of sundry debts, including refunds from Government and its agencies; contingent receivables; disputed receivables; sub juice receivables and disputed assets (where for example legal ownership is not clear) and assets underlying avoidance transactions. Both in terms of value and time, NRRA remain the realm of uncertainty. Presence of such assets in the kitty is detrimental to the attainment of the objective of time-bound closure of the liquidation process as envisaged under the Insolvency and Bankruptcy Code (IBC).

•  The IBBI has notified The Insolvency and Bankruptcy Code (Second Amendment) Act, 2020, an Act further to amend the Insolvency and Bankruptcy Code, 2016.

The amended legislation provides for temporary suspension of initiation of the Corporate Insolvency Resolution Process (CIRP) under the Code. It replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 promulgated in June this year. The Act provides that for defaults arising during the six months from the 25th of March this year, CIRP can never be initiated by either the Company or its creditors. A director or a partner may be held liable if despite knowing that insolvency proceedings cannot be avoided, he did not exercise due diligence in minimizing the potential loss to the creditors. This liability will occur if despite knowing that the insolvency proceedings cannot be avoided, the person did not exercise due diligence in minimizing the potential loss to the creditors. Further, the amendment Act shall be deemed to have come into force on the 5th day of June, 2020.

• The Ministry of Corporate Affairs has issued the Insolvency and Bankruptcy Board of India (Annual Report) Amendment Rules, 2020 to further amend the Insolvency and Bankruptcy Board of India (Annual Report) Rules, 2018. 

The following amendments have been done in Rule 4, which specifies the time schedule for the submission of the annual report has been substituted, with the dates for submission of the annual report referred to in rule 3 of annual accounts for audit leading to the issue of Audit Certificate by the Comptroller and Auditor General of India and for submission to the Ministry of Corporate Affairs for timely submission to the Parliament. Accordingly. the approved and authenticated annual accounts to be made available by the Insolvency and Bankruptcy Board of India to the concerned Audit Office and commencement of an audit of annual accounts on June 30; Issue of the final Separate Audit Report (SAR) in English with Audit Certificate to Insolvency and Bankruptcy Board of India on October 31 and submission of the annual report and audited accounts to the Ministry of Corporate Affairs for it to be laid on the Table of the Parliament on December 31.

•  The IBBI has introduced the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020 in the Rajya Sabha to further amend the Insolvency and Bankruptcy Code, 2016. 

The Amendments proposed under the Bill includes a new Section 10A shall be inserted which specifies “Suspension of initiation of Corporate Insolvency Resolution Process” namely, No Corporate Insolvency Resolution Process can be initiated against the debtor for any default arising on or after March 25, 2020 for a period of six months or such further period, not exceeding one year from such date. Provided, no application shall ever be filing for default during the said period against the debtor. Further, a new sub-section Section 66(3) shall also be inserted namely, no application shall be filed by the Resolution Professional under sub-section (2) related to default against which the initiation of the insolvency resolution process is suspended as per Section 10A. The Bill shall be deemed to have come into force on June 5, 2020 and the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 has been repealed.

•  IBBI has issued Guidelines for Appointment of Insolvency Professionals as Administrators under the Securities and Exchange Board of India (Appointment of Administrator and Procedure for Refunding to the Investors) Regulations, 2018. 

The IBBI and the SEBI have mutually agreed upon to use a Panel of IPs for appointment as Administrators for effective implementation of the Regulations. The IBBI shall prepare a Panel of IPs keeping in view the requirements of SEBI and the Regulations and the SEBI shall appoint the IPs from the Panel as Administrators, as per their requirement in accordance with the Regulations. The panel shall be valid for six months and a new Panel will replace the earlier Panel every six months. The Panel shall have a Zone wise list of IPs. An IP will be included in the Panel against the Zone where his registered office (address as registered with the IBBI) is located. Further, it must also be explicitly understood that an IP in the Panel will be appointed as Administrator, at the sole discretion of SEBI and the submission of expression of interest in accordance with these guidelines, is an unconditional consent by the IP to act as Administrator in accordance with the Regulations. These guidelines will be reviewed by the IBBI, in consultation with the SEBI, from time to time. These Guidelines shall come into effect for appointments as Administrator with effect from 1st October 2020.

• IBBI has issued Guidelines on Use of Caveats, Limitations, and Disclaimers by the Registered Valuers in Valuation Reports. 

These Guidelines may be called the Insolvency and Bankruptcy Board of India (Use of Caveats, Limitations and Disclaimers in Valuation Reports) Guidelines, 2020 and shall come into force in respect of valuation reports in respect of valuations completed by Registered Valuers (RVs) on or after 1st October, 2020. These Guidelines are divided into three sections, viz. the first section elaborates on the need for Caveats, Limitations, and Disclaimers in a valuation report; the second section provides a guidance note on the use of Caveats, Limitations, and Disclaimers, while the third section provides an illustrative list of Caveats, Limitations, and Disclaimers for each asset class provided in the Rules. These Guidelines provide guidance to the RVs in the use of Caveats, Limitations, and Disclaimers in the interest of credibility of the valuation reports. These also provide an illustrative list of the Caveats, Limitations, and Disclaimers which shall not be used in a valuation report. All Registered Valuers shall prepare valuations reports under rule 8 of the Rules in adherence to these Guidelines.

SEBI

• The SEBI has issued a circular for the Alternate Risk Management Framework applicable in case of near-zero and negative prices. 

Recently, globally the economy has hit the zero and the negative mark, which is why the Board decided to enable risk management framework and constituted a task force of clearing corporations and market participants so that the review of the risk management can take place. The SEBI has decided that Alternate risk management shall be applicable to all those commodities that have nature of having zero or negative prices. Further, the commodities shall be considered as prone to zero or negative prices, if all the commodities that need to be stored in physical markets and if the proper storage space is not provided shall be susceptible to causing environmental hazards or external implications and all then commodities that cannot be destroyed or disposed of easily i.e. their disposal may cause environmental damage or other such hazards. These Alternate Risk Management Guidelines shall be implemented within 60 days of the issue of such circular. 

•  The Securities and Exchange Board of India has modified certain rules related to mutual fund (MF) Schemes. 

SEBI has asked mutual funds to uniformly apply Net Asset Value (NAV) across schemes upon realisation of funds. The capital markets regulator also tightened rules on the processes that fund managers follow to buy shares. The new rules will become effective from January 1. Currently, mutual fund investors with cheque values of less than Rs 2 lakh per application get the NAV of the product on the same day of deposit. Those who invest more than Rs 2 lakh get the NAV of the day the fund house realised the cheque. This could be up to three days after the cheque is submitted. With the new rule, the capital markets regulator has now created a level playing field for all investors. The new circular requires that in addition to submitting the application before the cut off time, the money also has to reach the fund house on the same day to get that day’s NAV.

• The SEBI has issued a circular for collecting and reporting of margins by Trading Member (TM) and Clearing Member (CM) in the cash segment. 

A circular for the guidelines for the same was issued by SEBI on July 31, 2020. Further, the board has clarified the issues relating to the levy of penalty for the non-collection of the “other margins” on or before T+2 days from the clients by TM/CM. SEBI has clarified that if both the funds and securities have been paid within T+2 days, then there shall be no application of penalty or short funds arising thereof, if the early pay-in has been collected by the clearing corporation then all the short arising margins would have been deemed to be collected and if the clients are not paying the margins within T+2 days and the TM/CM fails to collect the margins within T+2 days, then the penalty shall be applicable.

•  The SEBI has issued a Consultation Paper, with a view to propose changes in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 

Inter-alia to strengthen corporate governance practices and disclosure requirements, ease the compliance burden on listed entities harmonize with the Companies Act, 2013 and maintain consistency within the LODR Regulations. Subsequent to the implementation of the LODR Regulations, various changes have taken place in the regulatory landscape, like Amendments made to the Companies Act, 2013 and Issue of informal guidance/ interpretative letters regarding the interpretation of various provisions of the LODR Regulations. SEBI has felt a need to review and align the LODR Regulations with an intent to strengthen corporate governance practices and disclosure requirements; To ease the compliance burden on listed entities and Other amendments inter-alia to maintain consistency within the LODR Regulations, harmonize the LODR Regulations with the Companies Act. The comments/suggestions may be forwarded as per the format prescribed by SEBI to Mr. Pradeep Ramakrishnan, General Manager, at pradeepr@sebi.gov.in and other October 11, 2020.

•  SEBI has issued a circular for the operating guidelines for portfolio managers in International Financial Service Centres (IFSC). 

These guidelines shall be applicable to all the portfolio managers operating or setting up in IFSC. An application shall be filed by the portfolio managers along with the prescribed fees. A SEBI registered intermediary may provide portfolio management services if they fulfil the prescribed criteria. Further, all the residents outside India shall obtain a certificate from any other organization or institution in India which is accredited by the Financial Market regulator in that foreign jurisdiction. All applicants need to have a NISM certificate, net worth less than USD 750,000 and if the operations are being carried out by the subsidiary, then the net worth requirements shall be fulfilled by the subsidiary. The Portfolio managers operating in IFSC shall not accept funds or securities from the client having a net worth of less than USD 70,000. These funds shall be maintained in a separate account regulated by the RBI. The amount for registration for grant of the certificate shall be USD 15,000 and for the application, it shall be USD 1,500. The registration fee for three years for the grant of the certificate shall be USD 7,500.

• SEBI has released a circular on Automation of Continual Disclosures under Regulation 7(2) of SEBI (Prohibition of Insider Trading) Regulations, 2015. 

SEBI has now decided to implement the system-driven disclosures for member(s) of promoter group and designated person(s) in addition to the promoter(s) and director(s) of the company (hereinafter collectively referred to as entities) under Regulation 7(2) of PIT Regulations. The system-driven disclosures shall pertain to trading in equity shares and equity derivative instruments i.e. Futures and Options of the listed company (wherever applicable) by the entities. The procedure for implementation of the system-driven disclosures is separately provided on the circular. The Depositories and Stock Exchanges shall make necessary arrangements such that the disclosures pertaining to PIT Regulations are disseminated on the websites of respective stock exchanges with effect from October 01, 2020. Further, the system would continue to run parallel with the existing system i.e. entities shall continue to independently comply with the disclosure obligations under PIT Regulations as applicable to them till March 31, 2021.

•  SEBI has issued a circular to add the National Stock Exchange (NSE) to the list of entities that can undertake e-KYC Aadhaar authentication. 

The regulator, in May had come out with a list of eight entities permitted to use e-KYC (Electronic-Know Your Customer) Aadhaar authentication. The Central Depository Services (India) Ltd (CDSL), National Securities Depository Ltd (NSDL), BSE, CDSL Ventures, NSDL Database Management, NSE Data, and Analytics, CAMS Investor Services and Computer Age Management Services were the eight entities that were allowed to use e-KYC Aadhaar authentication. Based on the recommendation by the Unique Identification Authority of India (UIDAI) and SEBI to undertake the Aadhaar authentication service of the UIDAI under Section 11A of the Prevention of Money-laundering Act, 2002. In view of the same, the National Stock Exchange of India Limited shall undertake Aadhaar authentication service of the UIDAI subject to compliance of the conditions as laid down in this regard. To provide the service, entities need to get registered with UIDAI as KYC user agency (KUA) and allow SEBI registered intermediaries or mutual fund distributors to undertake Aadhaar authentication in respect of their clients for the purpose of KYC.

•  SEBI has issued a Circular to fix March 31, 2021, as the cut-off date for re-lodgement of share transfer requests. 

Transfer of securities held in physical mode has been discontinued with effect from April 1, 2019, but investors have not been barred from holding shares in the physical form. SEBI, in March 2019, had clarified that transfer deeds lodged before the deadline of April 1, 2019, and rejected or returned due to deficiency in the documents may be re-lodge. It has been decided to fix March 31, 2021, as the cut-off date for re-lodgement of transfer deeds. Further, the shares that are re-lodged for transfer (including those requests that are pending with the listed company / RTA, as on date) shall henceforth be issued only in Demat mode.

The Foreign Contribution(Regulation) Amendment Bill, 2020 (FCRA)

•  The lower house of the Parliament, the Lok Sabha has cleared the Foreign Contribution (Regulation) Amendment Bill, 2020. 

The Bill amends the Foreign Contribution (Regulation) Act, 2010. The Act regulates the acceptance and utilization of foreign contribution by individuals, associations, and companies. The foreign contribution is the donation or transfer of any currency, security, or article (of beyond a specified value) by a foreign source under the Act, certain persons are prohibited to accept any foreign contribution. These include election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties, among others. The Bill adds public servants (as defined under the Indian Penal Code) to this list. Further, the Bill adds that any person seeking prior permission, registration, or renewal of registration must provide the Aadhaar number of all its office bearers, directors, or key functionaries, as an identification document. In the case of a foreigner, they must provide a copy of the passport or the Overseas Citizen of India card for identification. The Bill further amends to state that foreign contribution must be received only in an account designated by the bank as “FCRA Account” in such a branch of the State Bank of India, New Delhi, as notified by the Central Government.  No funds other than the foreign contribution should be received or deposited in this account. 

FSSAI

•  The Food Safety and Standards Authority of India (FSSAI) has issued a circular relating to Standardised List of Documents for FSSAI License. 

The Authorities have directed Licensing Authorities (State/Central) to stay away from seeking additional or irrelevant documents from FBOs leading to their avoidable harassment and undue delay in processing of applications. The Kind of Business (KoB) wise documents as uploaded on the homepage of FLRS/FoSCoS should be followed by licensing authorities in all States/UTs. Since the requirement of uploading a signed copy of Form A (application for Registration) and Form B (application for License) by applicants has been done away, all applicants are now therefore required to upload all documents mandatorily self-attested by the authorized proprietor. In case of a prerequisite condition of additional document requirement for grant of FSSAI License by a local body or a State or UT, the same shall be communicated to the public through a public order.

•  The Food Safety and Standards Authority of India (FSSAI) has issued an Order to waive off the penalties imposed on Food Business Operators (FBO) during the Covid-19 pandemic due to non-submission of Annual or Half-yearly returns (Form D1 and D2 respectively) in previous years. 

Earlier FSSAI had extended the date of submission of Form D1 (Annual returns) for the financial year 2019-20 and Form D2 (Half yearly returns) for October 2019 to March 2020 and April 2020 to September 2020 till December 31, 2020. Upon requests received from FBOs, the FSSAI has now decided to not count the period of March 22, 2020, to December 31, 2020, for further accumulation of penalties under Clause 2.1.13(3) of FSS (Licensing and Registration of Food Businesses) Regulations, 2011 due to non-submission of returns of previous financial years.

Labour Laws

•  The Lok Sabha has passed three Bills that complete the government’s codification of 29 labour laws into four codes, with the Rajya Sabha passing the Industrial Relations Code, 2020, the Occupational Safety, Health, and Working Conditions Code, 2020 and the Social Security Code, 2020. 

The three Bills that merge 25 laws were passed by the Lok Sabha on Tuesday. The first, of the four codes proposed by the government, the Code on Wages, was passed by Parliament in 2019. The Occupational Safety, Health and Working Conditions Code 2020, seeks to amend the laws regulating the occupational safety, health and working conditions of the persons employed in an establishment. The second bill, The Industrial Relations Code 2020, aims at amending the laws relating to Trade Unions, conditions of employment in industrial establishment or undertaking, investigation, and settlement of industrial disputes and the third bill, The Code on Social Security, 2020 seeks to amend the laws relating to the social security of the employees in the country.

NCLT

•  The NCLT has further notified that the Regular Proceedings at NCLT shall now start from 01-10-2020 instead of 07-09-2020. 

The regular proceedings at NCLT Delhi were stopped immediately after the lockdown was announced on 24-03-2020. The NCLT has earlier decided and fixed the dates of hearings for Principal Bench and for all its New Delhi Benches (Court No. II, III, IV, V & VI) effective from 15-06-2020 which was re-notified from 01-07-2020, 20-07-2020, 05-08-2020, 20-08-2020 and 07-09-2020. However, NCLT has now decided that all matters listed for 07-09-2020, 08-09-2020 shall now be held on 01-10-2020, 05-10-2020, 06-10-2020 respectively, and so on. All stakeholders are requested to take note of the same.

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates are for the period 26.08.2020 till 25.09.2020.

Prepared by

KNM MANAGEMENT ADVISORY SERVICES PVT. LTD.

E-mail: services@knmindia.com

Web site: www.knmindia.com

Income Tax

• CBDT vide NOTIFICATION G.S.R. 469(E) [ NO. 55/2020/ F. NO.142/22/2015-TPL], DATED 28-7-2020, has amended the Rule 12CB  alongwith Form 64C & 64D for the purpose of Section 115UB being charging section of Income from Investment fund and its unitholders.
• CBDT vide NOTIFICATION S.O. 2512(E) [NO. 56/2020/F. NO. 370142/23/2020-TPL], DATED 29-7-2020 has further extended the due date for furnishing of belated as well as revised Income-tax return for the Assessment Year 2019-20 from 31-07-2020 to 30-09-2020. Further, any tax paid by the senior citizens, who aren’t required to pay advance tax as per provisions of Section 207(2), within original due date i.e. 31-07-2020 for filing ITR for AY 2020-21, shall be treated as advance tax for the purpose of computing interest u/s 234A. The intent is to give relief and also that Senior Citizens need to deposit self assessment tax before 31st July, 2020 in case they intends to avoid levy of interest under section 234A.
• CBDT vide CIRCULAR NO. F.NO. 500/09/2016-APA-I, DATED 7-8-2020, has issue detailed guideline for Mutual Agreement Procedure (MAP). Recently vide G.S.R.282 (E) dated 6thMay, 2020, Rule 44G of the Income-tax Rules, 1962 has been notified. This rule substitutes the previous rules 44G and 44H, which dealt with the same issue of implementation of MAP. The MAP guidance is presented in the following four parts:
  • Part A: Introduction and Basic Information;
  • Part B: Access and Denial of Access to MAP;
  • Part C: Technical Issues; and
  • Part D: Implementation of MAP outcomes

• CBDT vide NOTIFICATION G.S.R. 499(E) [ NO. 58/2020/F. NO. 370133/08/2020-TPL], DATED 10-8-2020, has inserted new sub-rule in Rule 37BC that provisions of section 206AA (not required to obtain PAN), shall not apply in respect of payments made to a person being a non-resident, not being a company, or a foreign company if Section 139A r.w.r. 114AAB is satisfied. As per rule 114AAB, the non-resident does not earn any income in India, other than the income from investment in the specified fund during the previous year, TDS as specified in Rule 194LBB needs to be deducted and deposited by the specified fund and the non-resident furnishes the following details and documents to the specified fund, namely:—(a)          name, e-mail id, contact number;(b)          address in the country or specified territory outside India of which he is a resident;(c)          a declaration that he is a resident of a country or specified territory outside India; and(d)          Tax Identification Number in the country or specified territory of his residence and in case no such number is available, then a unique number on the basis of which the non-resident is identified by the Government of that country or the specified territory of which he claims to be a resident.
• CBDT vide ORDER F. NO. 187/3/2020/ITA-I [13-08-2020] instructed all the assessment shall be passed by the National e-Assessment Centre through the Faceless Assessment Scheme, 2019. Now, the National e-Assessment Centre shall intimate the assessee for conduct of faceless assessment in case wherein notice has been issued by AO. The Board has also extended its scope to cover best judgment assessments. However, the board has provided two exception as well. Assessment orders in cases assigned to Central Charges & International Tax Charges. In view of the same NOTIFICATION F.NO.173/ 165/2020 -ITA-I [13-08-2020], has been also issued for detailed guideline for implementation of faceless assessment scheme 2019.

Goods & Services Tax (GST)

• CBIC vide Notification No. 61/2020 – Central Tax dated 30^th July 2020 has amended Notification No. 13/2020 which shall come into force from 01^st of October 2020 whereby E-Invoicing has been made applicable for the taxpayer having aggregate turnover of more than 500 crore.

• CBIC vide Notification No. 60/2020 – Central Tax dated 30^th July 2020 has notified the Fomat /Schema for E-Invoicing under rule 48(4) of the CGST Rules 2017.
• CBIC vide Notification No. 62/2020 – Central Tax dated 30^th July 2020 has given an option for Aadhar authentication.

Every applicant for GST registration can opt for the Aadhaar authentication. The exceptions are persons exempted by the Central government under the CGST Act or those who must mandatorily undergo the Aadhaar authentication under section 25(6C) of the CGST Act. The revised rule will be effective for applications made on or after 21st August 2020.

From 1st April 2020 up to 20th August 2020, all the applicants submitting registration application under GST had to mandatorily undergo Aadhaar authentication for obtaining registration.

The applicants who opt for it must submit an Aadhaar Card along with the application for registration under GST. After this, they need to E- verify the same on the GST portal. An OTP will be sent on the mobile number and email ID linked to the Aadhaar card. Only upon entering this OTP, the Aadhaar will get e-validated. After this, whenever a taxpayer files his returns or uses any services on the GST portal, an OTP will be sent on the mobile number and email ID, which is linked to its Aadhaar number. Only after entering this OTP, a taxpayer can proceed to file the return.

If a person fails to do an Aadhaar authentication when opted or has not opted for it, the registration will be granted after a physical verification is done of the principal place of business.

• CBIC vide Notification No. 63/2020 – Central Tax dated 25^th August 2020 has appointed 1^st day of September 2020 as the date on which the provisions of Section 100 of the Finance (No. 2) Act, 2019 (23 of 2019), shall come into force. Interest on the delayed payments of GST liability is to be charged on the net liability (Gross Output- Input) from 1^st of September 2020. However, the GST council in its 39^th meeting recommended to apply the above provision retrospectively.

Companies Act, 2013

• MCA has notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2020, which shall come into force on the date of their publication in the Official Gazette i.e. 24-08-2020.

A new proviso has been added in Rule 2 (1)(e), to provided that any Company engaged in research and development activity of new vaccine, drugs and medical devices in their normal course of business may undertake research and development activity of new vaccine, drugs and medical devices related to COVID-19 for financial years 2020-21, 2021-22 and 2022-23 subject to the conditions that such research and development activities shall be carried out in collaboration with any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Act and details of such activity shall be disclosed separately in the Annual Report on CSR included in the Board’s Report. Further, to pave way for the said proviso, in Rule 4(1) the words, excluding activities undertaken in pursuance of its normal course of business have been deleted.

• MCA has notified the further amendments in Schedule VII to the Companies Act, 2013, which shall come into force on the date of their publication in the Official Gazette i.e. 24-08-2020. 

The amendments are made in the item (ix) and the entries thereto, to substitute the same with the new clause. According to the amendments, contribution to incubators or research and development projects in the field of science, technology, engineering and medicine, funded by the Central Government or State Government or Public Sector Undertaking or any agency of the Central Government or State Government has been added in sub-clause (a) and new institutions have been to the list, which are engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs).

• MCA has issued Clarification on Extension of Annual General Meeting (AGM) for the financial year ended as at 31.03.2020 beyond the statutory period provided in Section 96 of the Companies Act, 2013.

MCA has examined the matter and it is stated that the Ministry had already issued regarding holding of AGM through video conferencing (VC) or other audio-visual means (OAVM) for the calendar year 2020. In addition, the companies which are unable to hold their AGMs were advised to prefer applications for extension of AGM at a suitable point of time before the concerned Registrar of Companies under section 96 of the Act. MCA has once again reiterated that the companies which are unable to hold their AGM for the financial year ended on 31.03.2020, despite availing the relaxations, have to file their applications in form No. GNL-1 for seeking an extension of time in holding of AGM for the financial year ended on 31.03.2020 with the concerned Registrar of Companies on or before 29.09.2020. Further, the Registrars of Companies are hereby advised to consider all such applications (filed in Form No. GNL-1) liberally in view of the hardships faced by the stakeholders and to grant extension for the period as applied for (up to three months) in such applications.

• MCA has released the Report of the Committee on Business Responsibility Reporting, constituted for preparing Business Responsibility Reporting formats for listed and unlisted companies.

The committee has endeavoured to draft a report with a view towards global developments that are increasingly seeking businesses to be responsible and sustainable towards their environment and society. To better reflect the intent and scope of the reporting requirement, the Committee recommends that the Business Responsibility Report be called the Business Responsibility and Sustainability Report (BRSR). The Committee also proposes two formats for disclosures: a comprehensive format and a Lite version. The Committee is of the view that implementation of the reporting requirements should be done in a gradual and phased manner. With regard to listed entities, reporting may be done by top 1000 listed companies (by market capitalisation) as applicable presently, or as prescribed by SEBI. The reporting requirement may be extended by MCA to unlisted companies above specified thresholds of turnover and/or paid-up capital. Further, the Committee recommends that smaller unlisted companies below this threshold may, to begin with, adopt a lite version of the format, on a voluntary basis. The Committee recommends that the BRSR be integrated with the MCA21 portal. This would ensure that all information already filed on the MCA21 portal by companies would be automatically filled while filing the BRSR. The Committee also recommends that a Guidance Note on BRSR should be prepared to enable companies to disclose their actions on the principles in a more meaningful manner.

• MCA has issued a Clarification on dispatch of notice under Section 62(2) Companies Act, 2013 by listed companies for rights issues opening upto 31st December, 2020.

On the basis of the representations received for extending the validity of earlier circular and after taking into consideration the circular issued by SEBI, MCA has decided that clarification given under para 2 of General Circular 21/2020, would continue to be applicable for rights issues, in case of listed companies, opening up to 31st December, 2020. Accordingly, in case of listed companies, which comply with relevant circulars issued by SEBI, inability to dispatch the relevant notice to shareholders through registered post or speed post or courier would not be viewed as a violation of section 62(2) of the Act for rights issues opening up to 31st December, 2020. Other requirements provided in the said General Circular remain unchanged.

• The MCA has further decided to extend the period for names reserved and resubmission of forms. 

Accordingly, in case of names reserved for 20 days for new company incorporation. SPICE+ Part B was supposed to be filed within 20 days of name reservation. Now names expiring any day between March 15, 2020 to July 31, 2020, would be extended by 20 days beyond July 31, 2020. Further, the names reserved for 60 days for change of name of the company, the Form INC-24 had to be filed within 60 days of name reservation. Now the period has been extended for names expiring any day between March 15, 2020 to July 31, 2020 by 60 days beyond July 31, 2020. MCA has also extended the RSUB validity for companies. The SRNs where the last date of Resubmission (RSUB) falls between March 15, 2020 to July 31, 2020, an additional 15 days beyond July 31, 2020 is allowed. MCA has allowed extended the names reserved for 90 days for new LLP incorporation or change of name and FiLLiP Form 5 needs to be filed within 90 days of the name reservation. Now, the names expiring any day between March 15, 2020 to July 31, 2020 would be extended by 20 days beyond July 31, 2020. The RSUB validity for LLPs. The SRNs where the last date of resubmission (RSUB) falls between 15th March 2020 to July 31, 2020, an additional 15 days would be allowed from July 31, 2020 for resubmission

• MCA in consultation with the National Financial Reporting Authority has notified the Companies (Indian Accounting Standards) Amendment Rules, 2020 which shall come into force on the date of their publication in the Official Gazette i.e. 24/07/2020.

The entities must apply these amendments to business combinations, whose acquisition date is on or after the start of the first annual reporting period beginning on 1st April, 2020, and to asset acquisitions that take place on or after that period. The new Rules amend Indian Accounting Standards 107 that relates to disclosures to be made in respect of financial instruments by introducing a provision specifying the disclosures to be made where there is uncertainty due to Interest Rate Benchmark Reform. The new Rules amend Indian Accounting Standards 109 providing detailed provisions for temporary exceptions from applying specific hedge accounting requirements and transition for hedge accounting. These must be applied by entities for annual periods starting on or after 1st April, 2020. Indian Accounting Standard 116 has been amended to provide that subject to specified conditions, any rent concession due to COVID-19 may, if the lessee so elects, not be assessed as a lease modification. This is subject to disclosures to be made by the lessee and shall apply to annual reporting periods on or after 1st April, 2020 or where the lessee has not approved the financial statements prior to this amendment, it may be applied for such periods from 1st April, 2019. Further, in Indian Accounting Standards 1 and 8, changes have been made to the definition of material in relation to material information

• MCA has finally released the much awaited e-Form PAS – 6 for Reconciliation of Share Capital Audit Report(Half-yearly) Pursuant to sub-rule (8) of rule 9A Companies (Prospectus and Allotment of Securities Rules, 2014. 

All information shall be furnished for the hall year ended 30th September and 31st March in every financial year for each ISIN separately. Accordingly, every unlisted public company governed by this rule shall submit Form PAS-6 to the Registrar with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 within sixty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice. The e Form PAS-6 is now available for filing as e Form w.e.f 15th July 2020. Stakeholders may please take note and plan accordingly

• MCA has notified the extension of the last date of filing of Form NFRA–2.

The Ministry of Corporate Affairs after a due examination has considered the extension of the last date of filing of Form NFRA-2, which is required to be filed under Rule 5 of the National Financial Reporting Authority Rules, 2018. MCA has decided to extend the time limit for filing Form NFRA-2 will be 270 days (earlier 150 days) from the date of deployment of this form on the website of National Financial Reporting Authority (NFRA).

• The MCA has included contributions towards the Central Armed Police Forces (CAPF) and Central Paramilitary Forces (CPMF) veterans and their dependents including widows, within the definition of Corporate Social Responsibility (CSR).

The MCA has issued a notification for amendment in the Schedule VII of the Companies Act, 2013 which shall come into force on the date of its publication in the Official Gazette i.e. 23-06-2020. In exercise of the powers conferred by Section 467(1) of the Companies Act, 2013, the Central Government hereby makes the further amendments in Schedule VII to insert the words “Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows;” after the words “war widows and their dependents” in item (vi) of Schedule VII. The notification has widened the scope of CSR, which was earlier restricted activities benefiting the army, navy and air force veterans and their dependents and war widows.

Other Laws

• Trademark
  The Trade Marks Registry has issued a Public Notice to conduct Show-Cause Hearing through Video Conferencing.

Further, hearings will be scheduled in those matters where applicant or authorised agent give consent and confirm their participation for the hearing through Video Conferencing. In this regard, all applicants / Agents who are interested in hearing of their matters through video conferencing are requested to submit their consent to attend Show-Cause Hearing by sending an email at tlahearing-tmr@gov.in. Further, hearings will be scheduled in those matters where applicant or authorised agent give consent and confirm their participation for the hearing through Video Conferencing. In this regard, all applicants / Agents who are interested in hearing of their matters through video conferencing are requested to submit their consent to attend Show-Cause Hearing by sending an email at tlahearing-tmr@gov.in. Email sent to any other email address shall not be entertained. It may be noted that only cases for those parties will be scheduled for hearing where concern applicants or their authorised agent submit consent on or before 05/09/2020. Others applications will be kept in abeyance to schedule hearing in person as and when hearing with physical presence are started. It may further be noted that if the applicant or its authorised agent as the case may remain absent on the date of hearing the application will be decided as per law. For submitting consent for hearing through video conferencing applicant or its authorised agent shall submit his request by writing in subject “consent for Show-cause Hearing through Video Conference”. The Office will try to schedule all pending applications of concern applicant / agent on the same day in sequential order as per available time

SEBI

• The Listed Companies may approach SEBI to resolve grievances against proxy advisors, who advise shareholders on corporate governance issues and assist them with a voting recommendation.

This will be applicable from September 1, 2020. The regulator noted that proxy advisors, over the past few years, have played a key role in enabling shareholders to effectively participate in corporate governance decisions. Proxy advisors provide advice to institutional investors or shareholders of a listed entity, in relation, to exercise of their rights in the company including a voting recommendation on agenda items. However, due to the inherent nature of the work, it is probable that proxy advisors and listed entities may have different views on any agenda item of the listed entity leading to grievances. The market watchdog will examine the matter for non-compliance by proxy advisors with the provisions of the code of conduct specified under Research Analyst Regulations and the procedural guidelines for proxy advisors.

• SEBI has issued the procedural guidelines for proxy advisors under the SEBI (Research Analyst) Regulations,2014.

The proxy Advisors shall formulate the voting recommendation policies and disclose the updated voting recommendation policies to its clients. It shall disclose the methodologies and processes followed in the development of their research and corresponding recommendations to its clients. It shall alert clients, within 24 hours of receipt of information, about any factual errors or material revisions to the report. Further, it shall share their report with its clients and the company at the same time. This sharing policy should be disclosed by proxy advisors on their website. It shall also disclose in their recommendations the legal requirement. The provisions of this Circular shall be applicable with effect from September 01, 2020.

• The SEBI has issued the Securities and Exchange Board of India (Listing Obligations And Disclosure Requirements) (Second Amendment) Regulations, 2020

To further amend the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 which shall come into force on the date of their publication in the Official Gazette i.e. 05-08-2020. The amendments are made under Regulation 42(1) related to the record date or date of closure of transfer books. Accordingly, the listed entity shall intimate the record date to for the events, to all the stock exchange(s) where it is listed or where stock derivatives are available on the stock of the listed entity or where listed entity’s stock form part of an index on which derivatives are available, such as declaration of dividend; issue of right or bonus shares; Issue of shares for conversion of debentures or any other convertible security; Shares arising out of rights attached to debentures or any other convertible security; Corporate actions like mergers, de-mergers, splits, and bonus shares, where stock derivatives are available on the stock of listed entity or where listed entity’s stocks form part of an index on which derivatives are available; and Such other purposes as may be specified by the stock exchange(s)

• The SEBI has issued an amended International Financial Services Centre (IFSC) Guidelines pertaining to eligibility criteria and the shareholding limit for clearing corporations that wish to operate in such centers. 

Under the norms, any Indian recognised stock exchange or clearing corporation, or, any recognised stock exchange or clearing corporation of a foreign jurisdiction will form a subsidiary to provide the services of clearing corporation in IFSC wherein at least 51 percent stake is held by such exchange or clearing corporation. The remaining share capital may be acquired or held by any other person, whether Indian or foreign jurisdiction. Besides, such person will not at any time, directly or indirectly, either individually or together with persons acting in concert, acquire or hold more than 5 percent stake in a clearing corporation in IFSC, subject to applicable laws.

The Securities and Exchange Board of India has released the circular to extend the timeline for submission of financial results for the quarter/ half-year/financial year ended June 30, 2020.

Earlier, SEBI had extended the timeline for submission of financial results by listed entities for the quarter/half-year / financial year ended 31st March 2020 to July 31, 2020 due to the impact of the CoVID19 pandemic. According to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which requires a listed entity to submit its quarterly/half-year/annual financial results within forty-five days or sixty days, as applicable, from the end of each quarter/half-year/financial year. Accordingly, listed entities are required to submit the financial results for the quarter/half year ended June 30, 2020, on or before August 14, 2020. After consideration, it has been decided to extend the timeline for submission of financial results under Regulation 33 of the LODR Regulations, for the quarter/half-year/financial year ended June 30, 2020, to September 15, 2020.

• SEBI issues procedure for exchanges to handle investor complaints against listed companies.

SEBI has come out with a framework for handling investor complaints by exchanges as well as the standard operating procedure for actions to be taken against listed companies for failure to redress such grievances. Under the framework, exchanges can levy penalty on companies in case of non-redressal of investor complaints and ask depositories to freeze the shareholding of the promoter entities. The procedure will be applicable for complaints related to non-updation of address or signature; non-receipt of bonus, dividend, interest for delay in dividend, duplicate debt securities certificate and share certificate. In addition, grievances pertaining to non-receipt of securities in public issues or rights issues, not receiving securities after conversion/consolidation/splitting; and receiving refund or dividend and shares in physical mode instead of electronic mode will also be applicable. Further, it is clarified that the exchanges will not handle grievances related to monopoly and anti-competitive practices, chit funds, company, where moratorium order is passed against the company in winding up/ insolvency proceedings and companies under liquidation and the official liquidator has been appointed, among others. In case the company does not redress it within 30 days from the date of receipt of the complaint, such direct complaints will be forwarded to designated stock exchange (DSE) through SCORES. This will come into force from September 1, 2020.

• The Securities and Exchange Board of India has issued the master circular for Mutual Funds superseding the previous Master Circular issued in the year 2018.

For effective regulation of the Mutual Fund Industry, Securities and Exchange Board of India (SEBI) has been issuing various circulars from time to time. In order to enable the industry and other users to have access to all the applicable circulars at one place, Master Circular for Mutual Funds has been prepared. This Master Circular is a compilation of all the circulars issued by SEBI on the above subject, which are operational as on the date of this circular. In case of any inconsistency between the master circular and the applicable circulars, the contents of the relevant circular shall prevail. The Salient Features of this circular includes Offer document for the scheme; Conversion and consolidation of scheme and launch of an additional plan; New Products; Risk Management System; Disclosure and Reporting Norms; Governance Norms; Secondary Market Issue; Net Asset Value; Valuation; Loads, Fees and Expenses; Dividend Distribution Procedures; Investment by Foreign Investors in Scheme; Advertisements; Investor Rights and Obligation; Certification and registration of intermediaries and Transaction in mutual funds units.

• The SEBI has issued a circular to further extended the timelines for compliance with the regulatory requirements by the Depository Participants (DPs)/Registrars to an Issue & Share Transfer Agents (RTAs)and KYC Registration Agency (KRA) mentioned in the SEBI circulars.

In terms of this Circular, the extensions shall be made effective for the processing of Demat request form by issuer/ RTA or by Participants now carry a period of exclusion from 23^rd March, 2020 till 30^th September, 2020. It also applies to the requirement of updating the KYC application form and supporting documents of the clients on the system of KRA within 10 working days. Further, a period of 15 days, after 30th September 2020 is allowed to Depository/ DPs to clear backlogs. Submission of half-yearly Internal Audit Report (IAR) by DPs for the half-year ending on March 31, 2020, is extended till 30^th September. 2020. In the case of redressal of investor grievances, the transmission of securities, closure of Demat account, the period of exclusion is from 23^rd March, 2020 to 30^th September, 2020. The systems audit on an annual basis, the extended timeline specified is 30^th September, 2020 for the financial year ending on 31^st March, 2020.

IRDA

• The Insurance Regulatory and Development Authority of India has issued dividend criteria for equity investment under Approved Investment.

IRDA has issued a circular, after considering the representations made by Life and General Insurance Councils, the Authority in exercise of the powers conferred under Regulation 14(2) of the IRDAI (Investments) Regulations, 2016, has permitted Insurers to classify investments in Preference Shares and Equity Shares as a part of “Approved Investment” if such Shares have paid a dividend for at least 2 years out of 3 consecutive years immediately preceding instead of for at least 2 consecutive years immediately preceding (as required under Regulation 3(a)(4) and 3(a)(5) of IRDAI (Investment) Regulations, 2016) for the period from 1st April 2020 to 31st March 2021.

RBI

• The RBI has released a Review of Guidelines for Core Investment Companies (CIC) which deals with risk management, corporate governance, and disclosure requirements of the CICs. 

A Core Investment Companies (CIC) is a non-banking financial company (NBFC) that deals in the business of acquisition of shares and securities and hold not less than 90% of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt, or loans in group companies. Its investments in equity shares in group companies constitute a minimum of 60% of its net assets. The notification released by RBI defined the Adjusted Net Worth (ANW), as the amount representing any direct or indirect capital contribution made by one CIC in another CIC, to the extent such amount exceeds ten percent of Owned Funds of the investing CIC, shall be deducted. All other terms and conditions for the computation of ANW remain the same. To address the complexity in group structures and the existence of multiple CICs within a group, it has been decided that the number of layers of CICs within a Group (including the parent CIC) shall be restricted to two, irrespective of the extent of direct or indirect holding/ control exercised by a CIC in the other CIC.  All the CICs with asset size of more than Rs. 5,000 Crores shall appoint a Chief Risk Officers (CRO) with clearly specified roles and responsibilities. The disclosure requirements will apply to all NBFC-CICs and Corporate governance requirements will be as per the Companies Act, 2013.

• The RBI through an announcement on the Foreign Liabilities and Assets Information Reporting (FLAIR) system website has once again extended the due date of filing of Foreign Liabilities and Assets (FLA) Return for the financial year 2019-20 to 14th August, 2020 from 31st July, 2020. 

The FLA Return needs to be submitted by all Indian companies which have received Foreign Direct Investments (FDI) or made any FDI abroad (overseas investment) in the previous year(s) including the current year i.e. who holds Foreign Assets or Liabilities in their Balance Sheets. The due date of filing the FLA Return for the financial year 2019-20 was 15^th July, 2020 which was extended to 31^st July, 2020, and now further extended up to 14th August, 2020. Non-filing of the return before the due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA. Further, the submission of annual return on FLA through the web-based FLAIR portal for the financial year 2019-20 has been started. Entities which 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 they can file FLA return. However, the entities which have already registered earlier may submit FLA-2020 using their login credentials.

• RBI comes up with clarifications on a new definition of Micro, Small and Medium Enterprises, based on the representations from IBA and banks regarding the applicability of certain aspects on new criteria for classifying the enterprises as micro, small and medium enterprises.

It is clarified that all the enterprises are required to register online and obtain ‘Udyam Registration Certificate’ and All lenders may, therefore, obtain ‘Udyam Registration Certificate ’from the entrepreneurs. Further, the existing Entrepreneurs Memorandum and Udyog Aadhaar Memorandum (UAMs) of the MSMEs obtained till 30th June 2020 shall remain valid till 31st March 2021 and all enterprises registered till 30th June 2020, shall file new registration in the Udyam Registration Portal well before March 31, 2021, and Udyam Registration Certificate’ issued on self-declaration basis for enterprises exempted from filing GSTR and/or ITR returns will be valid for the time being, upto March 31, 2021.

• The Reserve Bank of India has issued the Foreign Exchange Management (Export and Import of Currency) (Amendment) Regulations, 2020 to further amend the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015.

A new Regulation 9 has been inserted through this amendment under the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015. The Regulation 9 has been inserted which specifies the Reserve Bank’s power to permit import or export of foreign currency. Accordingly, notwithstanding anything contained in these regulations, the Reserve Bank may, on an application made to it and on being satisfied that it is necessary to do so, allow any person to take or send out of India to any country or bring into India from any country currency notes of Government of India and /or of Reserve Bank of India subject to such terms and conditions as the Reserve Bank may stipulate.

FSSAI

• The Food Safety and Standards Authority of India (FSSAI) has issued the Standard Operating Procedures for applying and processing of refund of erroneous or inadvertent payments credited into the FSSAI Account in respect of license registration fee.

There have been instance, where the applicant has applied several times for the registration on the FSSAI online portal. According to the Standard Operating Procedure, the request for the refund of the payment of a fee for the license or the registration shall be made within 1 year of the payment, online on the registration portal. The application shall be dealt with by the Regulatory Compliance Division (RCD) shall then forward the complaint to the IT Division. After the inspection has been completed by the IT Division, the request shall then be processed with the proper facts by the RCD for the repayment. Further, the Repayment shall be processed according to the administrative structure provided by the competent authority and no Refund of less than Rupees 100 shall be processed. The refund shall be done only in cases of double payment or due to some technical glitch, made through razor pay. The amount shall be then refunded through razor pay only. The fee paid successfully for the registration or the license shall not be refunded.

NCLT

• The NCLT has mandated that it shall not accept new petitions without a record of default U/s. 7 of IBC, 2016, wherever available from the Information Utility.

With an intent to provide some relief, in partial modification to the order issued on 12/05/2020, the Hon’ble NCLT has directed all concerned to file default record from Information Utility along with the new petitions being filed under Section 7 of Insolvency and Bankruptcy Code, 2016 wherever available with the Information Utility. Further, the Authorized Representatives / Parties in the cases pending for admission under the aforesaid section of IBC also directed to file default record from Information utility, wherever available with the Information Utility. Earlier it was mandated to have records from Information Utility and no new petition was entertained without a record of default under section 7 of IBC, 2016.

• The NCLT has further notified that the Regular Proceedings at NCLT shall now start from 20-08-2020 instead of 05-08-2020. 

The regular proceedings at NCLT Delhi were stopped immediately after the lockdown was announced on 24-03-2020. The NCLT has earlier decided and fixed the dates of hearings for Principal Bench and for all its New Delhi Benches (Court No. II, III, IV, V & VI) effective from 15-06-2020 which was re-notified from 01-07-2020, 20-07-2020, and 05-08-2020. However, NCLT has now decided that all matters listed for 05-08-2020, 06-08-2020 shall now be held on 20-08-2020, 21-08-2020, 22-08-2020 respectively, and so on. All stakeholders are requested to take note of the same.

IBBI

• The IBBI has released the wonderful document on Avoidance Transaction – Red Flags for the benefit of Insolvency Professionals (IPs).

The IBBI has facilitated the preparation of this document for the use of IPs in understanding and identifying various red flags which may point to the need for a review of Avoidance transactions as covered under Sections 43, 45, 50 and 66 of the Code. In furtherance to its endeavour of achieving the objectives of the Code and keeping in mind the role of an IP, IBBI has released this document which is intended to guide the IPs to identify situations which would merit such Avoidance Transaction review and resultant application to AA. For the convenience of IPs, the various Red Flags have been collated and placed under the following six broad categories, namely, Red Flags related to Entity, Group and Operations; Maintenance of Books and Records; Regulatory Compliance and Litigation; Independent Auditor Reports; Financial Statements and Board Reports; and Classification and Reporting of Frauds (as covered under RBI Master Directions).

• The IBBI has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020. 

The amendment is brought under regulation 4A which deals with the choice of authorized representative in which the interim resolution professional shall identify three insolvency professionals who are not his relatives or related parties,  having their addresses, as registered with the Board, in the State or Union Territory, as the case may be, which has the highest number of creditors in the class as per their addresses in the records of the corporate debtor, Provided that where such State or Union Territory does not have adequate number of insolvency professionals, the insolvency professionals having addresses in a nearby State or Union Territory, as the case may be, shall be considered. Under regulation 16A the authorized representative shall circulate the agenda to creditors in a class and may seek their preliminary views on any item in the agenda to enable him to effectively participate in the meeting of the committee. Further, for approval of a regulation plan under Regulation 39, the committee shall, evaluate the resolution plans and record its deliberations on the feasibility and viability of each resolution plan, and vote on all such resolution plans simultaneously.

• The IBBI has notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Second Amendment) Regulations, 2020

To further amend Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 which shall come into force on the date of their publication in the Official Gazette i.e 05-08-2020. The amendments have been made in Regulation 5 related to the appointment of the liquidator has been substituted, stating that the corporate person shall appoint an Insolvency Professional as liquidator, and, wherever required, may replace him by appointing another insolvency professional as liquidator, by a resolution passed under Section 59(3)(c) or Regulation 3(1)(c), as the case may be. Provided that such resolution shall contain the terms and conditions of appointment of the liquidator, including the remuneration payable to him. The insolvency professional shall, within three days of his appointment as liquidator, intimate the Board about such appointment.

• The Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Third Amendment) Regulations, 2020

To further amend Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 which shall come into force on the date of their publication in the Official Gazette i.e 05-08-2020. The amendments are made in Regulation 4(2) which specifies the liquidator has to distribute the amount realised and if he does not do so, there shall be a corresponding fee applicable. The Regulations require the committee of creditors to fix the fee payable to the liquidator. Where the fee has not been fixed by the committee of creditors, the Regulations provide for a fee as a percentage of the amount realised and of the amount distributed by the liquidator. There have been instances where a liquidator realises the amount while another liquidator distributes the same to stakeholders. The amendment made to the Regulations yesterday clarifies that where a liquidator realises any amount but does not distribute the same, he shall be entitled to a fee corresponding to the amount realised by him.

MSME

• The Ministry of Micro, Small & Medium Enterprises has issued an Office Memorandum clarifying the existing Entrepreneurs Memorandum (EM)Part-III Udyog Aadhaar Memorandum (UAM) – I and New Udyam Registration.

Based on the representations seeking clarifications on certain issues it is clarified that all the existing EM Part II and UAMs obtained till 30.06.2020 shall remain valid till 31.03.2021. There are also doubts about whether existing UAM holders may edit or amend their details on the UAM portal. It is clarified that the same can be done till 31.3.2021. Those enterprises that have not entered their Aadhaar or PAN number so far in the UAM portal are hereby advised to obtain Udyam Registration Number well before 3l.3.2021.  It is further clarified that online Form for Udyam Registration captures depreciated cost as on 31st March each year of the relevant previous year for Value of Plant and Machinery or Equipment. Therefore, the value of Plant arid Machinery or Equipment’s for all purposes shall mean the Written Down Value (WDV) as at the end of the Financial Year as defined in the Income Tax Act and not the cost of acquisition or original price, which was applicable in the context of the earlier classification criteria.

FEMA

• The Ministry of Finance has issued a notification for Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2020

To further amend Foreign Exchange Management (Non-debt Instruments) Rules, 2019, which shall come into force on the date of their publication in the Official Gazette 27/07/2020. Amendments are carried out to insert a new rule 2A which specifies the rules to be administered by the Reserve Bank of India (RBI), relating to interpret and issue such directions, circulars, instructions, clarifications, as it may deem necessary, for effective implementation of the provisions of these rules. Further Schedule 1, serial number 9.3 which specifies the sectoral cap and entry route for air transport services has been substituted.

Income Tax

CBDT vide Notification No. G.S.R. 415(E) [No. 38/2020/F. No.370142/15/2020-TPL], Dated 26-6-2020, has amended the Rule 2BB due to which now assessee is allowed to take benefits of allowances like Transport allowance etc. even the assessee has taken option under Section 115BAC.

• CBDT vide Notification No. G.S.R. 421(E) [NO. 40 /2020/F. NO.370149/143/2019-TPL], Dated 29-6-2020 & Notification No. G.S.R. 423(E) [NO.42 /2020/F. NO.370149/143/2019-TPL], Dated 30-6-2020, has amended rule 11UAC to prescribed class of persons for the purpose of clause (XI) of the proviso to section 56(2)(x) & 50CA of the Income-tax Act, 1961.

• CBDT vide Notification No. G.S.R. 429(E) [NO. 43/2020/F. NO. 370142/11/2020-TPL], Dated 3-7-2020, has made amendment in Rule 31A to incorporate provision of section 194N. As per 194N, 2%/5% TDS will be deducted on payment in excess of specified payment withdrawal from Bank/Post office/Co-op Bank from 01.07.2020 onwards. Further on Income Tax portal, a tool to verify the applicability of TDS is also notified. Form 26Q & Form 27Q is also updated.

• CBDT vide Press release dated 08-07-2020 informed that a new MOU has been signed between Central Board of Direct Taxes (CBDT) and the Securities and Exchange Board of India (SEBI). The MoU will facilitate the sharing of data and information between SEBI and CBDT on an automatic and regular basis. In addition to regular exchange of data, SEBI and CBDT will also exchange with each other, on request and suo moto basis, any information available in their respective databases, for the purpose of carrying out their functions under various law.

• CBDT vide Circular F. NO. 225/98/2000/ITA-II, Dated 10-7-2020, has given instruction to process the validly filed ITR with refund upto the AY 2017-18 . Last date of processing of such ITR will be 31-10-2020. Further this instruction will not be applicable on:

-returns selected in scrutiny;

– returns remain unprocessed, where either demand is shown as payable in the return or is likely to arise after processing it;

-returns remain unprocessed for any reason attributable to the assessee

• CBDT vide Circular no. 3/2020 Dated 13-07-2020 given one time opportunity to taxpayers whose Income Tax Return’s was filed online but verification was pending FY 2014-15 to FY 2018-19. This verification can be done upto 30th September 2020.
  All such verified ITRs shall be processed on or before 31 December 2020.
  ITRs can be verified through EVC/OTP or by sending duly signed hard copy to CPC Bangalore.
  CBDT, also relaxes the time-frame for issuing the intimation as provided in second proviso to sub-section (1) of Section 143 of the Act and directs that such returns shall be processed by 31.12.2020 and intimation of processing of such returns shall be sent to the taxpayer concerned as per the laid down procedure. However, if any proceeding has been started against taxpayers considering that return for such year has not been filed by taxpayer then benefit of relaxation can not be availed

• CBDT vide Press release dated 18-07-2020, has informed that start an e-campaign on voluntary compliance of Income-tax for the convenience of taxpayers from Monday, the 20th of July, 2020. The 11 days campaign ending on 31st July, 2020 focuses on the assessees/taxpayers who are either non-filers or have discrepancies/deficiency in their returns for the FY 2018-19.

• CBDT vide Press release dated 20-07-2020 informed that a new MOU has been signed between the Central Board of Direct Taxes (CBDT) and the Ministry of Micro, Small and Medium Enterprises, Government of India (MoMSME) for sharing of data by CBDT to MoMSME. The MoU will facilitate seamless sharing of certain Income-tax Return (ITR) related information by the Income-tax Department to MoMSME. This data will enable MoMSME to check and classify enterprises in Micro, Small and Medium categories as per the criteria notified in the Notification No. S.O. 2119(E) dated 26/06/2020 of MoMSME

• CBDT vide Press release dated 21-07-2020 informed that a new MOU has been signed between the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs(CBIC) today, for data exchange between the two organizations. This MoU will facilitate the sharing of data and information between CBDT and CBIC on an automatic and regular basis. In addition to regular exchange of data, CBDT and CBIC will also exchange with each other, on request and spontaneous basis, any information available in their respective databases which may have utility for the other organization.

• CBDT vide Notification No. GSR.464(E) dated 24-07-2020, has amended rule 31AA with 206C to incorporate the provision amended by Finance Act 2020 which are applicable from 01-10-2020.

Goods & Services Tax (GST)

CBIC vide Notification No. 55/2020 – Central Tax dated 27^th June 2020 has extended the date of specified compliance falling during the period 20^th March 2020 to 30^th August 2020 to 31^st August 2020. Those specified compliances includes:

• completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the Acts stated above; or
• filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called, under the provisions of the Acts stated above.
• CBIC vide Notification No. 57/2020 – Central Tax dated 30^th June 2020 has waived off Late fee for the period July 2017 to September 2020 in the following manner:
• If the turnover is more than 5 crore rupees in the preceding financial year and you need to file a return (GSTR-3B) with tax liabilities, the late fees payable is Rs. 500 per return (Rs. 250/ under CGST + Rs. 250/ under SGST per return) for the months of May 2020 to July 2020.
• In case of NIL return (GSTR-3B) late fees is zero / waived off even if the turnover is more than Rs. 5 Crore.
• If the Turnover is Less than 5 crore rupees in the preceding financial year, taxpayers have NIL return are liable for NIL late fees.
• The important condition is that such returns should be filed before 30th September 2020.
• CBIC has revamped its Grievance Portal and launched its Chatbot GITA (GST Interactive Technical Assistant). e Chatbot works on Artificial Intelligence (AI) based technology. 24×7 facility is available on GST portal for mobile user too. Link for the facility is  https://selfservice.gstsystem.in/.
• Vide Notification no. 34/2020 Central Tax dated 3rd April 2020, the date of filing return in Form GSTR-4- Annual return to be filed by composition taxpayers for the year 2019-20 had been extended to 15th July 2020. Now the same has further been extended from 15th July 2020 to 31st August 2020.
• CBIC vide Circular No: 140/10/2020 – GST clarified the taxability of remuneration paid to the director by the company. In respect of the Independent director (Not being employees of company) there shall be levied GST on RCM basis, and in respect of Whole -time directors (being employees of the company) there shall be no GST liability as the same is covered in Schedule III of CGST Act.
• CBIC vide Notification No. 48/2020 – Central Tax dated 29^th June 2020 has facilitated filing of GSTR-3B and GSTR-1 through EVC for the return to be filed between the period 21^st April 2020 to 30^th September 2020.

Companies Act, 2013

The MCA has further decided to extend the period for names reserved and resubmission of forms.

Accordingly, in case of names reserved for 20 days for new company incorporation. SPICE+ Part B was supposed to be filed within 20 days of name reservation. Now names expiring any day between March 15, 2020 to July 31, 2020, would be extended by 20 days beyond July 31, 2020. Further, the names reserved for 60 days for change of name of the company, the Form INC-24 had to be filed within 60 days of name reservation. Now the period has been extended for names expiring any day between March 15, 2020 to July 31, 2020 by 60 days beyond July 31, 2020. MCA has also extended the RSUB validity for companies. The SRNs where the last date of Resubmission (RSUB) falls between March 15, 2020 to July 31, 2020, an additional 15 days beyond July 31, 2020 is allowed. MCA has allowed extended the names reserved for 90 days for new LLP incorporation or change of name and FiLLiP Form 5 needs to be filed within 90 days of the name reservation. Now, the names expiring any day between March 15, 2020 to July 31, 2020 would be extended by 20 days beyond July 31, 2020. The RSUB validity for LLPs. The SRNs where the last date of resubmission (RSUB) falls between 15th March 2020 to July 31, 2020, an additional 15 days would be allowed from July 31, 2020 for resubmission

• MCA in consultation with the National Financial Reporting Authority has notified the Companies (Indian Accounting Standards) Amendment Rules, 2020 which shall come into force on the date of their publication in the Official Gazette i.e. 24/07/2020.

The entities must apply these amendments to business combinations, whose acquisition date is on or after the start of the first annual reporting period beginning on 1st April, 2020, and to asset acquisitions that take place on or after that period. The new Rules amend Indian Accounting Standards 107 that relates to disclosures to be made in respect of financial instruments by introducing a provision specifying the disclosures to be made where there is uncertainty due to Interest Rate Benchmark Reform. The new Rules amend Indian Accounting Standards 109 providing detailed provisions for temporary exceptions from applying specific hedge accounting requirements and transition for hedge accounting. These must be applied by entities for annual periods starting on or after 1st April, 2020. Indian Accounting Standard 116 has been amended to provide that subject to specified conditions, any rent concession due to COVID-19 may, if the lessee so elects, not be assessed as a lease modification. This is subject to disclosures to be made by the lessee and shall apply to annual reporting periods on or after 1st April, 2020 or where the lessee has not approved the financial statements prior to this amendment, it may be applied for such periods from 1st April, 2019. Further, in Indian Accounting Standards 1 and 8, changes have been made to the definition of material in relation to material information

• MCA has finally released the much awaited e-Form PAS – 6 for Reconciliation of Share Capital Audit Report(Half-yearly) Pursuant to sub-rule (8) of rule 9A Companies (Prospectus and Allotment of Securities Rules, 2014. 

All information shall be furnished for the hall year ended 30th September and 31st March in every financial year for each ISIN separately. Accordingly, every unlisted public company governed by this rule shall submit Form PAS-6 to the Registrar with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 within sixty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice. The e Form PAS-6 is now available for filing as e Form w.e.f 15th July 2020. Stakeholders may please take note and plan accordingly

• MCA has notified the extension of the last date of filing of Form NFRA–2.

The Ministry of Corporate Affairs after a due examination has considered the extension of the last date of filing of Form NFRA-2, which is required to be filed under Rule 5 of the National Financial Reporting Authority Rules, 2018. MCA has decided to extend the time limit for filing Form NFRA-2 will be 270 days (earlier 150 days) from the date of deployment of this form on the website of National Financial Reporting Authority (NFRA).

• The MCA has included contributions towards the Central Armed Police Forces (CAPF) and Central Paramilitary Forces (CPMF) veterans and their dependents including widows, within the definition of Corporate Social Responsibility (CSR).

The MCA has issued a notification for amendment in the Schedule VII of the Companies Act, 2013 which shall come into force on the date of its publication in the Official Gazette i.e. 23-06-2020. In exercise of the powers conferred by Section 467(1) of the Companies Act, 2013, the Central Government hereby makes the further amendments in Schedule VII to insert the words “Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows;” after the words “war widows and their dependents” in item (vi) of Schedule VII. The notification has widened the scope of CSR, which was earlier restricted activities benefiting the army, navy and air force veterans and their dependents and war widows.

Other Laws

IBBI

• The IBBI has notified the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2020 which shall come into force on the date of publication in the Official Gazette i.e.30/06/2020.

The Amendment is brought under regulation 12(1) which deals with Recognition of Insolvency Professional Entities in which a limited liability partnership, a registered partnership firm or a company may be recognized as an insolvency professional entity if “its sole objective is to provide support services to insolvency professionals”. It is a welcome move by IBBI, as the IPE can now provide their services to any Insolvency professional as the restriction of providing services to Partners / Directors of entity is removed.

FSSAI

• The Food Safety and Standards Authority of India has issued standard operating procedures for reactivation of rejected applications and change in a user profile including new login credentials, Email id etc. 

The Food Business Operators shall apply to concerned regional officers of FSSAI for reactivation of license application within 6 months from the date of rejection and the application may be rejected automatically by the system due to non-furnishing of information/documents by FBO within 30 days. The FBOs intending to change their user profile shall submit a representation in this regard to the joint director, regulatory compliance division and the application should be on the letterhead of the firm/company duly signed by the authorized person and a copy of photo identity card and a copy of an existing license shall be enclosed along with the application. In case, FBOs want new login credential, they have to create a new login ID and Password and the same would be indicated in their application so that the IT team can validate and map the licenses or registrations in new login credentials.

RBI

• The RBI exempts venture capital fund companies from section 45-IA and 45-IC of the Reserve Bank of India Act, 1934.

The Reserve Bank of India vide its notification has exempted Venture capital fund companies holding a certificate of registration obtained under section 12 of the Securities and Exchange Board of India Act, 1992 and not holding or accepting public deposit from the provisions of section 45-IA which deals with the Requirement of registration and net owned fund and 45-IC which specifies Reserve fund of the RBI Act, 1934. Further, RBI also exempts those venture capital fund companies from the applicability of guidelines issued by the Bank for NBFCs. Further, Consequent upon the repeal of Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 and enactment of Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, it has been decided to substitute the word “Venture Capital Fund Companies” with “Alternative Investment Fund Companies”, in exercise of the powers conferred under section 45NC of RBI Act, 1934.

• RBI has extended the timeline for finalization of audited accounts by Non-Banking Financial Companies (NBFC).

RBI, in view of the on-going situation and taking in to account the feedback received from various stakeholders, has decided that every applicable NBFC shall finalise its balance sheet within a period of 3 months from the date to which it pertains or any date as notified by SEBI for submission of financial results by listed entities. As per RBI guidelines, every applicable NBFC is required to finalise its balance sheet within a period of 3 months from the date to which it pertains.

• RBI lays down guidelines for NBFCs, HFCs under special liquidity schemes.

The Reserve Bank of India laid down the eligibility criteria for non-bank financiers and mortgage lenders to utilize a special liquidity scheme that was approved by the Union cabinet in May. To borrow funds, the RBI rules mandate that non-banking financial companies (NBFCs) and housing finance companies (HFCs) should not have net non-performing assets of more than 6% as on 31 March 2019 and the funds raised will have to be solely used to extinguish existing liabilities. It also stipulated that the CRAR/CAR of NBFCs/HFCs should not be below the regulatory minimum of 15 per cent and 12 per cent, respectively as on March 31, 2019. These companies should have made net profit in at least one of the last two preceding financial years – 2017-18 and 2018-19 – and should not have been reported under SMA-1 or SMA-2 category by any bank for their borrowings during the last one year prior to August 1, 2018. They should also be rated investment grade by a Sebi registered rating agency and should comply with the requirement of the SPV for an appropriate level of collateral from the entity which would be optional and to be decided by the SPV.

• The RBI through an announcement on the Foreign Liabilities and Assets Information Reporting (FLAIR) system website has extended the due date of filing of Foreign Liabilities and Assets (FLA) Return for FY 2019-20to 31st July, 2020.

The FLA Return needs to be submitted by all Indian companies which have received Foreign Direct Investments (FDI) or made any FDI abroad (overseas investment) in the previous year(s) including the current year i.e. who holds Foreign Assets or Liabilities in their Balance Sheets. The due of filing the FLA Return for FY 2019-20 was 15th July, 2020 which now stands extended to 31st July, 2020. Non-filing of the return before the due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA. Further, the submission of annual return on FLA through the web-based FLAIR portal for the financial year 2019-20 has been started. Entities which 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 they can file FLA return. However, the entities which have already registered earlier may submit FLA-2020 using their login credentials.

SEBI

• SEBI has granted relaxation from compliance with provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, SEBI (Non-Convertible Redeemable Preference Shares) Regulations, 2013 and SEBI Circulars relating to Listing of Commercial Papers. 

SEBI has now received representations from listed entities seeking an extension of time for listing their Non-Convertible Debentures (NCDs)/Non-Convertible Redeemable Preference Shares (NCRPS)/Commercial Paper(s) (CPs), pending finalization of their annual accounts for the financial year ending March 31 2020. it has been decided to permit listed Issuers who have issued NCDs/NCRPS/CPs, on or after July 01 2020, and intend/propose to list such issued NCDs/NCRPS/CPs, on or before July 31, 2020, to use available financials as on December 31 2019.

• The SEBI has extended the relaxation given to the compliance requirement of the maximum time gap between two board or audit committee meetings for listed companies till July 31, due to COVID-19 pandemic.

SEBI in its earlier circular dated 19th March, had relaxed the requirement of the maximum stipulated time gap of 120 days between two meetings of the board and audit committees of listed entities as required under LODR (Listing Obligations and Disclosure Requirements) Regulations, 2015. This relaxation was provided for the meetings held or proposed to be held between the period December 1, 2019 to June 30, 2020. However, through this notification, SEBI has extended the relaxation till 31st July 2020. The board of directors and audit committees of listed entities shall, however, ensure that they meet at least four times a year, as stipulated under Regulations 17(2) and 18(2)(a) of the LODR Regulations. This Circular shall come into force with immediate effect i.e.  26-06-2020.

• The SEBI has issued a circular to provide relaxation in timelines for compliance with regulatory requirements by the depository participants (DPs), Registrars to an Issue & Share Transfer Agents (RTAs).

Due to the pertaining situation of COVID-19 in the country, the SEBI has decided to extend the timelines for certain compliances with regulatory requirements by DPs/ RTAs. Accordingly, compliance timelines have been extended for processing of the Demat request form by the issuer or RTA and the processing of the Demat request form by the participant’s timelines have been extended to July 31, 2020. Further, 15-day period after July 31, 2020 is given to all the depositories and DPs to clear the backlog. Further, the half-yearly Internal Audit Report shall be submitted by the DPs by July 31, 2020 for March 31, 2020. It is also provided that Closure of the Demat account shall be done by July 31, 2020. A 15-day period shall be provided after July 31, 2020 for the purpose of clearing the backlogs. Accordingly, a period of exclusion shall be from March 23, 2020 till July 31, 2020.

• The SEBI has amended the Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015.

SEBI has amended Clause 4(1) of SEBI (IFSC) Guidelines, 2015 related to Eligibility and shareholding limit for stock exchange desirous of operating in IFSC. The amendments have been made in the eligibility and shareholding limit for stock exchange desirous of operating in IFSC. All the Indian recognized stock exchange willing to provide stock exchange services in the IFSC shall hold paid-up equity share capital of 51%, whether Indian or Foreign. Further, the remaining capital can be acquired by other people be it Indian or Foreign nationals, however, the total paid-up equity capital shall not be more than 5%. Further, Bank companies, insurance companies, stock exchange, depository, commodity derivatives exchange, etc. can acquire only 15% of the paid-up equity share capital only after prior approval from the Board, whether directly or indirectly

• SEBI in a bid to streamline the operations of International Financial Services Centres (IFSC), has revised the eligibility and shareholding limit for stock exchanges desirous of operating in IFSCs.

Under the revised framework, any Indian recognised stock exchange or a bourse of a foreign jurisdiction may form a subsidiary to provide the services of a stock exchange in IFSC wherein at least 51 percent of paid-up equity share capital is held by such exchange and remaining share capital may be offered to any other person, whether Indian or of a foreign jurisdiction. Further, such person will not at any time, directly or indirectly, either individually or together with persons acting in concert, acquire or hold over 5 percent in the exchange, subject to applicable law.

• The SEBI has issued a circular for the transaction in Corporate Bonds and Commercial Papers through RFQ platform and enhancing transparency pertaining to debt schemes under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. 

To enhance the transparency, additional guidelines have been provided which includes Mutual funds shall take at least 10 percent of their total secondary market trades by value monthly in the corporate bonds through RFQ platform by placing quotes and seeking one to one mode; All the transactions relating to corporate bonds and commercial papers where the mutual funds are involved shall be carried out through RFQ platform on a one to one basis; Any transaction entered by mutual fund in Corporate Bonds in one to many modes and gets executed with another mutual fund shall also be counted for the aforesaid 10% requirement. Further, it is decided for debt schemes that such disclosure shall be done on fortnightly basis within 5 days of every fortnight. This Circular shall come in force from October 01, 2020.

• The SEBI has notified the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2020 to further amend the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

The amendments are done in the Regulation 3(5), which specifies the manner to handle price sensitive information has been substituted, stating that “the board of directors or head(s) of the organisation of every person required to handle unpublished price sensitive information shall ensure that a structured digital database is maintained containing the nature of unpublished price sensitive information and the names of such persons who have shared the information and also the names of such persons with whom information is shared under this regulation along with the Permanent Account Number or any other identifier authorized by law where Permanent Account Number is not available. Such database shall not be outsourced and shall be maintained internally with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database. Further, a new sub-regulation 3(6) has been inserted which specifies the handling of price sensitive database information and the preservation of database for a certain period. A new clause Regulation 7(2)(c) related to “Disclosures by certain persons” has been inserted, to deal with the disclosures shall be made in such form and such manner as may be specified by the Board from time to time

The Factories (Haryana Amendment) Act, 2018

• The State Government of Haryana has notified the Factories (Haryana Amendment) Act, 2018 to further amend the Haryana Factories Act, 1948.

Through this notification, amendments have been made to The Haryana Factories Act, 1948 which includes amendment in Section 2(m) which specifies the threshold limit of workmen has been substituted to “twenty” and “forty” instead of “ten” and “twenty”; Section 3, which specifies the number of hours of work by the workmen, the overtime work hours have been increased to “one hundred and fifteen” instead of “seventy five” to avail the exemption under section 65 which provides the power to the State Government to make exempting orders; Section 66(b) which specifies the hours of work for women has been substituted, stating that women can work in factories where proper security is provided from 7 PM to 6 AM. Further, a new Section 106 (B) has been inserted which provide relief through compounding of offenses, for the offenses specified in the Fourth Schedule, if committed for the first time, maybe compounded before the institution of the prosecution by such officer and for such amount, as may be notified by the State Government in the Official Gazette. However, the amount of fine shall not exceed the fine prescribed under section 92.

NCLT

• The MCA has extended the tenure of acting President of National Company Law Tribunal for another One Month.

The appointment of Hon’ble Shri. BSV Prakash Kumar is extended for another one months with effect from 05.07.2020 or until a regular President is appointed or until further orders, whichever is earlier. Earlier, Hon’ble Kumar was appointed as acting President for a period of three months from January 5, 2020 after the retirement of Justice MM Kumar as the NCLT President and extended further upto July 5, 2020. Presently hearing of all the NCLT benches across India is closed, following the lockdown declared by the government to contain Covid-19 pandemic.

• The NCLT has further notified that the Regular Proceedings at NCLT shall now start from 05-08-2020 instead of 20-07-2020.

The regular proceedings at NCLT Delhi were stopped immediately after the lockdown was announced on 24-03-2020. The NCLT has earlier decided and fixed the dates of hearings for Principal Bench and for all its New Delhi Benches (Court No. II, III, IV, V & VI) effective from 15-06-2020 which was re-notified from 01-07-2020 and then 20-07-2020. However, NCLT has now decided that all matters listed for 20-07-2020, 21-07-2020 shall now be held on 05-08-2020, 06-08-2020, 07-08-2020 respectively, and so on. All stakeholders are requested to take note of the same.

ESIC

The Employees State Insurance Corporation (ESIC) has instructed to make bank account details of an employee and mobile number registration mandatory for registering as an insured person.

Hence, bank account details and mobile number are now a prerequisite for an employee to be registered on an insured person. Accordingly, the Bank Details and Mobile Numbers would be required while registering a new insured person. Further, the Mobile No. should be available in the ESIC database and the number should be unique or it should be accessed through OTP. Further, in the case of updating of account details and mobile number of existing insured persons, Bank account details mandatory for availing cash benefits and claim reimbursements. The Bank details of existing insured persons can be updated by the employer by logging into employer portal accessing “Update particulars of existing persons” link. All the manuals pertaining to the above changes should be available on the ESIC website. This order shall come into effect from July 01, 2020