MCA updates

Accounting software capable of maintaining edit log – applicable from 01.04.2022

The Companies (Audit & Auditors) Amendment Rules, 2021 was notified by MCA which was scheduled to come into force on 01.04.2021. Please refer Samhita #257 for detailed summary. Briefly, the 2 notifications required the following:

  • From 01.04.2021, only accounting softwares capable of recording audit trail i.e. trail of every transaction and edit log, shall be used by Companies. The Auditor shall report if the same has been complied with and that the audit trail facility has not been disabled or tampered with during the year.
  • Additional information to be mentioned in the Audit Report.

However, there was no clarity if the requirements regarding reporting of maintenance of edit log and audit trail in the Audit Report were applicable to FY 2021-22. The same has been clarified by a notification no G.S.R. 248(E) dated 01.04.2021 that auditors are required to report if the software used by the company for maintaining their books of accounts provides for edit log and audit trail only from FY 2022-23 onwards.

Similarly, the Companies (Accounts) Amendment Rules, 2021 has been amended vide notification no G.S.R. 247(E) making the requirement of maintaining edit log and audit trail in the accounting softwares used by companies, mandatory only from 01.04.2022 onwards.

Open Notification No. G.S.R. 248(E) dtd. 01.04.2021

Open Notification No. G.S.R. 247(E) dtd. 01.04.2021
IBBI Updates

Introduction of Pre-packaged Insolvency Resolution Process

The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 notified on 04.04.2021, introduced the much anticipated Pre-packaged Insolvency Resolution Process exclusively for Micro, Small & Medium Enterprises (MSMEs).

The Pre-packaged Insolvency Resolution Process aims to provide an efficient alternative insolvency resolution framework for corporate persons classified as MSMEs under the Code, for ensuring quicker, cost-effective outcomes for all the stakeholders. The initiative is based on a trust model and the amendments honour the honest MSME owners by trying to ensure that the resolution takes place and the company remains with them. It is to be noted that this package is not available to proprietor owned MSMEs.

Highlights of the amendments made to the Insolvency and Bankruptcy Code, 2016 through the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 are as follows:

  • Insertion of various definitions including “base resolution plan”, “pre-packaged insolvency date”, “pre-packaged insolvency resolution process period” etc.
  • The Code has been amended to give power to the Central Government to specify a different minimum amount of default for initiation of the pre-packaged insolvency resolution process subject to a maximum of Rs.1 crore.
  • Process to be followed and forms to be filed under the Pre-packaged Insolvency Resolution Process.
  • Eligibility criteria to act as Resolution Professionals for Pre-packaged Insolvency Resolution Process.
  • Duties of Resolution professional before initiation of Pre-packaged Insolvency Resolution Process.
  • Time limit for completion of Pre-packaged Insolvency Resolution Process.
  • Procedure for Declaration of moratorium and public announcement during the pre-packaged IRP.
  • Time limit for Constitution of Committee of Creditors and their rights
  • Procedure for consideration and approval of resolution plan

Insolvency And Bankruptcy Board Of India (Pre-Packaged Insolvency Resolution Process) Regulations, 2021 and Insolvency and Bankruptcy (Pre-Packaged Insolvency Resolution Process) Rules, 2021 have also been notified to facilitate the complete process of insolvency resolution for MSMEs.

Please refer to the attached notifications for details.

Open Ordinance
Open Regulations
Open Rules
RBI Updates

Extended period for parking of unutilised ECB proceeds

Pursuant to the Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations, ECB borrowers are allowed to park ECB proceeds in term deposits with AD Category-I banks in India for a maximum period of 12 months. As a one-time relaxation due to the Covid-19 pandemic, vide Circular dated 07.04.2021 it has been notified that unutilised ECB proceeds drawn down on or before 01.03.2020 can be parked in term deposits with AD Category-I banks in India prospectively for an additional period up to 01.03.2022.

Open Notification No. RBI/2021-22/16 dtd. 07.04.2021

DGFT Updates
Foreign Trade Policy 2015-20 extended upto 30.09.2021

DGFT vide Notification dated 31.03.2021, has notified that the existing Foreign Trade Policy which was valid only upto 31.03.2021 shall be extended upto 30.09.2021, i.e. FTP 2015-20 shall be in effect upto 30.09.2021.

Open Notification No.60/2015-2020 dtd. 31.03.2021
Annual updation of IEC through online system – no filing fee applicable

All Importer-Exporter Code (IEC) holders are required to update and validate their details annually irrespective of whether there are any changes or not. The same is required to be completed in the April – June quarter. DGFT has also clarified vide Public Notice dated 31.03.2021 that no fee shall be charged for the same.

Failure to complete the verification shall lead to the IEC being marked de-activated disabling all import and export activities.

Open Public Notice No.49/2015-2020 dtd. 31.03.2021
Online filing of request for closure of advance authorisation

DGFT is in the process of revamping it’s IT systems. As part of the IT revamp, paperless online filing system has been introduced which has been extended to filing of request for closure of advance authorisation including its issuance, amendment and closure w.e.f. 30.03.2021.

A trade notice to this effect has been issued containing the instructions for online filing of application for closure of advance authorisation.

Open Trade Notice No.49/2021-21 dtd. 30.03.2021
IT Updates
Income tax (9th Amendment) Rules, 2021

Vide Income tax (9th Amendment) Rules, 2021 dated 05.04.2021, CBDT has notified certain amendments in the following rules:

  • In Rule 10DA which deals with Maintenance and furnishing of information and document by certain persons under section 92D (Maintenance, keeping and furnishing of information and document by certain persons entering into international transactions and certain specified domestic transactions)
  • In Rule 10DB which deals with Furnishing of Report in respect of an International Group & Form No. 3CEAB which is an intimation by a designated constituent entity, resident in India, of an international group, for the purposes of sub-section (4) of section 92D of the Income-tax Act, 1961.
Open Notification No. G.S.R 250(E) dtd. 05.04.2021
GST Updates
Waiver of penalty for non-compliance of QR Code provisions

Vide notification dated 30.03.2021, CBIC has extended the waiver of penalty for non-compliance of QR Code provisions between the period 01.12.2020 – 30.06.2021, subject to the condition that the QR Code provisions are complied with w.e.f. 01.06.2021.

Open Notification No. 06/2021 dtd. 30.03.2021