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Hi Folks

November, 2009 – we were small back then. Just trying to open our eyes. Crawling. Struggling to find our feet amidst the plethora of corporate and legal information available at different levels. Need was internal. To educate and keep ourselves abreast on a regular basis since we had little work on hand. We were twiddling our thumbs then, waiting for assignments to come our way. Believing that Knowledge is Power and it is a unique undiminishing Resource that grows when shared, we started sharing it with other stakeholders in our ecosystem.

There was no grand vision. There was no focussed plan. There was no ambition to be the fastest growing or the largest newsletter in terms of reach. The only goal was not to Give Up, not to stop (though we have had some misses) but to Keep Moving Forward, fortnight after fortnight. Not to reach a destination but merely to enjoy the journey. To learn, unlearn & relearn. To put the best foot forward (should I say best words and choicest thoughts ?☺). To strive towards quality. To keep at it, come rain or come shine (as they say proverbially). Feedback or no feedback. Until the realisation dawned that You are what You Do Repeatedly. You can only get better and better. It can never go worse. Never deteriorate. And today we are proud to say we are all of 10 ! 2009 to 2019 – Lexspeak turned Samhita, a collation, a potpourri of regulatory news, due dates, celebrity quotes, inspiring thoughts, funny takes, creative banners (that have never, ever been repeated during the last 10 years across the 225 issues) and my own humble Musings on Life as I see it !

Some of you have been associated since the 1st issue in 2009 while many of you have joined along the way. Some of you have expressed your thoughts and feedback (Readers’ Speak section in sharadasc.com) while some of you have chosen to remain silent. Either ways, we are grateful for your company. Sometimes the feedback has been so touching that it surprises me – the power of thoughts and words and how it can influence and impact. A big thank you for helping us grow and evolve during this 10 year long incredible journey. Hoping to travel along for another decade at least !

This landmark 225th issue contains many regulatory updates from MCA, IBC, GST & IT which are significant in their own way. Notably IBC on the insolvency process for personal guarantors and the labour notification from Government of Karnataka permitting women to work in the ‘graveyard shift’ of 8 pm to 6 am ! Will this help more women to mainstream into employment or drop out due to health and family issues because of night duty ? In the long run is it good for them and the society ? There can be arguments both for and against but today with long working hours and resultant burn outs, late night customer calls and the urge to stay connected 24×7, I am not sure if this is a good move. Having said that, do make out time to read Mr. Vittal Rao’s detailed analysis of certain critical clauses to be included or avoided in Employment Contract, enforcement of the same, difference between Liquidated and Unliquidated Damages. While we started with very few notifications in our very 1st issue of newsletter (erstwhile Lexspeak) on 26th November, 2019, 10 years down the line, the number seems to be growing along with the legislations themselves. Agreed that the economic, financial and corporate landscape has changed dramatically. But did we hear “Minimum Government, Maximum Governance” & “Ease of Doing Business” somewhere, sometime back ? Oh yeah, the latest to this list is “Ease of Living for Corporates” referred to in the Company Law Committee Report, 2019. Interesting phrase. Hope it is Ease of Living for normal citizens first and then for Corporate Citizens !!

For any previous issues of Samhita and the readers feedback, please visit https://sharadasc.com/resource-center/

Happy Reading

MCA updates
Amendment in RTP threshold limit

Vide Companies (Meetings of Board and its Powers) Second Amendment Rules, 2019, the limits of Rs. 100 crores and Rs. 50 crores in Section 188 dealing with Related Party Transactions have been removed w.e.f. 18th November, 2019. The revised limits referred to in Section 188 read with the Companies (Meetings of Board and its Powers) Rules, 2014 requiring prior shareholder’s approval are as below:

  1. sale, purchase or supply of any goods or material, directly or through appointment of agent, amounting to 10% or more of the turnover of the company as mentioned in clause (a) and clause (e) respectively of sub-section (1) of section 188;
  2. selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent, 10% or more of net worth of the company as mentioned in clause (b) and clause (e) respectively of sub-section (1) of section 188;
  3. leasing of property any kind amounting to 10% or more of the turnover of the company, as mentioned in clause (c) of sub-section (1) of section 188;
  4. availing or rendering of any services, directly or through appointment of agent, amounting to 10% or more of the turnover of the company as mentioned in clause (d) and clause (e) respectively of sub-section (1) of section 188.

Explanation – It is hereby clarified that the limits specified in sub-clause (i) to (iv) shall apply for transaction or transactions to be entered into either individually or taken together with the previous transactions during a financial year.

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Employment Contracts

In the previous Article1, a mention was made about contracts “Opposed to Public Policy” while discussing the legal enforceability of “Contracts” before any Court of Law. To start with, it is essential to understand the conceptual meaning and enlightened views of various Courts including the Supreme Court of India and the House of Lords.

1. Let us read Sec.23 & Sec.27 of the Indian Contract Act,1872

Sec.23 stipulates that the “consideration or the object of the Agreement is forbidden by law or Is of such a nature that, if…Read more

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Extension of due dates – Form NFRA-2, PAS-6 and J&K related
Form Purpose Extended filing due date
NFRA-2 Annual Return to be filed by auditor with the NFRA 90 days from the date of deployment of this form on the website of NFRA
PAS-6 Reconciliation of Share Capital Audit Report on half yearly basis 60 days from the date of deployment of the form on the website of the Ministry
AOC-4, AOC-4(CFS) and AOC-4(XBRL) and MGT-7 for UT J&K and Ladakh Filing of financial statements and annual returns 31.01.2020

Company Law Committee- 2019 – Report

The Company Law Committee- 2019 submitted its report to the Finance Minister on 18th November, 2019 with significant recommendations regarding compoundable offences, fines, penalties, additional fees etc. payable by companies, lower additional fees by OPCs, Small companies, Producer companies and Start-ups as well as higher threshold for CSR applicability. All this in the name of “Ease of living for Corporates” and de-clogging the Criminal justice System!

A complete report as well as a summary brought out by Press Information Bureau of India can be referred to.

Labour Law updates
Shops and Establishments open 24 x 7

The labour department of Government of Karnataka has made significant changes to the Karnataka Shops and Commercial Establishments Act, 1961 to permit all establishment having more than 10 employees to be open on 24 x 7 basis on all days of the year subject to certain conditions.

  • Women can now work from 8:00 p.m. to 6:00 a.m. provided her transport and safety is ensured by the employer.
  • Every employer having a woman employee must constitute a Prevention of Sexual Harassment Committee and keep it operative.

Above changes will be valid for 3 years from the date of gazette notification i.e. 11.10.2019.

IBBI updates
Insolvency & Liquidation of Financial Service Providers and Personal Guarantors

The following Rules and Regulations have been notified by MCA:

  1. The Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 w.e.f. 15.11.2019.
    • These rules shall apply to such financial service providers or categories of financial service providers, as may be notified by the Central Government under section 227 of IBC, from time to time, for the purpose of their insolvency and liquidation proceedings. One of the categories notified is NBFCs including Housing Finance Companies with asset size of Rs.500 crores or more and RBI is the notified regulator.
    • “Resolution Professional” / “Interim Resolution Professional” / “Insolvency Professional” is replaced with “Administrator” and “Corporate Debtor” is replaced with “Financial Service Provider”.
    • The Corporate Insolvency Resolution Process, Liquidation Process and Voluntary Liquidation Process of the corporate debtor under IBC, shall mutatis mutandis apply, to the Insolvency Resolution Process, Liquidation Process and Voluntary Liquidation Process of a Financial Service Provider subject to certain modifications.
  2. The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 and The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 shall come into force on 01.12.2019.

Under the above Rules and Regulations, Guarantor has been defined as “a Personal Guarantor to a Corporate Debtor in respect of whom guarantee has been invoked by the creditor and the amount remains unpaid in full or in part”. They are intended to help banks/ creditors to recover from defaulting guarantors within a given time frame under the IBC, which was earlier difficult due to delayed legal proceedings. The rules and regulations relating to Personal Guarantors will have a significant influence in the recovery of dues and will hopefully help fuel the sagging economy.

Income Tax updates
TDS for contractual work/professional fee

Section 194M has been inserted in the last Union Budget to provide for levy of TDS at the rate of 5% on the sum paid or credited in a year on account of contractual work (including supply of labour for carrying out any work) or professional fees by an individual or a HUF (other than those who are required to deduct income-tax as per the provisions of section 194C or section 194J), if aggregate of such sums exceeds Rs. 50 lakhs in a year. However, in order to reduce the compliance burden, it is proposed that such individuals or HUFs can deposit the tax deducted using their PAN and shall not be required to obtain TAN. This amendment takes effect from 1st September 2019. The tax deducted must be paid within 30 days from the end of the month in which the deduction was made and shall be accompanied by a challan cum statement in form 26QD. The relative certificate of deduction shall be issued in Form 16D within 15 days of furnishing form 26QD.

GST updates
Extension of due date- FORM GSTR-9/9C

CBIC has extended the last date for furnishing of annual return/reconciliation statement in Form GSTR-9/Form GSTR-9C for FY 2017-18 till 31st December, 2019 and for FY 2018-19 till 31st March, 2020.

Changes made in Form GSTR-9 and GSTR-9C

Annual Return GSTR-9 & GST Audit GSTR-9C have been simplified vide Central Goods and Services Tax (Seventh Amendment) Rules, 2019. Two significant changes in form GSTR-9C are that instead of true and correct now it specifies to give true and fair view and Cash flow statements to be reported only if available so all non-corporates would be relieved of such reporting requirements.

Optional filing of Annual returns

The CBIC has issued a clarification regarding the optional filing of Annual returns of taxable persons whose turnover does not exceed Rs. 2 crores. The summary is as follows:

  • Taxable persons who have for opted for Composition Scheme, must file Form GSTR-9A. However as per the notification dated 9th October 2019, it is optional for them to file the Annual returns for FY 2017-18 and 2018-19 respectively.
  • Similarly, in the case of taxable persons having aggregate turnover less than Rs. 2 crores, annual returns are optional and can only be filed before the due date.

Procedure for fully electronic refund process of GST

Earlier, after roll out of GST w.e.f. 01.07.2017, as per temporary mechanism applicants were required to file the refund application in FORM GST RFD-01A on the common portal, take a print out of the same and submit it physically to the jurisdictional tax office along with all supporting documents. 

Later, to make process of submission of the refund application electronic it was specified that the refund application in FORM-GST-RFD-01A, along with all supporting documents, shall be submitted electronically. However, various post submission stages of processing of the refund application continued to be manual. 

Finally, refund procedure was made fully electronic and was deployed on the common portal with effect from 26.09.2019.

Now the CBIC, has issued a Circular laying down procedure for electronic submission and processing of refund applications in supersession of all earlier circulars on the subject.

Due dates for GST filing in the UT of J&K
  • The Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 w.e.f. 15.11.2019.
Form Particulars Applicability For the period Filing due date w.e.f
Form GSTR-1 Details of outward supplies Registered persons having aggregate turnover of more than Rs. 1.5 crores in the preceding financial year(PY) or current financial year July to September, 2019 30.11.2019 15.11.2019
Form GSTR-1 Details of outward supplies Registered persons having aggregate turnover of more than Rs. 1.5 crores in the PY/ current financial year For October, 2019 30.11.2019 11.11.2019
Form GSTR-3B Monthly return All GSTIN holders October, 2019 30.11.2019 20.11.2019
Form GSTR-3B Monthly return All GSTIN holders July to September, 2019 30.11.2019 20.11.2019
Form GSTR-7 To deduct tax at source All registered persons required to deduct tax at source 30.11.2019 10.11.2019
  • Persons whose principal place of business or place of business lies in the erstwhile State of Jammu and Kashmir till the 30.10.2019; and now lies in the Union territory of Jammu and Kashmir or in the Union territory of Ladakh from the 31.10.2019 onwards, have been classified as a class of persons who shall follow a special procedure till 31.12.2019 as detailed in the Notification. This relates to tax period, availing Input Tax Credit, filing of returns etc.

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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