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

Income Tax

• CBDT vide Press release Dated 28^th May 2020, has formally launched the facility for instant allotment of PAN (on near to real time basis) for those PAN applicants who possess a valid Aadhaar number and have a mobile number registered with Aadhaar. The allotment process is paperless and an electronic PAN (e-PAN) is issued to the applicants free of cost.
• CBDT vide Notification No. 30/2020/F. NO. 370142/20/2020-TPL, Dated 28-5-2020, has revised the Form 26AS. Now, the Authorised person need to upload the information within three months from the end of the month in which the information is received by him. Such information will be received from any officer, authority or body performing any function under any law or the information received under an agreement referred to in section 90 or section 90A of the Income-tax Act,1961 or the information received from any other person to the extent as it may deem fit in the interest of the revenue.

• CBDT vide Notification No. G.S.R. 338(E) [NO. 31/2020/F. NO. 370142/32/2019-TPL], Dated 29-5-2020, has amend the rule and also bring the new ITR forms for filing for the Assessment year 2020-21.

• CBDT vide Notification No. S.O. 1879(E) [NO. 32/2020/F.NO. 370142/17/2020-TPL], DATED 12-6-2020, has notified the cost inflation index “301” for financial year 2020-21 for the purpose of calculation of indexed cost.

• CBDT vide Notification No. 35/2020/F.NO. 370142/23/2020-TPL], DATED 24-6-2020, has again given extension in various due date of compliance. Govt. has already given extension in March 24^th, 2020 in various due date which is now further extended and now almost all due dates falls in December except as mentioned in said notification.

Goods & Services Tax (GST)

• CBIC vide Notification No. 47/2020 – Central Tax dated 09^th June 2020 has extended the validity of E-way Bill generated on or before 24/03/2020 till 30^th June 2020.
• CBIC vide Circular No: 140/10/2020 – GST dated 10th June 2020 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 19^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.
• CBIC vide Notification No. 51/2020 – Central Tax dated 24^th June 2020 has provided relaxation in rate of Interest on delayed payment. Please Refer Annexure-2 for more detail.

• CBIC vide Notification No. 52/2020 – Central Tax dated 24^th June 2020 has provided nil late fees with regards to GSTR-3B. Please Refer Annexure-3 for more detail.
• CBIC vide Notification No. 53/2020 – Central Tax dated 24^th June 2020 fully waived the Late fees on filing of GSTR-1. Please Refer Annexure-4 for more detail.

Companies Act, 2013

• The Ministry of Corporate Affairs (MCA) has notified the amendments to Schedule VII of the Companies Act, 2013.

The amendment is carried out in Schedule VII is to insert Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) as Corporate Social Responsibility (CSR). The Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) was introduced by the Government of India on March 28, 2020, due to the COVID-19 pandemic in India. The fund was introduced to deal with any emergency or distress situation posed by the Coronavirus outbreak. The PM CARES Fund will be used for combat, containment and relief efforts against the COVID-19 and similar pandemic like situations in the future. The MCA has initially clarified that all contributions to the PM Cares Fund are admissible as CSR spending.

• MCA has notified the Companies (Share Capital and Debentures) Amendment Rules, 2020 which shall come into effect from 5th June, 2020.

Amendments are carried out in Rule 8(4) of the said Rules related to “Issue of sweat equity shares” has been substituted stating that the company shall not issue sweat equity shares for more than 15% of the existing paid-up equity share capital in a year or shares of the issue value of rupees five crores, whichever is higher, provided that a start-up company may issue sweat equity shares not exceeding 50% of its paid-up capital up to 10 years from the date of its incorporation or registration. Further, Rule 18(7)(b)(v) related to “Debentures” has been substituted, to be provided that In case a company is covered in item (A)(iii)(b) or item (B)(iv)(b), it shall on or before the 30th day of April in each year, in respect of debentures issued by such a company, invest or deposit, as the case maybe, a sum which shall not be less than 15% of the amount of its debentures maturing during the year, ending on the 31st day of March of the next year in any one or more methods of investments or deposits. Provided that the amount remaining invested or deposited, as the case may be, shall not any time fall below 15% of the amount of the debentures maturing during the year ending on 31st day of March of that year.

• MCA has notified the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020.

The government of India has effectively suspended fresh bankruptcy proceedings against persons impacted because of COVID-19 for at least six months, up to a maximum of one year. The amendments to IBC were promulgated, through the Insolvency and Bankruptcy Code Ordinance, 2020. The new rules come into effect immediately, as of June 5. The IBC (Amendment) Ordinance says that no business can be taken to bankruptcy tribunals for defaults during the period of the IBC’s suspension. The IBC (Amendment) Ordinance inserts new Section 10 A after Section 10. The Section pertains to suspension of initiation of corporate insolvency resolution process which says, “Notwithstanding anything contained in Sections 7, 9 and 10, no application for initiation of corporate insolvency process of a corporate debtor shall be filed, for any default arising on or after 25th March 2020 for a period of 6 months or such further period, not exceeding 1 year from such date, as may be notified in this behalf. Provisions of this Section shall not apply to any default committed under the said section before 25th March.

• MCA has issued further Clarification on the passing of ordinary and special resolutions by companies under the Companies Act, 2013 read with rules made thereunder on account of COVID-l9.

Earlier, MCA had issued a clarification on the passing of ordinary and special resolutions by companies and allowed companies to pass ordinary and special resolutions of urgent nature up to June 30, 2020 or to transact relevant business through postal ballot as per the procedure specified therein. The MCA has examined and it has been decided to allow companies to conduct their EGMs through VC or OAVM or transact items through the postal ballot in accordance with the framework provided in the aforesaid Circulars up to September 30, 2O2O. AII other requirements provided in the said Circulars remain unchanged.

• MCA has notified the much-awaited Scheme for relaxation of time for filling forms related to the creation or modification of charges under the Companies Act, 2013.

The Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013 & only Such forms can be filed under this scheme with normal fee where the timeline for filing such form had not expired under section 77 i.e. (120 Days) of the Act as on 01.03.2020 or the due date of filing such creation or modification falls between 01.03.2020 to 30.09.2020 (Both Days Inclusive). The Scheme shall not apply on the forms i.e.CHG-1 and CHG-9 had already been filed before the date of issue of this Circular, the timeline for filing the form has already expired under section 77 or section 78 of the Act prior to 01.03.2O2O and filing of form CHG-4 for the satisfaction of Charges.

• MCA has issued a clarification with regard to the creation of deposit repayment reserve and to invest deposit amount of debentures.

Clarification is issued to relax the requirement under Section 73(2)(c) of Companies Act, 2013 to create the Deposit Repayment Reserve of 20% of deposits maturing during the financial year 2020-21 before 30th April, 2020, shall now be allowed to be complied with till 30th September, 2020 and for the requirement under Rule 18 of the Companies (Share Capital & Debentures) Rules, 2014, to invest or deposit at least 15% of the amount of debentures maturing in specified methods of investments or deposits before 30th April, 2020, may now be complied with till 30th September, 2020. Earlier these dates were extended up to 30^th June, 2020.

• 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 June 30, 2020, would be extended by 20 days beyond June 30, 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 June 30, 2020 by 60 days beyond June 30, 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 June 30, 2020, an additional 15 days beyond June 30, 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 June 30, 2020 would be extended by 20 days beyond June 30, 2020. The RSUB validity for LLPs. The SRNs where the last date of resubmission (RSUB) falls between 15th March 2020 to June 30, 2020, an additional 15 days would be allowed from June 30, 2020 for resubmission.

• The MCA has issued a notification to further amend the Companies (Appointment and Qualification of Directors) Rules, 2014 through the Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2020.

which shall come into force on the date of their publication in the Official Gazette i.e. 23-06-2020. Accordingly, MCA has further extended the last date for registration of details of Independent Directors in the ID Data Bank for a further three months, i.e. ten months from December 1, 2019. The date is extended up to 30th September, 2020 instead of the earlier extension granted up to 30th June, 2020.

• The MCA has issued a notification to further amend the Companies (Meetings of Board and its Powers) Rules, 2014, through the Companies (Meetings of Board and its Powers) Second Amendment Rules, 2020

which shall come into force on the date of their publication in the Official Gazette i.e. 23-06-2020. The MCA has earlier provided certain relaxation w.r.t conduct of Board Meeting for approving financial statements through Video Conferencing (VC) or Other Audio-Visual Means (OAVM), upto June 30, 2020. Now through this amendment, MCA has further extended the above relaxation for all the Board meetings to be conducted till September 30, 2020, to approve its financial statements through VC or OAVM.

Other Laws

MSME

The Cabinet approves an upward revision of MSME definition and modalities/ road map for implementing the remaining two Packages for MSMEs (a) Rs 20000 crore package for Distressed MSMEs and (b) Rs 50,000 crore equity infusion through Fund of Funds.

In the package announcement, the definition of micro-manufacturing and services unit was increased to Rs. 1 crore of investment and Rs. 5 crores of turnover. The limit of the small units was increased to Rs. 10 crore of investment and Rs 50 crore of turnover. Similarly, the limit of a medium unit was increased to Rs 20 crore of investment and Rs. 100 crores of turnover. It may be noted that this revision was done after 14 years since the MSME Development Act came into existence in 2006. After the package announcement on 13th May, 2020, there were several representations that the announced revision is still not in tune with market and pricing conditions and it should be further revised upwards. This will help in attracting investments and creating more jobs in the MSME sector. The Government of India has been taking all necessary steps to ensure that the benefit of these landmark decisions reaches to the MSMEs at the earliest. In this regard, the following necessary policy decisions have been already taken and the implementation strategy has been put in place. To manage all this, a robust ICT-based system called CHAMPIONS has also been launched by the Ministry of MSME. The portal is not only helping and handholding MSMEs in the present situation but is also providing guidance to grab the new business opportunities and in the long run, become national and international Champions.

IBBI

IBBI has notified the Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2020

which shall come into force from 1st July, 2020. Further, these Guidelines have been issued in supersession of the earlier Guidelines issued on 28^th November, 2019. Given that every IP is equally qualified to be appointed as the IRP, Liquidator, RP or BT of any corporate or individual insolvency resolution, liquidation or bankruptcy process, as the case may be, if otherwise not disqualified, and in the interest of avoiding administrative delays, Page 3 of 7 the Board considers necessary to have these guidelines to prepare a Panel of IPs for the purpose of section 16(4), 34(6), 97(4), 98(3), 125(4), 146(3) and 147(3). 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. The NCLT may pick up any name from the Panel for appointment of IRP, Liquidator, RP or BT, for a CIRP, Liquidation Process, Insolvency Resolution or Bankruptcy Process relating to a corporate debtors and personal guarantors to corporate debtors, as the case may be.

NCLT

The NCLT has notified that the Regular Proceedings at NCLT shall begin from 15-06-2020.

The regular proceedings at NCLT Delhi were stopped immediately after the lockdown was announced on 24-03-2020. Now the Central Government has started to unlock 1.0 vide its Order dated 30-05-2020. The NCLT has decided to fix 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. All matters listed for 24-03-2020, 25-03-2020, 26-03-2020 shall now be held on 15-06-2020, 16-06-2020, 17-06-2020 respectively and so on. All stakeholders are requested to take note of the same.

The NCLT has further notified that the Regular Proceedings at NCLT shall now begin from 01-07-2020 instead of 15-06-2020.

The regular proceedings at NCLT Delhi were stopped immediately after the lockdown was announced on 24-03-2020. Now the Central Government has started to unlock 1.0 vide its Order dated 30-05-2020. 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. However, NCLT has now decided that all matters listed for 15-06-2020, 16-06-2020 shall now be held on 01-07-2020, 02-07-2020, 03-07-2020 respectively, and so on. All stakeholders are requested to take note of the same.

NCLT has issued a notice on its website w.r.t. payment of fees for fresh applications/petitions.

NCLT is taking urgent matters throughout this lockdown through Video Conferencing only. The filing at NCLT, New Delhi is being done through e-filing. The e- filing facilitates the litigant to make payment of fees through online or offline modes. It has been observed that most of the litigants made the payment through offline mode i.e. by way of filling details of Demand Drafts (DDs). However, these DDs have not been physically received in NCLT, New Delhi. Therefore, could not be deposited in the PAO (Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi). However, in e-court facility, such payment has been shown as fees paid and thus the matters were listed before the Bench. In view of above the litigants/ stakeholders who have e-filed and opted for offline mode for the payment of fee are requested to deposit DDs before it expires, at the NCLT counter between 4:00 P.M to 06:00 PM, on any working day.

FSSAI

The Food Safety and Standards Authority of India (FSSAI) has decided to extend the date for a mandatory food safety audit of food business under the FSS (Food Safety Auditing) Regulations 2018.

FSSAI, in order, has stated that the food businesses holding Central licenses and falling under high risk category can now complete the mandatory audit by Sept 30, 2020. For the order mandating audit of food businesses holding Central licenses falling under high risk category, it is informed that keeping in view the current situation due to COVID pandemic, the last date for mandatory audits have been extended up to Sept 30, 2020. Earlier, in its order dated August 13, 2019, the food authority had directed food businesses including dairy products and analogues (excluding products of food category 2.0); meat and meat products, including poultry; fish and fish products, including molluscs, crustaceans, and echinoderms; eggs and egg products; foodstuffs intended for particular nutritional uses (food for infant nutrition and so on); and prepared food (catering and so on), shall be subject to mandatory food safety auditing. Previously the last date for conducting the mandatory audit was December 31, 2019, which was extended to June 30, 2020.

SEBI

SEBI has notified further Relaxations from certain provisions of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 in respect of Further Public Offer.

SEBI has decided to provide similar relaxations in the eligibility conditions related to Fast Track Further Public Offer (FPO) as contained in the SEBI “ICDR Regulations. In Regulation 155(c) related to ‘eligibility conditions for fast track route’ is substituted stating that average market capitalisation of public shareholding of the issuer is at least Rupees 500 crores instead of Rs. 1000 crores in case of public issue. Further, Regulation 155(l) has been substituted, namely to capture the impact of audit qualifications, if any and where quantifiable, on the audited accounts of the issuer in respect of those financial years for which such accounts are disclosed, shall be appropriately disclosed and accounts accordingly restated, in the offer documents. All these temporary relaxations shall be valid for all the FPO’s that will be opened on or before March 31, 2021, and shall not applicable for issuance of warrants.

The SEBI has amended the takeover regulations to enhance the creeping acquisition limit for promoters of a listed company.

The amendment, allows a shareholder owning 25% or more of the shares or voting rights in a company to increase his shareholding by up to 10% in a year versus the earlier 5% limit. But this increase in limit is permitted only via a preferential issue of equity shares. The pertinent provision in the Substantial Acquisition of Shares and Takeovers Regulations provide for shareholders to increase their shares or voting rights in a company, by up to a specified threshold, in order to consolidate their shareholding. Any increase in voting rights beyond the permitted threshold will result in a mandatory open offer, according to regulation 3(2) of the takeover regulations. The threshold has been raised from 5% to 10%, via a preferential issue, only for the financial year 2020-21. SEBI has also relaxed the provision for the voluntary open offer. Earlier, a shareholder holding 25% or more of shares or voting rights was permitted to make a voluntary open offer, but only if he had not acquired any shares of the company via the creeping acquisition route in the preceding 52 weeks. That condition has now been relaxed till March 31, 2021.

The SEBI has notified the SEBI (Infrastructure Investment Trusts) (Second Amendment) Regulations, 2020 to further amend the SEBI (Infrastructure Investment Trusts) Regulations, 2014.

Through this amendment, a new Regulation 7A has been inserted specifying de-classification of the status of the sponsor. This shall be applicable to all the sponsors who are listed on the website for more than three years and the unit holding of such sponsors shall not exceed 10%. Further, a new sub-clause (da) and (ca) under Regulation 14(2) has also been inserted, stating that the maximum subscription from any of the sponsors shall not be more than 25% of the unit holding. A new sub-regulation (5C) under Regulation 22 has been inserted, stating no person other than such sponsors shall be allowed to hold the units of the InvIT. The amended regulation shall come into force on the date of their publication in the Official Gazette i.e. June 16, 2020.

SEBI has issued circular regarding further extension of time for submission of financial results for the quarter/half-year/financial year ending 31st March 2020 due to the continuing impact of the CoVID-19 pandemic.

After taking into consideration various representations and operational challenges due to the CoVID-19 pandemic, it has been decided by SEBI to further extend the timeline for submission of financial results under Regulation 33 of the LODR Regulations, by a month, to July 31, 2020, for the quarter and the year ending 31st March 2020. Similarly, the timeline under Regulation 52 of the LODR for submission of half-yearly and/or annual financial results for the period ending March 31, 2020, for entities that have listed NCDs, NCRPS’, CPs, MDS’ is also extended to July 31, 2020. This circular shall come into force with immediate effect i.e. 24-06-2020.

SEBI has issued Circular to further extend the time for submission of Annual Secretarial Compliance Report for the financial year 2019-2020, by listed entities due to the continuing impact of the COVID – 19 pandemic.

In March, the markets regulator had extended the deadline by one month from May 31 to June 30 and now it has further been extended to July 31. The decision has been taken after the regulator received representations from the Institute of Company Secretaries of India, industry bodies, and listed entities requesting the extension of time for submission of Annual Secretarial Compliance Report in view of the difficulties faced by entities and practicing company secretaries due to the impact of COVID-19. This Circular shall come into force with immediate effect i.e. 25-06-2020. The Stock Exchanges are also advised to bring the provisions of this circular to the notice of all listed entities that have issued specified securities and also disseminate on their websites.

RBI

The Reserve Bank of India has released on its website a Discussion Paper on ‘Governance in Commercial Banks in India’ for public comments.

The objective of the discussion paper is to align the current regulatory framework with global best practices while being mindful of the context of the domestic financial system. Accordingly, some of the major highlights of the paper include Empower the Board of Directors to set the culture and values of the organisation; recognised and manage conflicts of interest; set the appetite for risk and manage risks within the appetite; improve the supervisory oversight of senior management. Further, empowering the assurance functions through various interventions; Achieve a clear division of responsibilities between the Board and the management, and encourage the separation of ownership from management. Improving the quality of governance in financial intermediaries is an important determinant of efficiency in the allocation of resources, protection of depositors’ interest, and maintaining financial stability. In this endeavor, the paper has been drafted to encourage stakeholder feedback. Suggestions and comments on the discussion paper may be sent by email latest by July 15, 2020.

Annexure 2: Notification No. 51/2020 – Central Tax dated 24th June 2020

Annexure 3: Notification No. 52/2020 – Central Tax dated 24th June 2020

Annexure 4: Notification No. 53/2020 – Central Tax dated 24th June 2020

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates are for the period 26.05.2020 till 25.06.2020.

Annexure 3: Notification No. 52/2020 – Central Tax dated 24th June 2020

Annexure 4: Notification No. 53/2020 – Central Tax dated 24th June 2020

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates are for the period 26.05.2020 till 25.06.2020.

Income Tax

• TDS-CPC issued notification that online application for Lower/NIL tax deduction can be file 28^th February of the preceding financial year and can be filed upto 15^th March of same financial year.

• CBDT vide Notification dated 13^th February 2020, intimated that if Aadhar No. is not linked/intimated then PAN becomes inoperative and deemed that PAN is never furnished wherever required and consequent action will be taken.
• CBDT vide Circular No.06/2020 dated 19.02.2020, further relaxed the condonation of delay in filing of Income Tax Return/Form 9A/10 of charitable institution for AY 2016-17, 2017-18, 2018-19.
• CBDT also open facility of E-Calculator on their website to compare the tax in alternative new tax regime vs. old tax regime.

International Taxation

• CBDT clarify that Indian non-resident will not taxed twice until they derived income from an Indian sources.
• CBDT has approved the signing and ratification of the Protocol amending India-Sri Lanka DTAA. Updation of preamble text and inclusion of Principal Purpose Test, a general anti abuse provision in the DTAA will result in curbing of tax planning strategies which exploit gaps and mismatches in tax rules. Amendment done in DTAA not in MLI as Sri Lanka is not a signatory of MLI.

• Vide DOR Notification G.S.R. 84(E) dated 04th February, 2020 [F. No. S-31011/01/2012-SO (ST-1)(Pt.-8)] Ministry of Finance has declared the GST Database and its associated infrastructure dependencies installed at GSTN, as the protected system under Section 70(1) of the Information Technology Act, 2000.
• CBIC vide various tweets, has clarified the issue relating to Interest payable on Delayed Tax payments stating that the GST laws (sec. 50(1)), as of now, permit interest calculation on delayed GST payment on the basis of gross tax liability. This position has been upheld in the Telangana High Court’s decision dated 18.04.2019. Such amendment will be made prospectively from a date yet to be notified.
• CBIC vide Order-01/2020-GST dated 07th February 2020 extended the time limit for submitting the declaration in Form GST Tran-1 under rule 117(1A) of the CGST Rules, 2017 for the class of persons who could not file their form GST TRAN 1 by due date on account of technical difficulties on the common portal and whose cases have been recommended by the council till 31^st March, 2020.
• CBIC vide Notification No. 07/2020 – Central Tax dated 3rd February 2020, extended the due date of filling of GSTR-3B in staggered manner for different taxpayers basis upon turnover and State/UT of registered place. Under the amendment the last date for filing of GSTR-3B for the taxpayers having annual turnover of Rs 5 crore and above in the previous financial year would be 20th of the month, The taxpayers having annual turnover below Rs 5 crore in previous financial year are divided further in two categories-

The tax filers from 15 States/ UTs, i.e., States of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep will now be having the last date of filing GSTR-3B returns for the month of January, February and March, 2020 as 22^nd of following month.

For the remaining taxpayers whose principal place of business is in the States of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha or the Union territories of Jammu and Kashmir, Ladakh, Chandigarh and Delhi will now be having last date of filing the GSTR-3B for the month of January, February and March, 2020  as 24th of the following month without late fees.

• E-Way Bill system is now integrated with Vaahan system of Transport Department. Vehicle (RC) number entered in e-waybill will be verified with Vaahan data for its existence/correctness. If the vehicle number does not exist, then system will alert the user to check and correct, if required. If the vehicle (RC) number is correct as per the tax payer, then he can continue with generation of E-Way Bill. However, he needs to get the vehicle number updated in the Vaahan database so that in future E-Way Bill generation will not be affected.

Companies Act, 2013

MCA

MCA revises the effective date of implementation of the revised Incorporation procedure through the Companies (Incorporation) Amendment Rules, 2020 to 23rd February, 2020.

Accordingly, for Reservation of name or change of name, an application shall be made through the web service by using web service SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32), and for change of name by using web service RUN (Reserve Unique Name) along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014, which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre after allowing re-submission of such web form within fifteen days for rectification of the defects, if any, with effect from the 23rd February, 2020. Now the Form AGILE-PRO (Application for Goods and Services Tax Identification Number, Employees State Insurance Corporation Registration plus Employees Provident Fund Organization Registration, Profession Tax Registration and Opening of Bank Account) can be filed for Incorporation of a Company.

MCA has notified the Companies (Registration Offices and Fees) Amendment Rules, 2020 which shall come into force on the date of their publication in the Official Gazette i.e. 19-02-2020.

Through this amendment, MCA has released revised Form No. GNL-2. As the Companies can file certain documents with the Registrar of Companies by filing this e-Form GNL-2 and in case there is no e- Form prescribed for filing any document with Registrar, then company or liquidator can file such documents through this e-Form.

MCA has allowed the Filing of forms in the registry of MCA-21 by the Insolvency Professional (IP), Interim Resolution Professional (IRP) or Resolution Professional (RP) or Liquidator as appointed under Insolvency Bankruptcy Code, 2016.

MCA has specified the requirement of filing Form INC-28 by Interim Resolution Professional/Resolution Professional/ Liquidator, as appointed by Hon’ble Bench of NCLT/ NCLAT, after the admission of the petition filed under Insolvency and Bankruptcy Code, 2016. Before the initiation of Form INC-28, most of the corporates under CIRP had to face the issue of filing the relevant e-forms on the MCA portal, since the power of the Board of Directors get suspended, once the CIRP process is initiated against the company. As per the Circular, the Insolvency Professional is required to attach the order copy of NCLT/NCLAT in Form INC-28, which after verification from ROC, the same will get approved and Insolvency Professional will be allowed, to file the e-forms of the Company (under CIRP) by affixing his DSC. Once the form INC-28 is approved by the respective ROC, the name of Insolvency Professional will be reflected as ‘Chief Executive Officer’ under the Authorized Signatory details of the Company. The status of the Company will be shown as under CIRP or Liquidation, based on the filing of the e-form. On completion of the insolvency process or after getting stay order, the Insolvency Professional is required to file e-form INC-28 once again, to change the status of the Company on the MCA portal.

MCA has notified the Nidhi (Second Amendment) Rules, 2020 which shall come into force on the date of their publication in the official Gazette i.e. 14-02-2020.

Through this amendment, Rule 23A has been amended to extend the time limit of declaring a Public Company as Nidhi Company within 9 months. As per the new amendment, a public company shall declare it as Nidhi and every Nidhi incorporated under the Act shall get itself declared within a period of 1 year from the date of its incorporation or within a period of 9 months from the date of commencement of Nidhi (Amendment) Rules, 2019, whichever is later. The period was initially 6 months from commencement of Nidhi rules which is hereby extended for another 3 months.

MCA has notified the Nidhi (Amendment) Rules, 2020 which shall come into force on 10thFebruary, 2020.

Amendments are made to substitute new Form NDH-1, NDH-2 & NDH-3 in place of the existing forms. The FORM NO. NDH-I is for Return of Statutory Compliances [Pursuant to section 406 of the Companies Act, 2073 and pursuant to sub rule (2) of rule 5 of the Nidhi Rules, 2014. The FORM NO. NDH-2 is for Application for extension of time [Pursuant to sub-rule (3) of rules of Nidhi Rule 6., 2014] and FORM NO. NDH-3 is for Return of Nidhi Company for the half year ended [Pursuant rule 27 of the Nidhi Rules 2014].

MCA has notified the amended rules which may be called the Companies (Issue of Global Depository Receipts) Amendment Rules, 2020 and shall come into force on the date of their publication in the Official Gazette i.e. 13-02-2020.

Amendments are carried out to insert a new proviso in Rule 7 has been inserted which states that the proceeds of the issue of depositories receipts maybe remitted in an IFSC banking unit and utilized in accordance with the instructions issued by the RBI on time to time. Further, the depository receipts can be issued by way of a public offering or private placement or in any other manner prevalent in the concerned jurisdiction and may be listed or traded on the listing or trading platform in the concerned jurisdiction.

MCA has notified the Companies (Accounts) Amendment Rules, 2020 which shall come into force on the date of their publication in the Official Gazette i.e. 30-01-2020.

New Rule 12(1A) has been inserted to cover every Non-Banking Financial Company (NBFC) that is required to comply with Indian Accounting Standards (Ind AS) shall file the financial statements with Registrar together with Form AOC-4 NBFC (Ind AS) and the consolidated financial statement, if any, with Form AOC-4 CFS NBFC (Ind AS). Accordingly, MCA has provided Relaxation of additional fees and extension of the last date of filing of Forms AoC-4 NBFC (Ind AS) and AoC-4 CFS NBFC (Ind AS) for FY 2018-19 under the Companies Act, 2013. It is hereby informed that the two new eform namely AoC-4 NBFC (Ind AS) and AoC- 4 CFS NBFC (Ind AS) are likely to be deployed on 31st January, 2020 and 17th February, 2020 respectively. In view of the same, it has been decided to extend the last date for filing of AoC-4 NBFC (Ind AS) and AoC-4 CFS NBFC (Ind AS) for all eligible companies for the FY 2018-19, without payment of additional fee till 31st March, 2020. 

MCA directs that provisions of section 460 of the Companies Act, 2013 (Condonation of Delay by Central Government in certain cases) shall apply to a limited liability Partnership (LLP) from the date of publication of this notification in the Official Gazette.

Section 460 of the Companies Act, 2013 deals with the Condonation of delay in certain cases, provided that Notwithstanding anything contained in this Act, (a) where any application required to be made to the Central Government under any provision of this Act in respect of any matter is not made within the time specified therein, that Government may, for reasons to be recorded in writing, condone the delay; and (b) where any document required to be filed with the Registrar under any provision of this Act is not filed within the time specified therein, the Central Government may, for reasons to be recorded in writing, condone the delay. The same provision is now made applicable to LLP for Condonation of delay.

MCA has provided Relaxation of additional fees and extension of the last date for filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act, 2013 for the companies having registered office in UT of J &K and UT of Ladakh.

On the basis of the requests received from various stakeholders stating that due to disturbances in internet services and the normal work was affected in the UT of J &K and UT of Ladakh and sought extension of time for filing of financial statements for the financial year ended 31.03.2019. Therefore, it has been decided to further extend the due date for filing of e-forms AOC-4, AOC-4 (CFS) AOC4 XBRL and e-form MGT-7 up to 31.03.2020, for companies having the jurisdiction in the UT of J&K and UT of Ladakh without levy of additional fee.

MCA had notified the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2020, shall come into force on the date of their publication in the Official Gazette i.e 03-02-2020. 

The amendment includes a provision for majority shareholders to buy out minority stockholders. Accordingly, A member of the company shall make an application for arrangement, for the purpose of takeover offer in terms of sub-section (11) of section 230, when such member along with any other member holds not less than three-fourths of the shares in the company, and such application has been filed for acquiring any part of the remaining shares of the company. The notification by the ministry said that for such an application of takeover, the applicant will have to submit the report of a registered valuer disclosing the details of the valuation of the shares proposed to be acquired by the member. Additionally, the amendment prescribes that the whole process has to be carried out under the scheme of arrangement mechanism.

MCA has published the National Company Law Tribunal (Amendment) Rules, 2020 to insert new Rule to deal with grievances with respect to the takeover offer of Unlisted Companies. 

New Rule 80A according to which an application in Form NCLT-1 shall be filed before the tribunal by an aggrieved party in the event of any grievances with respect to the takeover offer of companies other than listed companies in such manner as may be prescribed and the Tribunal may, on application, pass such order as it may deem fit. The Application fees in case of takeover offer of companies which are not listed shall be Rs.5000. The list of documents to be attached with the above application shall include an Affidavit verifying the petition, Memorandum of appearance with copy of the Board’s Resolution or the executed Vakalatnama, as the case may be, Documents in support of the grievance against the takeover.

MCA has given a public notice on the website of the MCA, to inform all the Stakeholders that Nidhi Company related Forms NDH-1 (Return of Statutory Compliances), Form NDH-2 (Application for Extension of Time) and Form NDH-3 (Half Yearly Return) shall have to be filed only as e-forms, with effect from 11th February, 2020 onwards.

Accordingly, the e-forms shall be available on the MCA-21 portal on 11th February, 2020. Stakeholders are also advised to please note that any such Nidhi forms filed on or after 11th February, 2020 as attachments to GNL-2 e-form and RD-1 e-form shall not be processed by ROCs and RDs and shall be rejected accordingly. Stakeholders are advised to note and plan accordingly.

MCA has notified the Companies (Winding Up) Rules, 2020 which shall come into force from 01-04-2020, comprising of Rules 1 to 191 and Forms WIN 1 to WIN 95, applicable for winding up of companies under the provisions of Section 468 & 469 of the Companies Act 2013.

The Companies (Winding Up) Rules 2020 provides rules for Winding up by Tribunal; Liquidators; Winding up Order; Application for stay of suits etc. on winding up order; Report by Company Liquidator under section 281; Settlement of list of contributors; Advisory Committee; Meetings of Creditors and Contributories; Proxies in relation to meetings of creditors and contributories; Registration and Books of Account to be Maintained by Company Liquidators; Banking Account of Company Liquidator; Investment of Surplus Funds; Filing and Audit of Company Liquidator’s Account; Winding up  by Tribunal (other than summary winding up) Debts and Claims against Company; Attendance and Appearance of Creditors and Contributories; Collection and Distribution of Assets in Winding up by Tribunal; Calls in Winding up by Tribunal; Examination under Section 299 and 300; Application against Delinquent Directors, Promoters and Officers of the Company; Compromise or Abandonment of Claims; Sale by Company Liquidator; Dividends and Returns of Capital in Winding up by Tribunal; Termination of Winding up; Payment of Unclaimed Dividends or Distribution of Assets and Summary Procedure for Liquidation.

CA has given a message to all the stakeholders that due to the proposed changes to the RUN web service (for companies), Resubmission Option for name reservation shall not be available for forms processed by CRC from 1st February, 2020 onwards for approximately 15 days.

Hence, stakeholders are advised to either await deployment of SPICE+ and then apply for names through SPICe+ web form or perform due diligence while submitting any application in existing RUN web service for name reservations. RUN applications (for companies) processed w.e.f 1st February 2020 onwards shall either be approved or rejected based on checks performed by CRC officers. Stakeholders may kindly note and plan accordingly.

MCA has given a message to all the stakeholders w.r.t the changes made in the process of Incorporation of Companies.

Stakeholders may please note that as part of Government of India’s Ease of Doing Business (EODB) initiatives, the Ministry of Corporate Affairs would be shortly notifying & deploying a new Web Form christened ‘SPICe+’ (pronounced ‘SPICe Plus’) replacing the existing SPICe form. The new Form SPICe+ would be an integrated Web form offering multiple services viz. name reservation, incorporation, DIN allotment, mandatory issue of PAN, TAN, EPFO, ESIC, Profession Tax (Maharashtra) and Opening of Bank Account. It will also facilitate the allotment of GSTIN wherever so applied for by the Stakeholders. After deployment of SPICe+ web form, RUN shall be applicable only for the change of name of existing companies. Further, upon notification & deployment, all new name reservations for new companies as well as new incorporations shall be applied through SPICe+ only, however, incorporation of companies for names reserved through the existing RUN service shall continue to be filed in the existing SPICe eform along with related linked forms as applicable and if marked under resubmission shall be resubmitted in SPICe eform. Resubmission of SPICe forms submitted prior to the date of deployment of SPICe+ web form shall also be filed in the existing SPICe eform and related linked forms as applicable.

MCA notifies Companies (Auditor’s Report) Order 2020. Read Key Changes / Highlights CARO 2020 – Companies (Auditor’s Report) Order, 2020

MCA in place of existing the Companies (Auditor’s Report) Order, 2016, has notified CARO 2020 after consultation with the National Financial Reporting Authority constituted under section 132 of the Companies Act, 2013.

Other Laws

Employees’ State Insurance

The Employees’ State Insurance Corporation has issued a Clarification regarding checking of records beyond 5-year period for conducting test inspections and other inspections.

The ESIC had received several representations from employers regarding the demand of records beyond five years period by ESIC officials for conducting a test inspection / inspection. Hence, through the circular ESIC clarifies that the Authorized Officers is not permitted to ask for any records, relating to the contributions made by the employer to the ESIC before five years, from the employers while conducting test inspection/inspection. The time limit of five years must be strictly followed in determining the contributions and issue of speaking orders by the authorized officers. It is reasoned that since contribution cannot be determined for the period beyond five years, the Social Security Officer cannot ask for any records beyond 5 years from the employer for inspection.

The Employees’ State Insurance Corporation, under the labour Ministry, has proposed draft amendments to the Employees’ State Insurance (General) Regulations, 1950, through a notification in an Official Gazette.

The draft regulations will be taken into consideration after expiry of a period of Thirty days from the date on which the Official Gazette. The Amendment proposed are paving way for appointment of a local committee with representatives of Centre, state government, employers, and employees in each notified district under the existing regional board to facilitate the devolution of powers at the grass root level for better implementation of the scheme. The ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment and the beneficiaries’ monthly wage does not exceed Rs 21,000 are covered under the scheme. Amendments are proposed in the clause dealing with the Notice of Commissioning Mother, Declaration by Insured Women of her surviving child or children, Claim for Maternity Benefit by Commissioning Mother, Claim for Maternity Benefit by Adoptive Mother and Form No. 17 and Form No. 19 are revised.

SEBI

The SEBI has notified the new norms & Guidelines governing Portfolio Managers and their services.

The SEBI has mandated that portfolio managers cannot charge an upfront fee, either directly or indirectly, from clients and the only brokerage at actuals should be charged to clients as an expense. Further, Operating expenses excluding brokerage, over and above the fees charged for Portfolio Management Service, shall not exceed 0.50 percent per annum of the client’s average daily Assets under Management (AUM). For redemption of client portfolio in the first three years of investment, an exit load charge ranging from 1-3 percent would be charged. After the three-year period, there would be no exit load. Charges for all transactions in a financial year through self or associates would be capped at 20 percent by value per associate per service. The regulator noted that portfolio managers should provide an option for clients to be on-boarded directly, without the intermediation of persons engaged in distribution services. Further, the Portfolio managers would be required to provide a certificate from a qualified chartered accountant certifying net worth as on March 31, on the basis of audited accounts. This has to be done within six months from the end of a financial year. The provisions of the circular would come into effect from May 1.

SEBI Introduces New System to Detect Broker Misuse of Client Securities.

An online register will record brokers’ holdings of client securities, clubbing all such information collected by exchanges, depositories and clearing corporations for all types of trades. In the recent past, SEBI has observed that some brokers have misused clients’ securities received as collateral to meet their own settlement obligation or obligations of other clients. SEBI collects the details of the clients’ securities submitted in the weekly report filed by brokers with the exchanges and updates the same with trades conducted in the accounts of said clients using the data available with SEBI in DWBIS as well as data provided by exchanges, clearing corporations and depositories pertaining to auction trades, corporate actions, SLBM transfers, off-market trades etc.. The securities holding balance computed is matched with actual clients’ securities holding in the Demat account and the submission made by the broker for the next day. If there is any mismatch in data, it is flagged as an alert for exchanges. These reports are being generated by SEBI on a weekly basis and three such mismatch reports have already been forwarded to Exchanges for reconciliation with members.

Sebi has issued guidelines for benchmarking the performance of alternative investment funds (AIFs) with a view to streamlining disclosure standards and helping investors in assessing scheme performance.

The SEBI has proposed that an association of AIFs with representation from at least 51 percent of the industry selects one or more benchmarking agencies. The agreement between the benchmarking agencies and the AIFs should cover the mode and manner of data reporting, specific data that needs to be reported, and terms of confidentiality. Benchmarking will apply to all schemes that have completed at least one year from the date of ‘First Close’. Funds incorporated overseas with India track record shall also provide the data to the agencies when they seek registration as AIFs. Performance benchmarking shall be done on a half-yearly basis based on data as on September 30 and March 31 of each year. The performance and benchmark reports are to be made available latest by July 1, 2020, for the performance up to September 30, 2019. Further, the SEBI has also introduced a template for private placement memorandum (PPM) to ensure minimum disclosure in a simple and comparable format.

SEBI has simplified the rights issue process to make it more efficient and effective, by amending the SEBI (Issue of Capital and disclosure requirements) Regulations, 2018 (“ICDR Regulations”) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”), which shall be applicable for all rights issues and fast track rights issue where Letter of Offer (LoF) is filed with the stock exchanges on or after February 14, 2020.

Accordingly, as per Regulation 42(2) of LODR, the period of Advance Notice to Stock Exchange has been reduced to 7 workings days to 3 workings days as per Regulation 84(1) of ICDR, Issuance of a newspaper advertisement for disclosing the date of completion of dispatch and for intimation of the same to the stock exchange for dissemination on their website is now required to be completed by the Issuer at least 2 days before the opening of the Issue. Further, in the letter of offer or abridge letter of offer, the Issuer shall disclose the process of the credit of Right Entitlements (RE) in the Demat account and renunciation. The REs with a separate ISIN shall be credited to the Demat account of the shareholders before the opening of the issue, against the shares held by them on the record date.

SEBI has specified the uniform structure for imposing fines as a first resort for non-compliance with LODR regulations and the standard operating procedure for suspension and revocation of trading of specified securities.

SEBI pursuant to the amendments to Listing Regulations and in order to streamline the Standard Operating Procedure for dealing with non-compliance, the present circular has been issued suppressing the earlier circulars. Therefore, the stock exchanges shall, having regard to the interests of investors and the securities market shall take action by imposing a fine or any other act for non-compliance in respect of listed entities. The fine amount for violation of various provision has been listed out in the Annexure I and Annexure-II provides the standard operating procedure for suspension and revocation of trading of specified securities, of the circular. The Concerned recognized stock exchange shall display on their website non – compliance by the listed entity and details of fine levied/ action taken and the fines imposed shall continue to accrue till the time of rectification of the non-compliance to the satisfaction of the concerned recognized stock exchange. Further, the stock exchanges shall follow the Standard Operating Procedure (SOP) for suspension and revocation of suspension of trading of specified securities.

IBBI

The IBBI has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2020 which shall come into force on the date of their publication in the Official Gazette 12-02-2020.

As the Regulations require the Insolvency Professionals (IP) to file a set of forms, namely, IP1, CIRP1, CIRP2, CIRP3, CIRP4, CIRP5, and CIRP6 covering the life cycle of a CIRP along with the enclosures thereto, on an electronic platform of the Board within the prescribed time. The filing of a Form under this regulation after the due date of submission, whether by correction, updating or otherwise, shall be accompanied by a fee of five hundred rupees per Form for each calendar month of delay after 1^st January, 2020. Through this Amendment, IBBI has extended the last date of submission of delayed forms with fees from 01-01-2020 to 01-04-2020.

DGFT

The DGFT has issued a Trade Notice to request exporters to submit fortnightly statements in the prescribed format on Statement of Origin issued.

Further, to respond to the verification requests by EU within the prescribed time limit, failing which the Registered Exporter Number (REX) may be annulled. Furthermore, issued FAQs in this regard to clarify the various issues pertaining to the same. It has been clarified, that there is no difference in tariff or customs preferences if the wholly obtained (WO) criteria are used instead of the product-specific rule (PSR). Further, the WO criteria under Article 44 of EU regulation 2446/2015 should be used when all the inputs namely raw materials and intermediates used in the export product are originating in India. In case, there is a doubt on the origin of any input, used in the export product the WO criteria must not be used. It has been clarified, that the “Statement on Origin” can be issued retrospectively from the date of application for registration of an exporter, For example, if an exporter made an online application for registration on 1 April but the REX number was issued only on 15 April; he can use the REX number allotted to him for issuance of “Statement on Origin” for exports made from 1 April onwards.

RBI

The RBI has come up with some changes in operational guidelines for the captioned scheme contained in circular on ‘Interest Subvention Scheme for MSMEs‘.

Under the changes, it has been allowed to submit statutory auditor certificate by June 30, 2020 and in the meantime, to settle claims based on internal/concurrent auditor certificate. Acceptance of claims in multiple lots for a given half-year by eligible institutions has been allowed. Unit not required to obtain GST, may either submit Income Tax Permanent Account Number (PAN) or their loan account must be categorized as MSME by the concerned bank. RBI has also allowed trading activities also without Udyog Aadhar Number (UAN). Further, with the trading activity also eligible for interest subvention, the ‘Format of Certificate for claiming Subsidy’ has been revised. Banks are advised to submit claims to SIDBI as per the revised format.

The Reserve Bank of India has eased the investment norms for Foreign Portfolio Investors (FPI) in debt.

FPIs are allowed to invest in various debt market instruments such as government bonds, treasury bills, state development loans and corporate bonds, but within certain limits and restrictions. The Reserve bank increased the FPIs cap on investment in government securities and corporate bonds to 30% outstanding stock of that security, from 20% earlier. FPIs were allowed to invest in government and corporate bonds with a minimum residual maturity of three years. FPI investments in Security Receipts are currently exempted from the short-term investment limit These exemptions are extended to FPI investments in Debt instruments issued by Asset Reconstruction Companies; and Debt instruments issued by an entity under the Corporate Insolvency Resolution Process as per the resolution plan approved by the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016.

IPR – Trademark

Trademark Registry has issued a Public Notice specifying Guidelines for submission of Cash / Non-Cash documents at Trade Marks Registry.

The Trade Mark Registry took into notice that the documents submitted at the counter of the Trade Marks Registry, Mumbai were not classified properly due to which the documents were not get scanned and digitized as required and also not able to properly distributed in the respective sections for necessary action. Accordingly, the guidelines have been issued for the proper submission of documents. Now, the documents which found not as per guidelines as below will NOT be accepted at the counter.

BSE

The Bombay Stock Exchange (BSE) has issued a clarification that information regarding Statutory Auditor and Secretarial Auditor is to be mandatorily updated in the Management Details Section

(Tab 3 and 4) under BSE Listing Centre as a one-time exercise and should be updated as and when there are any changes. All listed companies are requested to do initial verification of the information that is displayed in the ‘Corp Information’ section of BSE website. In case there are any changes / updates in Key Managerial Personnel or Registrar and Share Transfer Agent details the same may be updated in the Management Details section (Tab 1 and 2) in addition to the corporate announcement made by the Company, in respect of changes in the above, from time to time. These changes will include changes in contact details as well

Income Tax

• CBDT vide Circular No.1/2020, dated 03.01.2020 relaxed the time limit for filing of application for compounding of offence till date 31.01.2020.
• CBDT vide Circular No. 2/2020 & 3/2020 , dated 03.01.2020 authorised Commissioner of Income tax to admit the application for condoned the delay in filing of Form 10B/10/9A for AY 2018-19 and for subsequent years if delay is upto 365 days.

• CBDT vide Circular No.4/2020, dated 16.01.2020 relaxed the time limit for filing of application for compounding of offence till date 31.01.2020.

International Taxation

• CBDT vide Notification dated 03/2020 dated 06.01.2020 amended the rules related with the Master File (Rule 10DA read with section 92D) & CBCR (Rule 10DB read with Rule 286) which will take effect from which will get effected from 01.04.2020.

Goods & Services Tax (GST)

• CBIC vide Notification No.28/2019-Central Tax (Rate) dated 30th December, 2019 has exempted the upfront amount payable for long term lease of industrial/ financial infrastructure plots by an entity having 20% or more ownership of Central or State Government. Earlier the exemption was available to an entity having 50% or more ownership of Central or State Government.
• CBIC vide Notification No. 27 /2019- Central Tax (Rate) dated 30th Dec, 2019 has raised GST rate on Woven and Non-Woven Bags and sacks of polyethylene or polypropylene strips or the like , whether or not laminated, of a kind used for packing of goods (HS code 3923/6305), and all such bags falling under HS 3923/6305 including Flexible Intermediate Bulk Containers (FIBC) to a uniform rate of 18%(from 12%).
• CBIC vide Notification No. 02/2020 – Central Tax dated 01st January, 2020 has extended the due date for submitting the declaration electronically in Form TRAN-1 by a further period not beyond 31^st March, 2020 and statement in Form TRAN-2 by 30^th April,2020 in case of registered persons who could not submit the said declaration by the due date on account of technical difficulties on the common portal and in respect of whom the Council has made a recommendation for such extension. Commissioner has been given power in his behalf on recommendation of council.
• CBIC has made Changes to Form GSTR- 3A, Serial No. 2 as -“You are, therefore, requested to furnish the said return within 15 days failing which the tax liability may be will be assessed u/s 62 of the Act, based on the relevant material available with this office.” And Serial number 5 inserted as – “This is a system generated notice and does not require signature.”
• CBIC vide Notification No. 03/2020 – Central Tax dated 1^st January, 2020 has given an option to the taxpayer to transfer the input tax credit (ITC) from the registered GSTIN, till the 31st December, 2019 in the State of Jammu and Kashmir, to the new GSTIN in the Union territory of Jammu and Kashmir or in the Union territory of Ladakh from the 1^st January, 2020. The balance of State taxes in electronic credit ledger of the said class of persons, whose principal place of business lies in the Union territory of Ladakh from the 1^st January, 2020, shall be transferred as balance of Union territory tax in the electronic credit ledger.
• CBIC has reallocated the New GSTIN to Taxpayers of Union Territory of Ladakh. New GSTINs are reallocated to active existing taxpayers registered under J & K State earlier with State code – 01, having Principal Place of Business in the jurisdiction of Union territory of Ladakh, now with UT code “38”.
• The Finance Ministry on 22^nd January,2020 has declared that now GST taxpayers can file their GSTR-3B returnsin a staggered manner as follows, official notification for the same is to yet to be issued:

 New Due Dates of Form GSTR -3B (Based on State and Turnover Criteria) based on press release dated 22-01-2020

Companies Act, 2013

• STAKEHOLDERS MAY PLEASE NOTE THAT AS PART OF GOVERNMENT OF INDIA’S EASE OF DOING BUSINESS (EODB) INITIATIVES, THE MINISTRY OF CORPORATE AFFAIRS WOULD BE SHORTLY NOTIFYING & DEPLOYING A NEW WEB FORM CHRISTENED ‘SPICE+’ (PRONOUNCED ‘SPICE PLUS’) REPLACING THE EXISTING SPICE FORM.

SPICe+ would be an integrated Web form offering multiple services viz. name reservation, incorporation, DIN allotment, mandatory issue of PAN, TAN, EPFO, ESIC, Profession Tax (Maharashtra) and Opening of Bank Account. It will also facilitate allotment of GSTIN wherever so applied for by the Stakeholders. After deployment of SPICe+ web form, RUN shall be applicable only for change of name of existing companies.  Upon notification & deployment, all new name reservations for new companies as well as new incorporations shall be applied through SPICe+ only. However, incorporation of companies for names reserved through the existing RUN service shall continue to be filed in the existing SPICe eform along with related linked forms as applicable and if marked under resubmission shall be resubmitted in SPICe eform. Due to the proposed changes to the RUN web service (for companies), RESUBMISSION OPTION for name reservation SHALL NOT BE AVAILABLE    for forms processed by CRC from 1st Feb 2020 ONWARDS for    approximately 15 days. Hence, stakeholders are advised to EITHER AWAIT DEPLOYMENT OF SPICe+ AND THEN APPLY FOR NAMES through SPICe+ web form or perform due diligence while submitting any application in existing RUN web service for name reservation. RUN applications (for companies) processed w.e.f 1st February 2020 onwards shall either be   approved or rejected based on checks performed by CRC officers. Stakeholders may kindly note and plan accordingly.

• THE MINISTRY OF CORPORATE AFFAIRS HAS AGAIN EXTENDED THE LAST DATE FOR FILING OF E-FORM BEN-2 WITHOUT ADDITIONAL FEES ON ACCOUNT OF THE REPRESENTATIONS RECEIVED.

On the basis of the representations received the matter has been examined and it is hereby informed that the time limit for filing e-form No. BEN-2 is extended upto 31st March, 2020 without payment of additional fee and thereafter fee and additional fee shall be payable. Consequent to the extension in the date of filing of e-Form BEN-2, the date of filing of Form BEN-1 may be construed accordingly.

• Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020.

1. Date of Notification– January 3, 2020
2. Applicability– The amended rules shall be applicable in respect of Financial Years commencing on and from April 1st, 2020.
3. The amendment has substituted the rule by providing that every private company which has a paid-up share capital of INR 10 Crore or more shall have a whole-time Company Secretary.

Post amendment the following companies are mandatorily required to appoint a whole-time Company Secretary:

1. Listed Company,
2. Every Company having paid-up share capital of INR 10 Crore or more.

Rule 9 – Secretarial Audit Report

Pursuant to Section 204, every listed company and companies belonging to such other class shall annex a Secretarial Audit Report, given by a Practicing Company Secretary, with its Board Report. Such other class of company which are required to comply with this provision are given in Rule 9 of the Rules.

Prior amendment, such class of companies were: –

(a) Every public company having a paid-up share capital of fifty crore rupees or more, or

(b) Every public company having a turnover of two hundred fifty crore rupees or more;

Post amendment, one more class of companies has been added in Rule 9. The new class of companies is every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more.

Post amendment the following companies are mandatorily required to conduct a Secretarial Audit:

(a) Every public company having a paid-up share capital of fifty crore rupees or more; or

(b) Every public company having a turnover of two hundred fifty crore rupees or more; or

(c) Every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more.

Other Laws

SEBI

• SEBI WITH AN INTENT FURTHER STRENGTHEN THE CONDUCT OF INVESTMENT ADVISERS HAS ISSUED A CIRCULAR TO ALL INVESTMENT ADVISORS AND INSTRUCTED THEM TO DO PROPER RISK PROFILING OF CLIENTS AND OBTAIN THEIR CONSENT ON THE SAME BEFORE PROVIDING ANY ADVICE TO SUCH INVESTORS.

The regulator also restrained Investment Advisers (IA) from providing a free trial for any product and service. The IAs shall not provide a free trial for any products/services to prospective clients. Further, IAs shall not accept part payments (where some part of the fee is paid in advance) for any product or service. To bring transparency in dealing with the clients, SEBI has asked IAs to accept fees through banking channels only. It has clarified that IAs shall not accept cash deposits. To enable the investors to make informed decisions regarding availing of advisory services, IAs have been asked to display information with regard to the number of complaints received as well as resolved during the month on the homepage of their website. Also, they need to display information pertaining to the number of grievances pending and reasons for such pendency during the month. The information should be displayed using proper font size and should be made available on a monthly basis within 7 days of the end of the previous month.

• SEBI NOTIFIES SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) (SIXTH AMENDMENT) REGULATIONS, 2019 WHICH SHALL COME INTO FORCE FROM THE DATE OF THE NOTIFICATION I.E 26TH DECEMBER, 2019. 

These regulations shall be applicable to the draft letter of offer, letter of offer and abridged letter of offer filed on or after the date of coming into force of these regulations. Accordingly, in the letter of offer and the abridged letter of offer, the issuer shall disclose the process of credit of rights entitlements in the Demat account and renunciation thereof. Further, the ASBA facility shall also be provided by the issuer to the applicant to the rights issue and payment through any other electronic banking mode shall be permitted in respect of an application made for any reserved portion outside the issue period. Furthermore, the rights entitlements shall be credited to the Demat account of the shareholders before the date of opening of the issue and Allotment of specified securities shall be made in the dematerialized form only.

Income Tax

• CBDT vide Press release dated 12.12.2019 launches new govt saving schemes in place of old saving schemes.
• CBDT vide Press release dated 16.12.2019 has decided to extend the last date for payment of December instalment of Advance tax for F.Y. 2019-20, from 15^th December 2019 to 31^st December 2019 in case of all the assessees, Corporate and other than Corporate, in the North Eastern States.

• CBDT vide Circular No.31/2019, dated 19.12.2019 hereby extends the due date for payment of tax deducted at source under section 194M during the month of September, 2019 and October, 2019 and the due date for furnishing the challan-cum-statement in Form 26QD for the same, from 31-10-2019 and 30-11-2019 respectively to 31-12-2019. Consequently, the due date of furnishing of the certificate of deduction of tax in Form 16D has also been extended for the tax deducted during the month of September, 2019 and October, 2019 to 15-1-2020.
• CBDT ORDER [F. NO. 225/306/2019-ITA-II], Dated 24-12-2019 hereby further extends the ‘due-date’ for filing of Income-tax Returns/Tax Audit Reports to 31st January, 2020 in respect of all categories of income-tax assessees in the Union Territory of Jammu and Kashmir and Union Territory of Ladakh.
• CBDT ORDER [F. NO. PR.CCIT (NeAC)/2019-20/61], Dated 24-12-2019 hereby With a view to provide relief to the taxpayers and tax professionals and to facilitate the compliance with respect to e-Assessment proceedings under E-assessment Scheme, 2019, the time limit for filing of response to notices under section 142(1) of the Income-tax Act issued up to 24.12.2019 by the National e-Assessment Centre is extended up to 10.01.2020 or time given in such notices, whichever is later.
• CBDT vide Circular No.32/2019, dated 30.12.2019 hereby prescribed electronic modes for accepting payments by the specified persons (every person having a business turnover of more than Rs 50 Crore). Following modes are notified in electronic modes in addition to other electronic modes:

(i) Debit Card powered by RuPay; (ii) Unified Payments Interface (UPI) (BHIM-UPI); and (iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code.

Therefore, with effect from 0 I” January, 2020, the specified person must provide the facilities for accepting payment through the prescribed electronic modes. In this connection, it may be noted that the Finance Act has also inserted section 271 DB in the Act, which provides for levy of penalty of five thousand rupees per day in case of failure by the specified person to comply with the provisions of section 269SU. In order to allow sufficient time to the specified person to install and operationalise the facility for accepting payment through the prescribed electronic modes, it is hereby clarified that the penalty under section 271 DB of the Act shall not be levied if the specified person installs and operationalises the facilities on or before 31″ January, 2020. However, if the specified person fails to do so, he shall be liable to pay a penalty of five thousand rupees ay m 01″ February, 2020 under section 271 DB of the Act for such failure.

• CBDT vide Notification No. 107/2019, Dated 30-12-2019 extends the due date of linking of Aadhar no with PAN from 31.12.2019 to 31.03.2019.

International Taxation

• CBDT vide Office Memorandum dated 31.12.2019 proposes to insert new rule 29BA and Form 15E to streamline the process of passing of such orders under section 195(2) of the Act.

Goods & Services Tax (GST)

• CBIC vide Removal of difficulty order (ROD) Order No. 09/2019-Central Tax dated 03^rd December,2019 extended the last date for filing of appeals before the GST Appellate Tribunal against orders of Appellate Authority on account of non-constitution of benches of the Appellate Tribunal.
• Following State/Area Benches of the Goods and Services Tax Appellate Tribunal (GSTAT) notified- 1.) Mizoram- Aizawal 2.) Rajasthan- Jaipur 3.) Karnataka 4.) Rajasthan- one area of Jodhpur
• Blocking/unblocking of EWB generation facility has been implemented on EWB Portal from 2^nd December, 2019.
• CBIC vide Notifications no. 63, 64, 65 and 66 /2019 – Central Tax all dated 14th November, 2019 extended the Due dates for GSTR-1, GSTR-3B and GSTR-7 for the state of Jammu and Kashmir.
• The updated List of CGST Nodal officers of IT Grievance redressal from all CGST Zones, containing their names, designations, addresses, phone numbers and e mails, has been uploaded on the GST Portal which can be accessed on http://cbic.gov.in/htdocs-cbec/gst/index.
• E-Invoice:

  Notification no. 68, 69, 70, 71 & 72/2019 – Central Tax all dated 13th December, 2019:

1. Starting from April 1,2020 a new invoicing system is to be introduced in the GST business process. A standardised protocol will be enabled to generate and read electronic invoices.
2. An e-invoice raised by a trader can be read by computer systems using dynamic QR code up or down the supply chain. The consumer, too, can integrate the data on their systems.
3. The GST Council has approved the introduction of e-invoicing in phases for reporting of business-to-business (B2B) invoices to the GST System. This will be introduced on a voluntary basis to begin with.
4. Taxpayers with a turnover of over ₹500 crore can implement it on voluntary (trial) basis from January 1, 2020 while those with a turnover of over ₹100 crore can adopt it (on voluntary trial basis) from February,1 2020.
5. It shall be made mandatory for all taxpayers with a turnover of over ₹100 crore from April 1, 2020.
6. The e-invoice schema and template, as approved by the GST Council, are available in the GSTN website
7. An invoice issued by a registered person, whose aggregate turnover in a financial year exceeds INR 500 crores, to an unregistered person, shall have Quick Response (QR) code

• CBIC vide Notification No. 76, 77 & 78 /2019 – Central Tax, all dated 26th December, 2019 extended the Last date for GSTR-1 to 31st December, 2019 for the taxpayers, having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or current financial year, and having principal place of business in the State of Assam, Manipur or Tripura, for the month of November, 2019, also Last date for GSTR-3B extended to 31st December, 2019 and Last date for GSTR-7 extended to 25th December, 2019.
• CBIC Vide Notification No. 74/2019 – Central Tax dated 26th December, 2019 (deemed to have come into force with effect from the 19th day of December, 2019) amends the Notification No. 4/2018 – Central Tax dated 23rd January, 2018 by purview of which Late fee payable under section 47 of the CGST Act shall stand waived for the registered persons who failed to furnish the details of outward supplies in FORM GSTR-1 for the months/quarters from July, 2017 to November, 2019 by the due date but furnishes the same in FORM GSTR-1 between the period from 19th December, 2019 to 10th January, 2020.
• Rule 36(4) amended wherein effectively ITC shall not exceed now 10% (Earlier 20%) of the eligible credit reflected in GSTR-2A.
• New Rule 86A inserted for Blocking of ITC Ledger, Power under Rule 86A is exercised by authorities if they have reason to believe that ITC is ineligible or has been fraudulently availed. ITC is said to have been availed fraudulently in following cases :-
  1. Supplier found non-existent or not conducting business from its registered place.
  2. Taxes not paid into the Government Treasury, i.e. the supplier has not paid GST against prescribed documents on which recipient availed credit.
  3. Recipient availed credit without receipts of goods or services.
  4. Recipient is not in possession of tax invoice, debit note or any other document prescribed under rule 36.

Companies Act, 2013

• MCA extends the last date of filing of Form PAS-6 (Reconciliation of Share Capital Audit Report – Half yearly) without additional fees for the half-year ended on 30.09.2019 will be sixty days from the date of deployment of this form on the website of the Ministry.

The Ministry has received representations regarding extension of the last date of filing of Form PAS-6 under rule 9A (8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014. Earlier this year MCA has notified that the first such report in Form PAS – 6 shall be filed for the half year ending on 30-09-2019 within 60 days i.e. by 30-11-2019.

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

The Ministry of Corporate Affairs has received several representations regarding 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 90 days from the date of deployment of this form on the website of National Financial Reporting Authority (NFRA).

• MCA has notified the Relaxation for additional fees and extension of last date infiling of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act, 2013- UT of J & K and UT of Ladakh.

On the basis of the representations received from various stakeholders stating that due to disturbances in internet services and the normal work was affected in the UT of J&K and UT of Ladakh and sought an extension of time for filing of financial statements for the financial year ended 31.03.2019. MCA has decided to extend the due date for filing of e-form AOC-4, AOC-4 (CFS) AOC-4 XBRL and e-form MGT-7 upto 31.01.2020, for companies having jurisdiction in the UT of J&K and UT of Ladakh without levy of additional fee.

• The Ministry of Corporate Affairs and Indian Institute of Corporate Affairs (IICA) have introduced a comprehensive online databank for all existing and aspiring Independent Directors.

This databank draws its origin from Companies (Appointment and Qualification) Rules, 2019. As per the rules, all existing Independent Directors need to empanel with this databank within 3 months of commencement of these rules. Simultaneously, acting as a facilitator and educator, the Ministry has provisioned for the capacity building of Independent Directors through an integrated Learning Management System (LMS) to deliver an interactive and engaging library of eLearning courses. The databank has many key features to offer such as Empanelment of professionals acting as Independent Directors, Empanelment of professionals with/without DIN who wish to serve as Independent Directors, Online courses offered through an integrated Learning Management System (LMS), Newsletter and knowledge resources for continued professional development and most important is the Profile sharing for corporate access for helping them appoint well-trained and informed Independent Director. The empanelment process is quick and simple and independent directors can choose the subscription plan of their choice. There are three different subscription plans available – 1 Year, 5 Years, and Lifetime. The fee for 1 Year plan is Rs. 5,000 + 18% GST (five thousand only + 18% GST). The fee plan for 5 Years and Lifetime will be notified later.

• MCA inexercise of the powers conferred by section 435 of the Companies Act, 2013 and with the concurrence of the Chief Justices of the High Court of Uttarakhand, Nainital and High Court of Jammu and Kashmir has designated the Courts as Special Courts.

For the purpose of providing speedy trial of offenses punishable with imprisonment of two years or more as per clause (a) of sub-section (2) of section 435 of the Act, Court of IV Additional District and Session Judge, Dehradun State of Uttarakhand and Principal Sessions Judge, Leh Union territory of Ladakh, respectively as the Special Courts. Further, for the purpose of providing speedy trial of other offenses as mentioned in clause (b) of sub-section (2) of section 435 of the Act, Court of II Additional Chief Judicial Magistrate, Dehradun State of Uttarakhand, Sub-Judge/Special Mobile Magistrates, Jammu and Srinagar Union territory of Jammu and Kashmir, Chief Judicial Magistrate, Leh-Union Territory of Ladakh respectively, as the Special Courts.

• MCA has granted relaxation of additional fees and extension of the last date of filing of CRA-4 (cost audit report) for FY 2018-19 under the Companies Act, 2013.

On the basis of the several representations received from various stakeholders for extension of the last date, MCA has decided that the last date of filing of CRA-4 (cost audit report) for all eligible companies for the Financial Year 2018-19, without payment of additional fee, has been further extended till 29.O2.2020. However, it may be noted that the said extension is given for the entire process starting from ‘preparation of Annexures to the Cost Audit Report’ to ‘submission of Cost Audit Report by the Cost Auditor to the Company’ and finally, filing of Cost Audit Report by the Company with the Central Government’.

Other Laws

IBBI

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2019 which shall come into force on the date of their publication in the Official Gazette i.e. 27th November 2019.

The Insolvency and Bankruptcy Code, 2016 (Code) envisages corporate insolvency resolution process (CIRP) for reorganisation and insolvency resolution of corporate debtors. An insolvency professional conducts the CIRP and manages its operations during the CIRP. Keeping in view the responsibilities of the IPs and the importance of CIRP, the Code casts an obligation on the IBBI and the IPA to monitor performance of IPs, and to collect, maintain and disseminate information and records relating to insolvency process of corporate debtors. It also casts an obligation on IPs to forward/submit certain information and records relating to CIRP to the IPA and IBBI. In the interest of transparency and accountability in conduct of CIRPs and conduct of the IPs, and to facilitate the IBBI, the IPAs and the IPs to discharge of their statutory obligations, the Amendment Regulations require the IPs to file a set of Forms, covering the life cycle of a CIRP, online on an electronic platform hosted on the website of the IBBI.

The Union Cabinet approved the proposal to make amendments in the Insolvency and Bankruptcy Code, 2016, through the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019.

The amendments aim to remove certain difficulties being faced during insolvency resolution process to realise the objects of the code and to further ease of doing business. The Amendment Bill seeks to provide additional thresholds for Financial Creditors represented by an authorized representative due to large numbers in order to prevent frivolous triggering of the Corporate Insolvency Resolution Process (CIRP). Further, for ensuring that the substratum of the business of the corporate debtor is not lost, and it can continue as a going concern by clarifying that the licenses, permits, concessions, clearances, etc. cannot be terminated or suspended or not renewed during the moratorium period. Ring-fencing corporate debtor resolved under the IBC in favour of a successful resolution applicant from criminal proceedings against offences committed by previous management/promoters.

RBI

RBI announced to make the NEFT system available on a 24×7 basis from December 16, which means the stakeholders would be able to send and receive money anytime through the National Electronic Funds Transfer (NEFT) System on a 24×7 basis.

It has been decided that the NEFT shall be made available from December 16, 2019 with the first settlement taking place after 00:30 hours on December 16, 2019. The NEFT payment system so far is available for customers from 8 am to 7 pm on all working days, except the second and fourth Saturdays of the month. Further, NEFT transactions after usual banking hours of banks are expected to be automated transactions initiated using ‘Straight Through Processing (STP)’ modes by the banks. The existing discipline for crediting beneficiary’s account or returning the transaction (within 2 hours of settlement of the respective batch) to the originating bank will continue and Member banks will ensure the sending of positive confirmation messages (N10) for all NEFT credits. Member banks are also advised to initiate necessary action and ensure availability of all necessary infrastructural requirements at their end for providing seamless NEFT 24×7 facility to their customers. Banks may disseminate information on the extended timings for NEFT to all their customers.

RBI with the intent of furthering Digital Payments has decided for Waiver of Charges for all online National Electronic Funds Transfer (NEFT).

Transfer of money via NEFT 24×7 is effective from 16th December 2019 and shall be free of cost from Jan 1, 2020. From December 16, one can transfer money online using the National Electronic Funds Transfer (NEFT) route 24×7, i.e., any time of the day and any day of the week. The Reserve Bank of India stated earlier on in the month, that bank customers will be able to transfer funds through NEFT around the clock on all days including weekends and holidays from December 16. This ensures the availability of anytime electronic funds transfer. RBI now joins an elite club of countries having payment systems that enable round the clock funds transfer and settlement of any value. NEFT allows individuals, firms, corporates to transfer money from one bank branch account to another one anywhere in the country. Earlier, this facility could be availed only on working days between 8:00 Am and 7:00 PM. In order to give further impetus to digital retail payments, it has now been decided that member banks shall not levy any charges from their savings bank account holders for funds transfers done through NEFT system which is initiated online (viz. internet banking and/or mobile apps of the banks).

The Reserve Bank of India has reviewed all the 35 circulars appearing in Master circular on OLTAS,

In consultation with the office of Principal Chief Controller of Accounts, Central Board of Direct Taxes, based on its relevance in the present scenario, issuing authority etc. It has been decided to withdraw with immediate effect 31 circulars issued under the signature of RBI, however, the instructions issued by the office of Principal Chief Controller of Accounts, Central Board of Direct Taxes remain in force wherever applicable. Further, four circulars which will continue to remain operational under the signature of RBI w.r.t On-line Tax Accounting System (OLTAS) – Funds Settlement; Compulsory quoting of Permanent Account Number (PAN) / Tax Deduction Account Number (TAN) – State of Rajasthan; Cut-off time for e-payment transactions pertaining to Government Revenue & Improvement in data quality- Introduction of Computerised receipts w.e.f. June 1, 2008.

SEBI

SEBI in partial modification of the original circular has mandated Filing of Offer Documents under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.

SEBI has decided that the draft offer documents in respect of issues of size up to Rs. 750 crores shall be filed with the concerned regional office of the Board under the jurisdiction of which the registered office of the issuer company falls. Accordingly, the Merchant Bankers are also advised to file the draft offer documents / offer documents with the concerned office of the Board, based on the estimated issue size as provided in the circular. The amendments made vide this circular shall come into effect for all draft offer documents for issues which are filed with SEBI on or after the date of issuance of this circular.

SEBI has allowed asset management companies (AMC) of mutual funds to provide management and advisory services to foreign portfolio investors

owned by central banks, sovereign wealth funds, international multilateral organisations, and other agencies including entities controlled or at least 75 percent owned by such Government. This apart, they can also provide asset management service to regulated entities such as pension funds, insurance or reinsurance entities, banks and mutual funds besides foreign portfolio investors where the regulated entities own over 50 percent of share. SEBI has given one-year exit time to AMCs which are already providing management and advisory services to such foreign portfolio investors are not falling under the above categories. The new norms will come into effect immediately. In September, the regulator had issued norms on classification for FPIs and simplified their registration process as part of ease of doing business in India.

Income Tax

• Finance Bill 2019(No.2), becomes the Finance Act on 01.09.2019.
• CBDT vide Circular No. 17 dated August 8, 2019 enhanced of monetary limits for filing of appeals by the department before income tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court – amendment to circular 3 of 2018.
• CBDT vide Circular No. 18 dated August 8, 2019 issued 19 frequently Asked Questions (FAQs) with respect to filling-up Income-tax Return (ITR) forms for AY 2019-20.
• CBDT vide Circular No. 19 dated August 14, 2019, has decided that no communication shall be issued by any income- tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after the 1st day of October, 2019 unless a computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. The Circular also lists down the exceptions in cases where the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner/Director General of income- tax.
• Tax department has launched ‘e-Filing Lite’, a lighter version of e-Filing portal
• On August 16, 2019, Task Force has submitted New Direct Tax Code to Finance Minister.
• CBDT vide Circular No.20 dated August 19, 2019, has clarified that the amount paid by the oil exploration and production (E&P) companies for acquiring the ‘Participating Interest’ shall not be treated either as cost for acquiring the share in partnership or investment for acquisition of a member’s interest in an association of persons or body of individuals, rather it would be treated as an amount paid to acquire the underlying assets; and the amount paid for acquiring the ‘Participating Interest’, after reducing component of cost attributable to tangible assets for purposes of clause (i) of sub-section (1) of section 32, would be treated as an ‘intangible asset’ (being a business or commercial right akin to a licence), eligible for claim of depreciation for purposes of clause (ii) of sub-section (1) of section 32 of the Income Tax Act.
• CBDT vide Circular No. 21 of 2019 dated August 27, 2019 issued clarification regarding foreign directorship & foreign assets in ITR.
• CBDT’s issued clarification by Press Note on eligibility of small Start-ups to avail tax holiday u/s 80IAC
• CBDT vide Circular No. 22/2019 dated August 30, 2019 issued consolidated circular for assessment of start-ups.
• CBDT has issued a clarification to extend the benefit of the DPIIT Notification to even those start-ups where addition on account of Angel Tax had already been made prior to 19 February 2019 provided the other conditions mentioned in the DPIIT Notification are fulfilled and the assessee has subsequently submitted the declaration in Form 2 to the effect that it fulfils the conditions mentioned in the DPIIT notification dated 19 February 2019.
• CBDT vide Notification No.59/2019 dated August 30, 2019 amended Rule 114E to facilitate interchangeability of PAN with Aadhaar.
• CBDT issued checklist in order to avoid common mistakes in filing of ITR 7.
• New TDS section i.e. 194M, 194IA, 194N, 194DA, as proposed & finalised by Finance Act 2019 will get effective from September 1, 2019.

International Taxation

• CBDT vide Notification No.58/2019 dated August 27, 2019 protocol amending India-Spain DTAA.
• CBDT vide Press release dated 28.08.2019 clarifies differential regime between domestic investors (including AIF category iii) and FPIs existed even prior to general budget 2019 and was not creation of the finance (no.2) act, 2019.
• FM in a press conference on Friday, August 23, 2019 to announce certain measures Govt. will be taking to give a boost to the securities market and economy. Some of the key measures that have been announced includes the relief to the FPI from the enhanced surcharge, de-criminalization of CSR violations, and immunity to eligible start-ups and investors from angel tax.

GST

• CBIC vide Order No. 7/2019 dated August 26, 2019 extending the due date for furnishing annual return in Form GSTR-9/ 9A and the reconciliation statement in Form GSTR-9C for the financial year 2017-18 till 30 November 2019 (from 31 August 2019).
• CBIC vide Notification No.36/2019 dated August 20, 2019 seeks to extend the date from which the facility of blocking and unblocking of e-way bill facility as per the provision of Rule 138E of CGST Rules, 2017 shall be brought into force to 21.11.2019.
• CBIC has issued Corrigendum issued to prescribe DRC-03 for payment of tax under rate.
• CBIC vide Notification No.38 dated August 31, 2019 exempt certain class of person (as the class of registered persons who shall follow the special procedure) who are not required to furnish Form ITC-04 from July 2017 to March 2019.
• CBIC vide Notification No.39 dated August 31, 2019 brings Section 103 i.e Advance Ruling along with section 54(8A) which will come in to force from 01.09.2019.
• CBIC vide Notification No.40 dated August 31, 2019 seeks to extend the last date in certain states (Bihar, Gujrat, Karnataka, Kerala, Maharashtra, Odisha & Uttarakhand) for furnishing GSTR-7 for the month of July, 2019 are furnished by on or before 20.09.2019
• CBIC vide Notification No.41 dated August 31, 2019 seeks to waive the late fees in certain cases for the month of July, 2019 for FORM GSTR-1 and GSTR-6 provided the said returns are furnished by 20.09.2019
• GST Council 37^th meeting is announced to be held on 20.0.2019 at Goa.

Companies Act, 2013

• The Ministry of Corporate Affairs has divulged new version of eForms to wit CHG-1 {Application for registration of creation, modification of charge (other than those related to debentures)}, CHG-8 (Application to Central Government for extension of time for filing particulars of registration of creation / modification / satisfaction of charge OR for rectification of omission or misstatement of any particular in respect of creation/modification/satisfaction of charge), CHG-9 (Application for registration of creation or modification of charge for debentures or rectification of particulars filed in respect of creation or modification of charge for debentures), and AOC-4 XBRL (Form for filing XBRL document in respect of financial statement and other documents with the Registrar) are revised and available on Company Form Download page at http://www.mca.gov.in/MinistryV2/companyformsdownload.html. Stakeholders may kindly take note and are advised to check the latest version before filing.

• The Ministry of Corporate Affairs, Government of India, has decided to shift the office of Registrar of Companies (RoC), Haryana, from Delhi to Chandigarh.

The budge will not only result in better reciprocity with the State Government but it will also be convenient for promoters of Companies, tax practitioners and company secretaries to pursue their case easily as they need not go to Delhi anymore. The total number of companies registered with the RoC, Haryana, is 43,915. In almost every state, the office of RoC is located in the state capital howbeit the RoC Delhi was looking after the work of the RoC, Haryana, since the genesis of the state. With the shifting of the office, it would be convenient for the Ministry of Corporate Affairs also to pursue its cases in the Punjab and Haryana High court and the National Company Law Tribunal (NCLT), as its Bench is also in Chandigarh. Currently, the office of RoC, Delhi, has jurisdiction over the companies in the National Capital Territory (NCT) of Delhi and Haryana. The total number of companies with ROC, Delhi, is 3,32,415. If the charge of Haryana is shifted from the RoC, Delhi, to the RoC, Chandigarh, the workload of the RoC, Delhi, will be decreased by 43,915 companies.

• MCA has introduced the new process for the Incorporation of Section 8 Companies.

The stipulation of antecedent filing of INC-12 for new Section 8 companies are being dispensed with vide the Companies (Incorporation) Sixth Amendment Rules, 2019 dated 7th June, 2019. Therefore, Section 8 Companies can be incorporated by either reserving names through Run and filing SPICe thereafter or by directly filing SPICe. The Licence Number for a section 8 company shall henceforth be allotted at the time of incorporation itself. In view of the above, all pending INC-12 SRNs for new Companies pending at respective RoCs would be marked as ‘Rejected’ on 15th August 2019. Such applicants may thereafter directly file SPICe for obtaining License Number and for the incorporation of Section 8 Companies. Stakeholders who have already obtained License Numbers and are yet to file SPICe form for incorporating Section 8 companies may do so at their convenience but may please note that the forms shall be processed only after a certain time lag to allow for workflow changes to take effect. Those stakeholders who have already filed SPICe forms which are pending at CRC may kindly await processing of these forms after the workflow changes take effect.

• MCA has notified on its website that as per the Companies (Incorporation) Fourth Amendment Rules, 2018 dated 18th December 2018 a new form RD GNL-5 and changes to Form RD-1 has been notified.

The Companies (Incorporation)Fourth Amendment Rules, 2018 has amended the provisions for making an Application for approval of concerned Regional Director under Section 2(41) for change of the financial year and Application under section 14 for the conversion of a public company into a private company, shall be filed in e-Form No.RD-1 and accordingly a new form is also introduced to comply with the directions of RD to the applicant/person or the company to furnish such information, or to rectify defects or incompleteness and to re-submit such application within a period of fifteen days, in e-Form No. RD-GNL-5. It has been notified by the MCA that both forms (revised) would be made available shortly on the MCA21 Company Forms Download page for filing purposes. Stakeholders are advised to check the latest version before filing.

• MCA relaxes norms for shares with differential voting rights to boost innovative technology companies and start-ups.

Shares with differential voting rights of the company, the existing capital of 26 per cent of the total post issue paid up equity share capital has been enhanced to 74 per cent. Further, Employee Stock Options (ESOPs) can now be issued by start-ups to promoters or directors holding more than 10 per cent of equity shares for 10 years from the date of their incorporation instead of five years earlier as prescribed earlier. The norms for shares with differential voting rights have been amended to enable promoters of Indian companies to retain control “in their pursuit for growth and creation of long-term value for shareholders, even as they raise equity capital from global investors. MCA has also amended the requirements with regard to Debenture Redemption Reserve (DRR) and investment or deposit of sum in respect of debentures maturing during the year ending on the 31’t day of March of next year, for all companies.

• MCA has notified the date of commencement for various provisions and amendments of the Companies (Amendment) Act,2019 which shall come into force from 15th day of August, 2019.  

Following provisions of sections 6, 7 and g, clauses (i), (in) and clause (irr) of section 14, section 20, section 31, sections 33, 34 and 35 and sections 37 and 38 of the said Act shall come into force as per the details provided hereunder:

• MCA has released the report of the High-Level Committee on Corporate Social Responsibility (CSR) headed by Corporate Affairs Secretary Sh. Injeti Srinivas.

The High-Level Committee has the mandate to review the existing CSR framework and make recommendations on strengthening the CSR ecosystem, including monitoring implementation and evaluation of outcomes. Major recommendation of the High-Level Committee on Corporate Social Responsibility includes Making CSR expenditure tax-deductible, Provision for carrying forward of unspent balance for a period of 3 – 5 years, Aligning Schedule 7 with the SDGs by adopting a SDG plus framework (which would additionally include sports promotion, Senior Citizens’ welfare, the welfare of differently-abled persons, disaster management and heritage protection), Balancing local area preferences with national priorities, Introducing impact assessment studies for CSR obligation of 5 crores or more, Registration of implementation agencies on MCA portal, Developing a CSR exchange portal to connect contributors, beneficiaries and agencies, Allowing CSR in social benefit bonds, Promoting social impact companies and third party assessment of major CSR projects, Companies having CSR prescribed amount below Rs. 50 lakh may be exempted from constituting a CSR Committee and Violation of CSR compliance may be made a civil offence and shifted to the penalty regime.

• The MCA has notified the Companies (Amendment) Act, 2019 and the provisions of which, shall be deemed to have come into force on the 2nd day of November, 2018, except sections 6, 7 and 8, clauses (i), (iii) and clause (iv) of section 14, sections 20 and 21, section 31, sections 33, 34 and 35, sections 37 and 38 which shall come into force on such date as the Central Government may notify.

Atone Act containing 44 clauses is being brought in to “plug the critical gaps in the Companies Act,2013 and to facilitate ease of doing business and strengthen the corporate compliance management.” The Act will tighten Corporate Social Responsibility (CSR) compliance, re-categorisation of specific offences as civil offences and transfer certain responsibilities to National Company Law Tribunal.

The key features of the amendment are:

1. Allowing subsidiaries of foreign companies to follow different financial year for accounting;
2. Sixteen sections of the Act are amended so as to modify the punishment as provided in the said sections from fine to monetary penalties to lessen the burden upon the Special Courts.
3. Amendments are made to Section 135 to carry forward the unspent corporate social responsibility amount, to a special account to be spent within three financial years and transfer thereafter to the Fund specified in Schedule VII, such as PM’s National Relief Fund.
4. The Act provides for the punishment for debarment from appointment as an auditor or internal auditor of a company, or performing a company’s valuation, for a period between six months to 10 years in case of proven misconduct.
5. The pecuniary limits of Regional Director (“RD”) to compound offences under section 441 of the Act is proposed to be increased. The threshold is increased to a fine up to Rs. 25 lakhs.
6. A new clause has been inserted under the Section 164 to state that violation of Section 165(1) shall be a ground for disqualification of a director if he/ she breaches the limits of maximum directorship allowed thereunder.
7. The amendment to Section 241 empowers the Central Government to move a matter before the NCLT against managerial personnel on several grounds.
8. Shifting of powers for conversion from public to private companies from National Company Law Tribunal (NCLT) to the central government, as well as more clarity with respect to certain powers of the National Financial Reporting Authority (NFRA).
9. The Act provides more power to the Registrar of Companies (ROC) to take strict action against those companies which are not working as per the law. Registrar can remove the name of the company from the Register of companies if it is not carrying on the operations.
10. Amendment Act seeks to insert sub-section 1A to Section 29, which inter-alia mandates certain unlisted companies that the securities shall, in addition to being issued, also be held and transferred only in dematerialized form after complying with the provisions of the Depositories Act, 1996 and regulations made thereunder. With this proposed move, all shareholders of all private companies shall have to get their holdings dematerialized.
11. In case of corporate frauds revealed by an investigation by SFIO, the Central Government may make an application to NCLT for passing appropriate orders for disgorgement of profits or assets of an officer or person or entity which has obtained an undue benefit.
12. Charges can only be registered within a period of 120 days from the date of creation and modification and ad-valorem fees shall also be charged over and above the additional fees in case of delayed filings beyond 60 days.
13. Rectification by Central Government in Register of charges in case of omission and or misstatement of any particulars, in any filing previously made to the Registrar with respect to any charge or modification thereof or with respect to any memorandum of satisfaction or other entry made in pursuance of section 82 or section 83.
14. If any company fails to file its annual return under sub-section (4), before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees.
15. If any company fails to furnish the Director Identification Number under sub-section (1), such company shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues.
16. Section 203, non-compliance provisions amended to provide that if any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.”
17. Penalty provided under section 447 of the principal Act, is increased from “twenty lakh rupees”, to “fifty lakh rupees”.
18. Insertion of new section 454A to provide Penalty for repeated defaults by a company or an officer of a company or any other person having already been subjected to a penalty for default under any provisions of this Act.
19. The Companies (Amendment) Second Ordinance, 2019 is repealed on notification of the Act.

  SEBI (Stock Exchange Board of India)

• SEBI with an intent to streamline the issuance of SCORES Authentication for SEBI registered intermediaries had directed all listed companies and SEBI registered intermediaries to obtain SCORES user id and password.

Any existing or new listed company or SEBI registered intermediary, not having a SCORES user id and password were also required to obtain the same. In partial modification of the generation of SCORES user id and password has been automated for all new SEBI registered intermediaries. This has been done to streamline the process of providing SCORES credentials in the interest of investors. The SCORES user id and password details shall be sent to all new SEBI registered intermediaries, through an auto-generated e-mail, upon completion of the process of online grant of registration by SEBI. The primary e-mail address in SCORES is the e-mail ID where all notifications related to SCORES complaints are sent to the SEBI registered intermediary. All existing and new SEBI registered intermediaries will now be able to update their primary e-mail address and registered address on their own.

• The Securities and Exchange Board of India has eased the regulatory and compliance framework for Foreign Portfolio Investors (FPI) in a bid to boost investments and expedite the registration process for FPI’s.

SEBI also simplified KYC requirements for them and permitted them to carry out the off-market transfer of securities. This is a much-needed boost to the FPI route, which had been languishing on account of multiple issues in the past few months. SEBI at its board meeting approved the SEBI (Prohibition of Insider Trading) (Third Amendment) Regulations, 2019. In order to incentivise and encourage informants, SEBI has worked out a reward plan for them and accordingly informants would be suitably rewarded in case the Unpublished Price Sensitive Information (UPSI) by them provided leads to disgorgement of at least Rs 1 crore. The total amount of monetary reward shall be 10 per cent of the monies collected but shall not exceed Rs 1 crore. An interim reward not exceeding Rs 10 lacs may be given at the stage of issuance of the final order by the SEBI against the person directed to disgorge. The reward to the informants will be paid through the Investor Protection and Education Fund (IEPF). SEBI also simplified documentation requirements for KYC and also the structure for registration for multiple investment managers (MI). Further, the central banks that are not members of BIS (Bank of International Settlement) will be eligible for FPI registration. In another move, entities established in the IFSC (International Financial Services Centre) would be deemed to have met the jurisdiction criteria for FPIs. This is expected to be a big booster for the financial centre in the GIFT City. The SEBI also decided to give flexibility to the mutual funds to invest in unlisted non-convertible debentures up to a maximum limit of 10 per cent of the debt portfolios of the scheme.

Ministry of Finance

The Finance Minister Smt. Nirmala Sitharaman has announced a string of measures to revive a flagging economy.

As expected, the enhanced surcharge on FPIs has been withdrawn. The government has also decided to withdraw enhanced surcharge levied on long and short-term capital gains. She also said that CSR violations will not be treated as a criminal offence. MCA will review sections in Companies Act on CSR violations. For start-ups and their investors, angel tax provision has been withdrawn. Also, banks will issue improved one-time settlement plan for MSMEs, and banks have further decided to launch repo-rate linked products and there will be online tracking of loan applications of home and auto loans. NBFCs will now be able to use Aadhaar-authenticated KYCs to simplify the taking up of credit. All pending GST refunds for MSMEs, will be paid within 30 days and in future, all GST refund matters will be resolved within 60 days.

RBI

• The Reserve Bank of India (RBI) relaxed norms for the end-use of money raised through External Commercial Borrowings (ECBs).

In a bid to give a leg-up to the slowing economy, The RBI relaxed the end use restrictions related to external commercial borrowings. As per the relaxed ECB end-use provisions, ECB’s with a minimum average maturity period of seven years can be availed for repayment of rupee loans availed domestically for capital expenditure as also by NBFCs for on-lending for the same reason. Moreover, the ECB’s with a minimum average maturity period of 10 years can be used for working capital purposes and general corporate purposes and borrowing by NBFCs for the above maturity for on lending for the above purposes is also permitted. It has been decided to permit eligible corporate borrowers to avail ECB for repayment of rupee loans availed domestically for capital expenditure in the manufacturing and infrastructure sector if classified as SMA-2 or NPA, under any one-time settlement with lenders. Lenders are also permitted to sell, through assignment, such loans to eligible ECB lenders, besides foreign branches or overseas subsidiaries of Indian banks, provided, the resultant external commercial borrowing complies with all-in-cost, minimum average maturity period and other relevant norms of the ECB framework

• The RBI has notified the Foreign Exchange Management (Deposit) (Amendment) Regulations, 2019 w.r.t Acceptance of Deposits by the issue of Commercial Papers.

The Regulation 6(3) of the Foreign Exchange Management (Deposit) Regulations, 2016, in terms of which a Company may accept deposits through the issue of Commercial Paper, has been reviewed vis-à-vis other Statutes/ Regulations notably Section 45 U(b) of RBI Act, 1934 describing CP as one of the Money Market Instruments and Section 2(c) of Companies (Acceptance of Deposits), Rules 2014 which excludes any amount received against the issue of, inter alia, CPs from the definition of deposits. It has also been considered that Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017, already allow investments in CPs issued by the Indian Companies. Therefore, with a view to bringing inconsistency in statutory provisions/regulations relating to Commercial Papers (CPs), the provisions of Regulation 6(3) of FEMA 5(R)/2016-RB has been deleted vide GOI Notification No. FEMA 5(R)(2)/2019-RB dated July 16, 2019.

Income Tax

• It is mandatory to quote Aadhaar on every return of income filed for the AY 2019-20. CBDT has extended the last date of linkage of Aadhaar & PAN to 30-09-2019 from 31-03-2019.
• Central Board of Direct Taxes vide Circular No. 13/2019 dated 24 June, 2019, has clarified that the income tax exemption available to all members of Armed Forces who have been invalided for naval, military or air force service on account of bodily disability attributable to or aggravated by such service would be available to all armed forces personnel (irrespective of rank) who have been invalided for such service on account of bodily disability attributable to or aggravated by such service.
• Central Board of Direct Taxes vide Circular No. 14/2019 dated 3 July, 2019, has clarified that any income in the hands of the non-resident investor from off-shore investments routed through the Category I or Category II AIF, being a deemed direct investment outside India by the non-resident investor, is not taxable in India under section 5(2)of the Act
• CBDT vide Circular No. 15/2019 dated 11.07.2019 issues clarification on certain procedural issues under section 195 of the income disclosure scheme, 2016. As per clarification electronic payments on 01.10.2017 to 03.10.2017 are treated as paid on 30.09.2017 subject to their clearance till 05.10.2017.
• Union Budget Post election presented on 05.07.2019, has been passed by Loksabha on 18.07.2019 with some modification and now presented to President for assent.
• CBDT vide Press Release dated 23 July 2019, the due date for filing of Income Tax Returns for Assessment Year 2019-has been extended from 31st July, 2019 to 31st August, 2019.

International Taxation

• On June 25th, 2019 India has signed & deposited the Multilateral Instrument (MLI) which will be come in to force from October 1st, 2019 and will be effective from Financial Year 2020-21. The Convention will modify India’s Tax treaties in order to curb revenue loss through treaty abuse and BEPS strategies by ensuring that profits are taxed where substantive economic activities generating the profits are carried out and where value is created. India has signed protocol for amending India-China double tax avoidance agreement on dated 17.07.2019 to incorporate MLI amendments

GST

The 36th GST Council Meeting was held on 27^th July,2019 at New Delhi, 12 Agenda items were discussed during the Council meeting, covering following topics:

• The GST rate on all electric vehicles be reduced from 12% to 5% w.e.f. 1^st August, 2019
• The GST rate on charger or charging stations for Electric vehicles be reduced from 18% to 5% w.e.f. 1^st August, 2019
• Hiring of electric buses (of carrying capacity of more than 12 passengers) by local authorities be exempted from GST w.e.f. 1^st August, 2019.
• Last date for filing of intimation, in FORM GST CMP-02, for availing the option of payment of tax under notification No. 2/2019-Central Tax (Rate) to be extended from 31.07.2019 to 30.09.2019
• The last date for furnishing statement containing the details of the self-assessed tax in FORM GST CMP-08 for the quarter April, 2019 to June, 2019 (by taxpayers under composition scheme), to be extended from 31.07.2019 to 31.08.2019.

 Companies Act, 2013

• MCA has notified new versions of e-FormsCHG-1 {Application for registration of creation, modification of charge (other than those related to debentures)}, Form CHG-8 (Application to Central Government for extension of time for filing particulars of registration of creation / modification / satisfaction of charge OR for rectification of omission or misstatement of any particular in respect of creation/ modification/ satisfaction of charge), Form CHG-9 (Application for registration of creation or modification of charge for debentures or rectification of particulars filed in respect of creation or modification of charge for debentures), and Form AOC-4 XBRL (Form for filing XBRL document in respect of financial statement and other documents with the Registrar) are revised and available on Company Form Download page at MCA website. Stakeholders may kindly take note and are advised to check the latest version before filing.

• MCA has notified the Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2019 which shall come into force on the date of their publication in the Official Gazette i.e 25th July 2019.MCA has notified the e-form DIR-3-KYC-WEB which shall be required to be filed by every holder of DIN by 30^thSeptember 2019. Further, as per the said notification, e-Form DIR-3 KYC is to be filed by an individual who holds DIN and is filing his KYC details for the first time or by the DIN holder who has already filed his KYC once in e-form DIR-3 KYC but wants to update his details and Web service DIR-3-KYC-WEB is to be used by the DIN holder who has submitted DIR-3 KYC e-form in the previous financial year and no update is required in his details. Necessary amendments are also carried out to capture the fee for filing of e-Form DIR – 3KYC-WEB upto 30^th September 2019 and after the said date.

• MCA has Revised version of the e-Form BEN- 2 (Return to the Registrar in respect of declaration under Section 90) effective from today i.e 17th July, 2019, and shall be available on MCA21 Company Forms Download page. The MCA notifies Companies (Significant Beneficial Owners) second Amendment Rules, 2019 and also notified revised FORM NO. BEN-2 w.e.f 01-07-2019. E-form BEN-2 is required to be filed pursuant to Section 90(4) of the Companies Act, 2013and Rule 4 of the Companies (Significant Beneficial Owners) Rules 2018. Every company shall file a return of significant beneficial owners of the company and changes therein with the Registrar containing names, addresses and other details as may be prescribed within 30 days, in BEN – 2 with the respective Registrar of Companies. Stakeholders are advised to check the latest version before filing.

• MCA has extended the last date for filing of Form NFRA-1 for all bodies corporate governed by NFRA Rule 3(2) and 3(3), on the basis of the representations received from stakeholders.The revised time limit for filing Form NFRA-1 will be 30 days from the date of deployment of form NFRA-1 on the MCA/ NFRA website i.e 31-07-2019. Entities that are required to inform the details of the appointment of their Auditor to the Authority in Form NFRA-1 includes Companies whose securities are listed on any stock exchange in India or outside India; Unlisted public companieshaving paid-up capital of not less than Rs. 500 crores or having an annual turnover of not less than Rs. 1000 crores or having, in the aggregate, outstanding loans, debentures and deposits of not less than Rs. 500 crores, as on the 31st March of immediately preceding Financial Year: Insurance companies, banking companies, companies engaged in the generation or supply of electricity companies governed by any special Act. If a company or any officer of a company or an auditor or any other person contravenes any of the provisions of these rules, the company and every officer of the company who is in default or the auditor or such other person shall be punishable as per the provisions of section 450 of the Act.

• The Ministry of Corporate affairs has received several representations regarding extension of last date for filing of e-Form No. BEN-2 without additional fees on account of Companies (Significant Beneficial Owners) Second Amendment Rules, 2019 notified vide G.S.SR NO. 446 E dated 01.07.2019. The matter has been examined and it is hereby informed that time limit for filing e-Form BEN-2 is extended upto 30.09.2019 without the payment of additional fees and thereafter fee and additional fee shall be payable.

• MCA has revised the version of the eForm Addendum to FiLLiP(Details in respect of designated partners and partners of Limited Liability Partnership), Form 4 LLP(Notice of appointment, cessation, change in name/ address/designation of a designated partner or partner. and consent to become a partner/designated partner) and Form 4A LLP (Notice of appointment, cessation, change in particulars of a partners) are likely to be revised on MCA21 and shall be available on LLP Form Download page w.e.f 26-07-2019. Stakeholders may kindly take note and are advised to check the latest version before filing.

• The Union Cabinet approved the proposal to introduce a Bill in the Parliament to carry out 08 amendments to the Insolvency and Bankruptcy Code, 2016.The amendments aim to fill critical gaps in the corporate insolvency resolution framework as enshrined in the Code, while simultaneously maximizing value from the Corporate Insolvency Resolution Process (CIRP). The Government intends to ensure the maximization of the value of a corporate debtor as a going concern while simultaneously adhering to strict timelines. The changes are expected to lead to timely admission of applications and timely completion of the Corporate Insolvency Resolution Process, greater clarity on permissibility of corporate restructuring schemes, manner of distribution of amounts amongst financial and operational creditors, clarity on rights and duties of authorized representatives of voters and applicability of the resolution plan on all statutory authorities. The proposal is in line with the overall objective of the government to achieve the outcomes envisioned in the Insolvency and Bankruptcy Code and seeks to ensure speedier resolution of cases involving corporate debtors.

• In section 135 of the principal Act,

• In sub-section (5), –
• After the words “three immediately preceding financial year” the words or where the company has not completed the period of the three financial year since its incorporation, during such immediately preceding financial years shall be inserted.
• In the second proviso, after the words “reason for not spending amount” occurring at the end, the words, bracket, figures and letter “ and unless the unspent amount relate to any ongoing project referred to in sub-section (6) transfer such unspent amount to a fund specified in Schedule VII, with in the six month from the expiry of the financial year’’ shall be inserted.
• After the sub-section (5), the following sub-section shall be inserted, namely

(6) Any amount remaining unspent under the sub-section (5) pursuant to any ongoing project, fulfilling such condition as may be prescribed, undertaken by the company in pursuance of its Corporate Social Responsibility Policy, shall be transfer by the company with in the thirty days from the end of financial year to the special account to be opened by the company in that behalf for the that financial year in any scheduled bank to be called unspent Corporate Social Responsibility  Account and such amount shall be spent by the company in the pursuance of its obligation towards the Corporate Social Responsibility Policy with in the period of three financial year from the date of transfer, falling which, the company shall transfer the same to the fund specified in the schedule VII with in the period of thirty days from the date of completion of the third financial year.

(7) If a company contravenes the provision of sub-section (5) or sub-section (6) , the company shall be punishable with the fine which shall not be less then 50,000 rupees but may extend to twenty five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for the term which may extend to the three years or fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both.

Insolvency and Bankruptcy Code, 2016

• NCLT rules corporate insolvency resolution process can be initiated during the pendency of debts recovery tribunal : In the matter of A.P.I. Industries Pvt. Ltd. (‘Corporate Debtor’) v. State Bank of India (‘Financial Creditor’), the NCLT vide its order dated 19 February 2019 initiated CIRP against the corporate debtor on application filed by its authorised representative u/s 10 of the Insolvency and Bankruptcy Code (IBC).
• Debtor’s cannot take shelter under moratorium provided under IBC for determination of liability under SEBI takeover and Insider Trading Regulations  :In the matter of Castex Technologies Ltd. (Castex), SEBI vide its order dated 24 May 2019 imposed a penalty of INR 24 lakh on Amtek Auto Ltd. (‘Amtek’) for violation of provisions under SEBI (substantial acquisition of shares and takeovers) Regulations, 2011 (‘SEBI Takeover Regulations’) and SEBI (prohibition of insider trading) Regulations 2015 (‘SEBI PIT Regulations’) due to non-disclosures.
• NCLT initiates CIRP against guarantor for default by non-corporate borrowers
  In the case of the Karur Vysya Bank Ltd. (‘Financial Creditor’) v. Maharaja Theme Parks and Resorts Pvt. Ltd. (‘Corporate Debtor’), the NCLT vide its order dated 8 April 2019 admitted insolvency petition filed by financial creditor against corporate debtor, which stood as a guarantor against loans taken by a partnership firm and two proprietary concerns (‘Principal Borrowers’).
• CIRP filed by part-time employee to claim 25 percent shares of corporate debtor without an agreement was to be dismissed :In the matter of Ms. Rohita (‘Operational Creditor/Petitioner’) v. All That Hype Media Pvt. Ltd. (‘Corporate Debtor/Company’), the NCLT vide its order dated 12 March 2019 dismissed the CIRP petition of the operational creditor because of the absence of a legal enforceable contract.
• NCLAT rules that financial service providers are out of purview of IBC :In the case of Housing Development Finance Corporation Ltd. (‘Financial Creditor/HDFC’) v. RHC Holding Pvt. Ltd. (‘RHC Holding’), the NCLAT vide its judgment dated 10 July 2019 dismissed the appeal filed by HDFC and held that financial service provider per section 3(16) of IBC do not come within the meaning of corporate person/corporate debtor and was out of purview of IBC.

RBI

RBI, in view of the recent change in reporting platform for submission of FLA return, the last date for filing the FLA return for 2018-19 has been extended to July 31, 2019, for the convenience of reporting this year. Recently RBI has migrated the filing of Annual Return on Foreign Liabilities and Assets (FLA) on Foreign Liabilities and Assets Information Reporting (Flair) System. Further, RBI allows for revision in the current year. It also allows for the submission of FLA returns of the previous year(s) with the prior approval of RBI by following the process. Annual return on Foreign Liabilities and Assets has been notified under FEMA 1999 and it is required to be submitted by all the India-resident companies which have received FDI and/ or made an overseas investment in any of the previous year(s), including current year by July 15 every year. Non-filing of the return before the due date will be treated as a violation of FEMA and the penalty clause may be invoked for violation of FEMA.

RBI has notified the Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR), FALLCR against credit disbursed to NBFCs and HFCs. RBI has earlier permitted banks to reckon, in a phased manner, an additional 2 percent of government securities held by them under Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) within the mandatory SLR requirement, as Level 1 HQLA for the purpose of computing Liquidity Coverage Ratio (LCR). RBI has decided that, with immediate effect, banks will be permitted to reckon this increase in FALLCR of 1.0 per cent of the bank’s NDTL as Level 1 HQLA for computing LCR, to the extent of incremental outstanding credit to NBFCs and Housing Finance Companies (HFCs) over and above the amount of credit to NBFCs/HFCs outstanding on their books as on date. The front-loading of FALLCR of one percent, exclusively meant for incremental exposure to NBFCs/HFCs, will form part of general FALLCR as and when the increase in FALLCR takes place as per original schedule on August 1 and December 1, 2019. All other instructions as per our circular ibid remain unchanged.

RBI has notified the decision of allowing one Asset Reconstruction Company to acquire financial assets from other Asset Reconstruction Companies (ARCs). The decision has been taken in view of amendment to the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, it has been decided to permit ARCs to acquire financial asset from other ARCs provided that the transaction is settled on cash basis, Price discovery for such transaction shall not be prejudicial to the interest of Security Receipt holders, the selling ARC will utilize the proceeds so received for the redemption of underlying Security Receipts and the date of redemption of underlying Security Receipts and total period of realisation shall not extend beyond eight years from the date of acquisition of the financial asset by the first ARC.

The Reserve Bank with effect from June 29, 2019, will replace the email-based annual reporting of Foreign Liabilities and Assets (FLA) by direct investment companies, with web-based Foreign Liabilities and Assets Information Reporting (FLAIR) system. The web-portal would also contain the user manual and FAQs in this regard. The move is consistent with the enhanced information security policy and is expected to further improve the quality of data. The form will seek investor-wise direct investment and other financial details on a fiscal year basis as hitherto, where all reporting entities are required to provide information on FATS related variables (it was mandatory only for subsidiary companies earlier). In addition, the revised form seeks information on the first year of receipt of FDI/ODI and disinvestment. Reporting entities will get system-generated acknowledgment receipt upon successful submission of the form. They can revise the data, if required, and view/download the information submitted. Entities can submit FLA information for earlier year/s after receiving RBI confirmation on their request email. The existing mechanism of email-based submission of FLA forms will be discontinued. Indian entities not complying with above, will be treated as non-compliant with Foreign Exchange Management Act, 1999 and regulations made thereunder.

The Reserve Bank of India (RBI) relaxed norms for the end-use of money raised through External Commercial Borrowings (ECBs). The ECB’s with a minimum average maturity period of seven years can be availed for repayment of rupee loans availed domestically for capital expenditure as also by NBFCs for on-lending for the same purpose. The ECB’s with a minimum average maturity period of 10 years can be used for working capital purposes and general corporate purposes and borrowing by NBFCs for the above maturity for on lending for the above purposes is also permitted. It has been decided to permit eligible corporate borrowers to avail ECB for repayment of rupee loans availed domestically for capital expenditure in the manufacturing and infrastructure sector if classified as SMA-2 or NPA, under any one-time settlement with lenders. Lenders are also permitted to sell, through assignment, such loans to eligible ECB lenders, except foreign branches or overseas subsidiaries of Indian banks, provided, the resultant external commercial borrowing complies with all-in-cost, minimum average maturity period and other relevant norms of the ECB framework.