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- Breather for tax on ESOP – employee need not pay tax on deemed perquisite at the time of grant of Employee Stock Options. Taxable event is earlier of the 3:
- after the expiry of 48 months from the end of the relevant assessment year when ESOP was issued or transferred; or
- from the date of the sale of ESOP by the employee; or
- from the date of the cessation of employment.
This relaxation is available for both ESOP shares as well as Sweat Equity shares issued or transferred by a start-up company recognized u/s 80-IAC of the Income Tax, Act ( recognised start-up for tax purposes).
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- TDS related changes:
- Limits for TDS liability for individuals, HUF, AOP, BOI was earlier indicated in Tax Audit Section 44AB i.e. such assesses having total sales, gross receipts or turnover of Rs. 1crore from business or Rs. 50 lakhs from profession were required to deduct TDS from payments. Now these limits have been included u/s 194C directly. Similar change for requirement for TDS applicability has been made in Sections 194A, 194H, 194I, 194J and 206C.
- TDS on fees for technical services reduced from 10% to 2%.
- TDS by E-comerce operator for payments made to e-commerce participant.
- Applicability: E-Commerce Operator for the sale facilitated/ executed via its platform including digital or electronic facility.
- Time of Liability: The operator is required to deduct tax at the time of credit of amount of sale or service or both to the account of participant’s account or at the time of payment whichever is earlier.
- Rate of TDS: 1% of the gross amount of such sale or service or both.
- No TDS upto Rs.5,00,000 transaction value if individual / HUF e-com participant has PAN or Aadhar.
- TDS not applicable for income earned by e-com operator from advertisements.
- W.e.f. 01.04.2020 TCS (Tax Collection at Source) applicable at the rate of 0.1% on consideration received from a buyer in excess of sales of Rs. 50 Lakhs, if the turnover of seller is above Rs. 1 crore during the immediately preceding financial year. In non-PAN/Aadhar cases, the rate shall be 1%.
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Only select provisions have been highlighted above, while the details are attached titled as “Highlights of Union Budget 2020-21”.
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2. GST updates
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Input Tax Credit
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The Sub-section (4) of section 16 of CGST Act, 2017 is being amended to extend the scope of claiming the Input tax credit on the debit notes received after September of subsequent year following the end of financial year to which invoice pertaining to such debit note was issued.
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Earlier the ITC on invoice and debit note relating to invoice issued in a FY was not available after the due date of furnishing of the return under section 39 for the month of September of subsequent year following the end of financial year to which such invoice relates or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.
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Refund
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No refunds shall be made if the rate of GST as per the existing law is less than the rate as per the law at the time it was collected.
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3. Customs Act updates
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Under Customs Act, Health Cess of 5% will be levied on import of medical devices (goods referred to under Fourth Schedule) to finance the health infrastructure and services.
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MCA updates
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SPICe+ – comprehensive form for Company incorporation & other registrations
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As part of Government of India’s Ease of Doing Business (EODB) initiatives, MCA has notified The 2 new web forms, SPICe+ and AGILE – PRO through the Companies (lncorporation) Amendment Rules, 2020 which shall come into force on 15.02.2020. The highlights of the same are as follows:
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- W.e.f. 15.02.2020, RUN service shall be applicable only for change of name of existing companies and PART-A of the Web Form SPICe+ shall be used for applying for name of the company.
- Web Form SPICe+ has been divided into 2 parts i.e. Part-A and Part-B. Part-A of the form has replaced the RUN service w.r.t. application of name for a new company. Part-A of the Form can be submitted without Part-B with the option of one resubmission.
- Companies are now mandatorily required to apply for EPFO, ESIC and Profession Tax (for companies incorporated in Maharashtra) registrations and also open a bank account through web Form AGILE – PRO
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Condonation of delay for LLPs
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Section 67(1) of the LLP Act, 2008 empowers the Central Government, by a notification in the Official Gazette, to direct that any provisions of the Companies Act, 2013 shall apply to LLPs.
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Accordingly, vide a notification by the MCA, the provisions of Section 460 of Companies Act, 2013 i.e. Condonation of delay in certain cases, are applicable to LLPs w.e.f 30.01.2020. With a view to give an opportunity todefaulting LLPs, any delay in making an application to the CG or delay in filing any documentwith the RoC may be condoned by the Central Government at its discretion. If a delay is condoned, penal provisions shall not apply and the default shall be treated as if it was never committed.
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Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2020
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Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 amended w.e.f. 03.02.2020. The changes made are as follows:
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- Sub-sections 11 and 12 of Section 230 shall come into force on 03.02.2020.
- A member of the company can make an application for the purpose of takeover offer if such member along with any other member holds not less than 3/4th of the shares in the company, and such application has been filed for acquiring any part of the remaining shares of the company. The prescribed fee for filing the application is Rs.5,000.
- The sub-rule also specifies what the application of arrangement for takeover offer must contain. This includes Valuation Report issued by a Registered Valuer and also details of bank account to be opened by the acquirers where at least 50% of the takeover offer price must be deposited.
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NCLT (Amendment) Rules, 2020
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The National Company Law Tribunal (Amendment) Rules, 2020 shall come into force on 03.02.2020.
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Rule 80A inserted – under Section 230(12) of CA, 2013, application to be made in Form NCLT-1 by an aggrieved party in the event of any grievances w.r.t. takeover of companies other than listed companies. NCLT application fee Rs. 5,000 along with prescribed documents i.e. affidavit, Memorandum of Appearance, Board resolution, grounds for grievance etc.
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