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Hi Folks
Team SCS&A began this financial year with a short break to recoup, rejuvenate and refresh ourselves. We spent time in a neighbouring city that is known for palaces, museums, bird sanctuary, mother nature, clean roads and hospitable people. As you put together your budget estimates and market strategies for this financial year, I thought I will share with you a small insight into customer feedback that I carry from this visit.
My conversation with the boatman in Ranganathittu bird sanctuary went somewhat like this……..
I : How much does the boat ride cost ?
He : Madam, normal ride for 20 mins costs Rs. 70 per person. Longer ride for 40 mins around all the grooves costs Rs. 1500 per person and only 5 people in this.
I : Whaaat ? why so much difference ? 2,3, 5 times is ok but why 20 times ?
He : What can I say madam ? This is what Govt. has fixed and I have to follow the rules.
I : I see that except for some couples who want privacy no one else is using the long ride. The moment you say 1500, people are opting for the 70 ride. Is it not a loss for the Govt. ?
He : Yes, I know but what can I do madam ?
I : Why can’t you give this customer feedback to your higher ups ? You are at the ground level dealing with people and you know best what is their response. Tourism department must know this and refix the price.
He : Ayyo, no madam. I will lose my job if I give this feedback. Do you think sahebru (Sir) will listen to a low level boatman like me ? These decisions are taken by IAS officers. He will say “Yeno, neenu nannage helo ange aagbitya?” …………..meaning “what, have you also become competent enough to tell me?”
I was taken aback to hear his reply though I was not shocked, knowing our Indian hierarchical mentality, especially the bureaucracy which has the ‘know it all’ attitude (at least most of them) ! Should the tourism department not gather ground level information from the actual service providers like the boatman and the ticket seller ? where is the question of ego when today every parent and grandparent is rushing to his child / grandchild to help them with using the mobile apps, social media etc. ? when almost every CEO is making sure to spend time with the shopfloor employee or the entry level coder or the delivery boy or the sales representative or the store assistant to understand what the customer wants, what the market is saying, what changes need to be made to the product or service and how to enhance customer experience ? Direct interaction with the customer-facing employees, despite all available analytical tools and data is one of the best ways to keep your ears to the ground. Not only do you get unfiltered information, you also boost the morale of the employees which mere incentives cannot do.
From the boatman’s conversation and the takeaways, let us now move on to what this 186th issue of Samhita contains. The usual round up of regulatory updates from various ministries are no doubt covered. But do not miss out reading the latest Income Tax exemptions for Startups under “Incentives for Startups”. While the exemptions are welcome, I am not sure if the criteria for angel tax exemption is easy or simple.
Let me conclude with an advance warning:
MCA WILL SHORTLY INTRODUCE ADDITIONAL FEE OF RS. 100 PER DAY FOR LATE FILING OF ANNUAL FILING FORMS I.E. 23AC, 23ACA, AOC4, XBRL VERSIONS, MGT7 ETC. WHICH RELATE TO AUDITED FINANCIAL STATEMENTS, ANNUAL RETURN ETC. APPLICABLE TO OLD FILINGS ALSO IF NOT DONE. PLEASE PLAN FOR TIMELY AUDITS AND FILING OF THESE FORMS WITHIN THE DUE DATE. 100 PER DAY SEEMS PEANUTS BUT ACCUMULATED OVER MONTHS IT CAN SNOWBALL INTO A SHOCKING FIGURE !!
For our earlier issues do visit the Resource Centre at sharadasc.com.

Happy Reading

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Accounting Standard (AS) 22 or Indian Accounting Standard (IAS) 12 relating to deferred tax asset or deferred tax liability, will not apply to certain Government Companies i.e., public financial institutions, NBFCs and infrastructure finance leasing business. Earlier it was not applicable up to a period of 7 years, which is now removed.
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On consideration of request received from various stakeholders, Condonation of Delay Scheme (CODS), 2018 has been extended up to 30th April, 2018. This will provide relief to many directors who were disqualified due to certain non – compliance by their Companies.


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The last date for filing of AOC-4 XBRL E-Forms using Ind AS under the Companies Act, 2013, has been extended up to 30th April, 2018 without additional fee for the FY 2016-17.
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  • The Companies (Share Capital and Debentures) Amendment Rules, 2018 w.e.f 10th April, 2018 has made some changes w.r.t issue of Share Certificates:
  • shall specify the shares to which it relates and the amount paid-up thereon
  • shall be signed by 2 directors or by a director and the company secretary, wherever the company has appointed company secretary – In case of a Private / Public Limited Company
  • shall be signed by one director and the Company Secretary or Authorized Signatory – In case of OPC
  • Common seal to be affixed, if available in the presence of the signatories
  • Table F of Schedule I of the Companies Act, 2013, which is the standard Articles of Association of Company limited by shares, has been amended suitably on the above lines.
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4 years after enforcement of CSR (Corporate Social Responsibility) provisions, MCA has now set up a Steering Committee to review the functioning of CSR enforcement and to recommend uniform approach for its enforcement in the next 60 days. Indicating how seriously Government is monitoring CSR implementation by corporates, the following Terms of Reference (select ones) have been laid down for the Legal and Technical sub-committees:
  • To revisit guidelines for CSR enforcement & structure for Centralized Scrutiny and Prosecution Mechanism (CSPM)
  • Criteria to identify responsibility for non-compliance for CSR provisions
  • Issue of Show Cause Notice by ROCs and prosecutions
  • To verify data consistency of National CSR Data Portal
  • Review of all CSR related circulars and E-forms issued
  • Modify AOC-4 e-form w.r.t KYC and CSR committee constitution
Corporates who are required to comply with CSR provisions are advised to get their act together and ensure 100% compliance. If not their directors may face prosecution. Merely explaining the reason for non-spending may not cut teeth with the Government.
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Effective from 20th March, 2018, the Reserve Bank of India has issued Regulations for Cross Border Merger, Amalgamation and Arrangement between Indian and Foreign Companies, covering inbound merger, outbound merger, valuation, reporting and deemed approval.
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In view of the associated risks with VCs, including Bitcoin, the RBI has directed that, with immediate effect, no entity shall deal in VCs, or provide services for setting up VCs or maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of VC exchanges, etc. Regulated entities which already provide such services shall exit the relationship within three months from the date of this circular i.e., 6th April, 2018.
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The IBBI (Insolvency Professionals) (Amendment) Regulations, 2018 mandate the following:
  • ➢ By 30th June, 2018 all IPEs must ensure that majority of their partners (of LLPs) or directors (of Companies), as the case may be are insolvency professionals and none of them is a partner or a director of another IPE.
  • ➢ By 30th September, 2018 all IPEs must ensure that their sole objective is to provide support services to IPs, who are their partners or directors, they have a net worth of not less than one crore rupees, majority of their shares (of Companies)/capital contribution (of LLPs) is held by IPs, who are its
    directors/partners, as the case may be.
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For monitoring the progress of Export Obligation Discharge Certificate (EODC) applications of Advance and (Export Promotion Capital Goods) EPCG authorizations, DGFT has developed an online EODC monitoring system, in which the input data related to applications submitted by exporters for EODC can be entered and the status can be updated by the DGFT when either Deficiency letter or EODC is issued. There is a query raising and resolution mechanism in place.
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As per FEMA, the obligation of compliance with the various foreign investment limits rests on the Indian company. In order to facilitate the listed Indian companies to ensure compliance with the foreign investment limits, SEBI in consultation with RBI has put in place a new system for monitoring the foreign investment limits.
NSDL/CSDL (Depositories) and the Stock exchanges have made available required IT infrastructure to operationalize the new system w.e.f 1st May, 2018.
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Transport Allowance Exemption of Rs. 1600 p.m. has been withdrawn with effect from the financial year 2018-19 and subsequent years. Instead Standard Deduction provisions have been reintroduced.
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Exporters need to file Letter of Undertaking (LUT) in Form GST-RFD 11 on the portal only. LUT will be deemed to be accepted as soon as Application Reference Number is generated and no document needs to be submitted in physical form.
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As part of ‘Startup India’ initiative, the Inter-Ministerial Board of Certification constituted by DIPP will receive applications from the Startups for claiming the following incentives under the Income Tax Act, 1961:
  • ➢ A Startup being a Private Limited Company or Limited Liability Partnership(LLP) incorporated on or after 1st April, 2016 but before 1st April, 2021 shall make an application in Form 1 to obtain certificate for 100% deduction of the profits and gains from their income for 3 out of 7 consecutive assessment years.
  • ➢ A Startup being a Private Limited Company, who has fulfilled the following conditions shall make an application in Form 2 for approval of exemption from levy of income tax on share premium:
  • The aggregate amount of paid up capital & share premium after the proposed issue of shares does not exceed 10 Cr
  • The proposed investor, who proposed to subscribe to the issue of shares of the Startup has:
    • -The average returned income of 25 Lacs or more for the preceding 3 FYs; or
    • -The net worth of 2 Cr or more as on the last date of the preceding FY
  • The Startup to obtain a report from a merchant banker specifying the fair market value of shares in accordance with Income-tax Rules, 1962.


Note: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. S. C. Sharada & Associates disclaims all liability on action taken without professional advice.
 


S. C. Sharada & Associates, Company Secretaries. #405, 7th Cross, IV Block, Koramangala, Bangalore – 560 034
sharadasc.com Phone : +91 80 25534374 , +91 80 25536618 Email: [email protected]

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