I couldn’t have chosen the quote in the banner at a more opportune time than now. Now, when we are besieged with shocking news about brazen conflict of interest, breach of code of conduct and misuse of position by a ‘Corporate czar’ who was a star in most ‘Corporate Governance Award’ ceremonies and had truly worked her way up to becoming a stellar role model for corporate women. What is right, what is the right way and right time must be decided by each one of us at every step in our life, whether personal or professional. Listen to the true inner voice. It will never fail you ! Challenge lies in how to find it, how to fine-tune it and how to use it in moments of dilemma.
It is heartening to note that when one model falls, several others rise. There is no dearth of women role models today. The small but growing number of women in the armed forces, especially the young women officers leading the contingents in the Republic Day Parade this year was testimony to this fact. 26th January, 1950 to 26th January, 2019……it took our nation 70 long years to recognise this and at the most appropriate time when an eminent woman is our Defence Minister. I would like to share that incidentally 26th January is significant for yet another reason – it was the day way back in 1975, that Soka Gakkai International, a Buddhist organisation that promotes peace and happiness both at the individual as well as societal levels across the world was created. It is a faith and not a religion. It is a life transforming philosophy dating back to the 12th century that places great importance on empowerment of youth and women. The teachings and activities are aimed at helping the individuals to realise their inner strength and achieve victory over crises, with focus on family being the fulcrum of growth and peaceful coexistence. So, so relevant in today’s troubled times.
Brace yourselves for a long reading of this 205th issue of Samhita…..many, many more compliance burdens on companies imposed by MCA. More disclosures, more returns, more reporting, more dates to remember, more audits et al. Reason is not difficult to see but the levels of information demanded are quite overwhelming. Request all professionals and company directors to read the notifications and take necessary action. Except for Government companies, all others, big and small, whether billing or not, whether operational or not are required to comply. Scroll down to read and understand. Another interesting development is the changes made to Angel Tax exemption for Startups but I wouldn’t say the procedure is any easier. Without advance planning, raising funds the right way and at the right time will not be possible. Doing it any other way would attract legal consequences under the Tax and company law.
6th article on ‘Skills & Training for Mediators’ by Ms. Saradha Kumar, Advocate and ADR practitioner throws light on who can become a mediator and what it takes to become one. For any previous issues of Samhita and the readers feedback, please visit https://sharadasc.com/resource-center/
MCA updates :
Transactions to be disclosed in DPT-3
Companies (Acceptance of Deposits) Amendment Rules, 2019 has been notified and shall come into force from the date of publication of notification in the Official Gazette.
The following are the highlights of the said Rules:
– Real Estate Investment Trusts are added to the list of exempt deposits
– Return of deposit or particulars of transaction not considered as deposit or both by every company other than Government Company is to be filed in Form DPT-3
– Every company other than a Government company shall file a onetime return of outstanding receipt of money or loan by a company but not considered as deposits from 1st April, 2014 to the date of publication of this notification in the Official Gazette, as specified in Form DPT-3 within 90 days from the date of publication of this notification in the Official Gazette
– 13 categories of amounts not treated as Deposits are listed in DPT-3 which are to be filled based on audited figures together with auditor’s certificate
An attempt has been made to analyze the implications. Do read the article by Mr. Sreenivasan Narasimhan, a Law and CS student.
Mediation is a dynamic process in which a neutral third party, the Mediator, facilitates the resolution of dispute between the parties. The mediator helps parties to communicate with each other, identifies the real underlying issues and helps parties explore and generate resolution options thereby facilitating…Read more
Specified Companies to file MSME dues with MCA
“Specified companies” are companies who procure supplies of goods or services from Micro and Small Enterprises (MSME) and whose payments to them exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services.
Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 has been notified with effect from 22nd January, 2019 requiring such Specified Companies to file with the MCA:
– Details of outstanding dues (45 days and beyond) to MSME suppliers existing on the date of notification of this order within 30 days from 22nd January, 2019 in MSME Form I.
– Details of outstanding dues (amount and reasons for delay) on a half-yearly basis i.e., by 31st October for April – September and by 30th April for October – March.
Commencement of Business Certificate
The Ministry of Corporate Affairs (MCA) has re-introduced the concept of Commencement of Business Certificate. All companies having a share capital incorporated on or after 2nd November, 2018 (Effective date of the Companies (Amendment) Ordinance, 2018) have to obtain this Certificate by filing Form INC-20A.
Each Director of the company is to give a declaration stating that every subscriber to the MoA has paid the value of shares agreed to be taken by him / her on the date of making such declaration, which is to be filed along with INC-20A.
The Certificate is to be obtained within 180 days from the date of Incorporation of such a company. If not, the Company is liable to pay a penalty of INR 50,000 and each of the Directors are liable to pay a penalty of INR 1,000/ day upto a maximum of INR 1 lakh.
If no declaration has been filed in Form INC-20A and the RoC has reasonable cause to believe that the company is not carrying on business, then he / she may initiate strike off proceedings.
Certain Companies Exempt from DEMAT
Companies (Prospectus and Allotment of Securities) Amendment Rules, 2019 effective from 22nd January, 2019, exempt Nidhi / Government / wholly owned subsidiary companies from complying with the rules relating to issue of securities in dematerialised form by unlisted public companies.
NCLT Rules Amended
The National Company Law Tribunal (Amendment) Rules, 2019 have been notified with effect from 15th January, 2019.
An application for obtaining approval of the Tribunal for the consolidation and division of all or any of the share capital into shares of a larger amount than its existing shares which results in changes in the voting percentage of shareholders is to be advertised by the Company at least 14 days before the date of hearing.
The Company is to now serve a notice with copy of the application and objection if any, by affected persons to the Regional Director, as against previously to the Central Government.
DIPP updates :
Angel Tax Exemption Conditions for Startups Revised
DIPP has modified the notification dated 11th April, 2018 with respect to eligibility of Startups and investors as also the procedure for claiming Angel Tax exemption. Startups can make an application under the new notification to claim exemption even for past investments subject to meeting the criteria.
Earlier Conditions – 11th April, 2018 Notification
Valuation report was to be obtained only from a Merchant Banker in case of Discounted Cash Flow Method. Accordingly, the term Merchant Banker was defined.
No reference to Valuation report. Only a justification for Valuation is required. Consequently, the definition of Merchant Banker has been replaced with CBDT since the new conditions require a CBDT approval for Angel Tax exemption.
A DIPP recognized Startup shall avail Angel Tax exemption if the investor has:
– An average Returned Income of Rs. 25 Lakhs or more for the preceding 3 FYs;
– A Net worth of Rs. 2 crores or more as on the last date of the preceding FY;
A DIPP recognized Startup shall avail Angel Tax exemption if the investor has:
– Returned income of Rs. 50 Lakhs or more for the FY preceding the year of investment / proposed investment;
– A Net worth of Rs. 2 crores or the amount of investment made/proposed to be made in the startup, whichever is higher, as on the last date of the FY preceding the year of investment / proposed investment;
Application in Form-2 for approval w.r.t 56 (2)(viib) of the Income Tax Act, 1961 (Angel tax exemption) to be made to the Inter-Ministerial Board (IMB)
Application in Form-2 for approval w.r.t 56 (2)(viib) of the Income Tax Act, 1961 (Angel tax exemption) now to be made to DIPP which will then forward it to CBDT. CBDT may or may not grant the approval. It must convey the approval / decline decision within 45 days of receipt of application from DIPP.
In case approval is required for the shares already issued by the start –up , no application is required if assessment order has been passed by the assessing officer for the relevant FY. The notification effective from 16th January, 2019 will be valid untill reviewed before 31st March, 2021 by the Government.
RBI Updates :
ECB Framework – Revamped
The Reserve Bank of India (RBI) has revamped the entire External Commercial Borrowings (ECBs) framework. The following are a few highlights of this extensive notification:
– Merging of Tracks: Merging of Tracks I and II as “Foreign Currency denominated ECB” and merging of Track III and Rupee Denominated Bonds framework as “Rupee Denominated ECB”.
– Eligible Borrowers: All entities eligible to receive FDI are Eligible Borrowers. Additionally, Port Trusts, Units in SEZ, SIDBI, EXIM Bank, registered entities engaged in micro-finance activities, viz., registered not for profit companies, registered societies/trusts/cooperatives and non-government organisations can also borrow under this framework.
– Recognised Lender: The lender should be resident of FATF or IOSCO compliant country.
– Minimum Average Maturity Period (MAMP):
✔ MAMP will be 3 years for all ECBs.
✔ MAMP for ECB raised from foreign equity holder and utilised for specific purposes will be 5 years.
✔ ECB up to USD 50 million per financial year raised by manufacturing sector will be 1 year.
– Late Submission Fee (LSF) for delay in Reporting: Any borrower, who is otherwise in compliance of ECB guidelines, except for delay in reporting drawdown of ECB proceeds before obtaining LRN or Form ECB 2 returns, can regularize the delay by payment of LSF as per the laid down procedure.
The notification is to be read in detail for specific clarifications / answers.
Establishment of a branch office / liaison office/ project office
Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) (Amendment) Regulations, 2019 has been notified and is effective from 21st January, 2019.
Approval of RBI is not required if Government approval / license / permission by the concerned Ministry / Regulator has been granted.
If a Non Resident Applicant has entered into a contract / agreement with the Ministry of Defence or Service Headquarters or Defence Public Sector Undertakings then no separate reference / approval is required from the Central Government.
GST updates :
GST on business facilitator / business correspondents
Where a banking company is the service provider in the business facilitator model or the business correspondent model operated by a banking company as per RBI guideline, the banking company is liable to pay GST on the entire value of service charge or fee charged to customers whether or not received via business facilitator or the business correspondent.
It is further clarified that for the purpose of a Business Facilitator (BF) or Business Correspondent (BC) availing exemption from GST under Sl. No. 39 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, the conditions flowing from the language of the notification should be satisfied. These conditions are that the services provided by a BF/BC to a banking company in their respective individual capacities should fall under the Heading 9971 and that such services should be with respect to accounts in a branch located in the rural area of the banking company.
CA Certificate for Deemed exports
Supply of goods by a registered person against Advance Authorisation will be treated as Deemed export only if a certificate from a Chartered Accountant is submitted to jurisdictional GST Commissioner within 6 months. However, certificate is not required if ITC (Input Tax Credit) has not been availed on inputs used in manufacture of export goods.
CBIC (Central Board of Indirect Taxes and Customs) has clarified that ‘eligible duties’ should be read as ‘eligible duties and taxes’. No transition of Cess under Customs Act is allowable.
F&B supplied by an educational institution
Supply of food and beverages by an educational institution to its students, faculty and staff, where such supply is made by the educational institution itself, is exempt from GST.
However, such supply of food and beverages by any person other than the educational institutions based on a contractual arrangement with such institution will attract [email protected] 5%.
GST Exemption to IIM PG programs
The exemptions from GST for the following Post Graduate programs offered by IIM are as follows:
Programs offered by IIM
Whether exempt from GST
1st July, 2017 to 30th January,
Two-year full time Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT) conducted by the Indian Institute of Management,
Fellow programme in Management
Five years integrated programme in Management.
1st July, 2017 to 30th January,
One-year Post Graduate Programs for Executives,
Any programs other than those mentioned at Sl. No. 67 of notification No. 12/2017- Central Tax (Rate), dated 28.06.2017.
All short duration executive development programs or need based specially designed programs (less than one year).
Not exempt from GST
31st January 2018 onwards
All long duration programs (one year or more) conferring degree/ diploma as recommended by Board of Governors as per the power vested In them under the IIM Act, 2017 including one year Post Graduate Programs for Executives
Exempt from GST
31st January 2018 onwards
All short duration executive development programs or need based specially designed programs (less than one year) which are not a qualification recognized by law
Not Exempt from GST
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.