GST Updates

Our Associate CA. R Krishnamurthy has compiled all the amendments, extensions of due dates etc under GST laws for the fortnight. The same has been carried as an article with a 10 minutes read time.

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MCA updates

Registration for Shops & Establishment Act to form Part of Incorporation

MCA vide notification dated 07.06.2021 has notified the Companies (Incorporation) Fourth Amendment Rules, 2021. Pursuant to the Rules, the Form AGILE-PRO shall be substituted by Form AGILE-PRO-S, which also includes Shops and Establishment Registration. Similar to GST the option to register under Shops and Establishment through the AGILE form seems to be optional with the yes / no radio buttons made available. It is seen that most professionals are advising GST registration to be taken up after incorporation separately considering the time taken for its approval through the AGILE form. It remains to be seen how quickly the Labour Department in each state responds to the Shops and Establishment registration and how well the system works. It definitely is a good move by the Government towards enabling Ease of Doing Business.

A few observations from our practical experience….

Start up founders are advised to check the apartment association by-laws if they propose to use their residence for the purpose of Registered Office during incorporation, since most by-laws prohibit such usage. In terms of Sec. 12(3)(a) of Companies At, 2013, name board of a company must be displayed outside the registered office failing which a penalty of Rs. 1,000 per day subject to a maximum of Rs. 1,00,000 may be levied on the company and every officer in default. Using a residential address for commercial purpose may also attract Property Tax, water and electricity at commercial rates. Some of these practical challenges have to be borne in mind while offering a residence as registered office and opting for Shops and Establishment registration. This is not to deny the fact that in most states Shops and Establishment registration is mandatory under the respective State law, whether applied through AGILE-PRO-S or subsequent to incorporation.

Open Notification No. G.S.R. 392(E) dtd. 07.06.2021
SEBI Updates

Compliance Report on Corporate Governance

As per the Listing Regulations, 2015, a listed entity is required to submit Compliance Reports on Corporate Governance to the Stocks Exchanges in the format specified by SEBI on quarterly basis, at the end of the FY and within 6 months of close of the FY.

In order to bring about transparency and to strengthen the disclosures around loans/ guarantees/comfort letters/ security provided by the listed entity, directly or indirectly to promoter/ promoter group entities or any other entity controlled by them, in addition to the above a Compliance report on Corporate Governance on half yearly basis is required to be submitted from FY 2021-22. The format for the same forms part of the Circular.

Open Circular No. SEBI/HO/CFD/CMD-2/P/CIR/2021/567 dtd. 31.05.2021

Increased overseas investment limits – Mutual Funds

Vide Circular dated 03.06.2021, SEBI has notified that Mutual Funds can make overseas investments subject to a maximum of US $ 1 billion per Mutual Fund, within the overall industry limit of US $ 7 billion.

Mutual Funds can make investments in overseas Exchange Traded Fund (ETF(s)) subject to a maximum of US $ 300 million per Mutual Fund, within the overall industry limit of US $ 1 billion.

Open Circular No. SEBI/HO/IMD/IMD-II/DOF3/P/CIR/2021/571 dtd. 03.06.2021
DGFT Updates
DFIA online scrips

Vide Trade Notice dated 29.05.2021, DGFT has introduced a new facility on the DGFT website to record information about transfer of DFIA (Duty Free Import Authorization) scrips. The recording of given information would allow the transferee to apply for ARO (Advance Release Order) / Invalidation against the said DFIA Scrip online.

The issuance of paper copies of DFIA scrips (for EDI Ports) shall be discontinued w.e.f. 07.06.2021 and any transfer of DFIA Scrips issued on or after this date shall be mandatorily recorded in the online system.

The trade notice also mentions in detail the steps to be followed for issue and transfer of DFIA Scrips in paperless/digital mode.

Open Trade Notice No. 06/2021-22 dtd. 25.05.2021
RBI Updates
Resolution Framework 2.0 – revision in threshold for MSMEs

RBI vide circular dated 05.05.2021 had introduced the “Resolution Framework 2.0 – Resolution of Covid-19 related stress of MSMEs”. Please refer to Samhita issue #260 for details regarding the Resolution Framework. The eligibility conditions for MSME accounts to be considered for restructuring under the framework, stated that the aggregate exposure, including non-fund based facilities, of all lending institutions to the MSME borrower should not exceed ₹25 crore as on 31.03.2021. Vide Circular dated 04.06.2021, the threshold has been increased from ₹25 crore to ₹50 crores.

Open Circular No. RBI/2021-22/47 dtd. 04.06.2021