Save-the-internet campaign, IPL ecstasy, our PM’s Vijay Yatra (victory trip) to Germany & Canada, mind-boggling stipends to interns by talent-hungry start-ups, who has gobbled whom in the mad corporate race to numero uno position, the irony of the unseasonal rains killing the crops and clogging our roads – all these and more hogged the limelight this fortnight, amongst other important happenings. Not for me. I am relishing the pleasant nostalgia of a gentleman who was declared NOT OUT at 98, as he crossed over the ‘crease of life’ last week after batting for 98 long years.
I have mixed feelings travelling down the memory lane to the 84th and 100th issue of Lexspeak…..joy to recall that such a person as him ever lived on this earth and sorrow because he called it a day finally. The small, petite body of Mr. Rama Rao, my grand old uncle was an eternal spring of joie de vivre that quenched our thirst for ‘how to lead a fulfilling life?’. His boundless positive energy, quest for knowledge, enthusiasm and zest for life transcended all barriers of age, nationality, geography and interests. It was amazing to see how he adapted himself to the changing times, especially to technology. Everyday he would spend an hour on the email staying connected to his family and friends spread far and wide, apart from reading, talking on the phone and meeting people. ‘Stay connected‘ was his mantra for life ! If only he were a few years younger and fitter he would have taken to facebook and twitter with hordes of likes and followers trending. A true tribute to a gentleman who lived a full life always caring and giving would be to pick a few lessons from his journey and use it as we go along. For professionals challenged by countless issues of theory and practice, ethics and values, rights and wrongs, do’s and dont’s his life is an open book with new insights as we delve into it each time. He was an ‘ODE TO LIFE‘ !!
This 126th issue of Lexspeak has got slightly delayed thanks to the incessant flow of notifications and circulars by the MCA clarifying contentious issues of the 1 year old baby – the Companies Act, 2013. Sad to see that many of the issues that could have been anticipated and provided for in the original Act haven’t been done, resulting in umpteen clarifications. Hope MCA gets wise like RBI and issues Master Circulars which serve as a compendium of all the changes made during a year. Or else keeping track of the frequent changes is a herculean task. Well, reading Lexspeak could help as well as referring to our older issues @ Resource Centre of sharadasc.com. Do not miss out the newly announced Foreign Trade Policy, 2015-2020 and our Definitions section. Same word / phrase has different meanings under different enactments and it pays to know.
The much awaited Foreign Trade Policy (FTP) released for the term 2015-2020, providing a framework for increasing exports of goods and services:
2 new schemes introduced – ‘Merchandise Exports from India Scheme (MEIS)’ for export of goods which is a combination of 5 earlier schemes rolled into one and ‘Services Exports from India Scheme (SEIS)’ for export of notified services which replaces the earlier Served From India Scheme.
Both permit freely transferrable duty scrips that can be used to pay customs duty, excise duty and service tax.
Boost to Make in India – Export obligation for procurement of capital goods from Indian suppliers under EPCG scheme reduced from 90% to 75% & higher rewards under MEIS if domestic content is more.
Digitisation & e–governance – online filing of documents/applications and paperless trade in 24×7 environment.
New initiatives for EOU, STPI & EHTP
E–Commerce exports of certain goods upto Rs. 25,000 permitted through Foreign Post Offices
Corresponding notifications under Customs, Central Excise and Service Tax for exemption against scrips obtained under MEIS and SEIS have also been issued.
The amended Deposit Rules seem to remove certain difficulties faced in compliance and also clarify certain issues relating to Acceptance of Deposits by Companies:
Subscription amount towards shares, stock, bond or debenture received before 1st April, 2014 and remaining unallotted as of 31st March, 2015 must be either refunded or allotted by 1st June, 2015. Or else it will be treated as deposit requiring compliance under Deposit Rules.
Company may accept deposits without deposit insurance contract till 31st March, 2016 or till the availability of a deposit insurance product, whichever is earlier.
Annual credit rating must for deposits.
Revised Form DPT–3 notified.
Managerial remuneration for listed companies
Managerial remuneration approved by the shareholders of listed companies in terms of schedule XIII of the 1956 Act can continue to be paid even after 1st April, 2014 without any Central Government approval under CA 2013.
Loan by Companies u/s 186(7)
MCA has clarified that in cases where the effective yield (effective rate of return) on tax free bonds is greater than the prevailing yield of 1year, 3year, 5year or 10year Government Security closest to the tenor of the loan, there is no violation of Sec. 186 (7) under CA 2013. This section does not permit giving of loan at an interest rate lower than the prevailing yield rate of Government Security.
MCA has notified CARO 2015 which will be applicable for all companies for the FY ended 31st March, 2015. Exceptions – section 8 company, One Person Company, Private Limited Company with Rs.50 lac paid up capital or borrowing not exceeding Rs. 25 lacs or turnover not exceeding Rs. 5 crore. Along with specified areas to be covered in the report, auditors also need to mention the reason for unfavorable or qualified remarks in their report.
Central Government has delegated its power to Regional Directors (RDs) to give order and direction for an immediate inspection of the registers, returns of the company by certain persons, if the same is refused by the company officials.
SEBI has come down heavily on errant listed companies, who have failed to appoint woman director by the stipulated deadline of March, 2015. Penalty for non-compliance ranges from Rs. 50,000 from 1st April, 2015 to Rs.1,42,000/- + Rs.5000/- per day from October 1, 2015 till the date of compliance. This has seen companies scurrying to onboard their woman relatives – is this true governance ?
In a bid to expedite the Tax registration process, CBDT has notified that a Company which is still under registration with the ROC can now apply for Permanent Account Number (PAN) and Tax deduction/collection Account Number (TAN) on the basis of application form for incorporation of company i.e. Form INC-7 without waiting for the incorporation certificate.
Central Board of Direct Taxes (CBDT) has clarified that no capital gain will arise at the time of exercise of the option to roll over by an investor in an open ended fixed maturity plan mutual fund scheme since there is no transfer of asset but mere continuation of the scheme. The capital gain will, however, arise at the time of redemption of the units or opting out of the scheme, as the case may be.
Is 14% the Service Tax rate from 1st April, 2015? No, it is not. It continues to be 12.36% until
Government notifies a specific date. Clarification has been issued in this regard by the Ministry of Finance.
RBI has increased the Foreign Direct Investment (FDI) limit in insurance sector from 26% to 49% – up to 26% under automatic route and from 26% to 49% with Government approval. Ownership and control of the Indian insurance company to remain with resident Indian entities and the foreign investors to obtain license under Insurance Regulatory & Development Authority of India (IRDA).
The Karnataka State Budget presented in March, 2015 has amended the Karnataka VAT Act and Professional Tax Act among others. Highlights are enclosed.
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. Lex Valorem disclaims all liability on action taken without professional advice.