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.