Hi Folks
My last editorial said service tax is still 12.36% until the date for the new rate of 14% is announced. Little did I know that the very same day (19.06.15) the notification for the increased rate had been issued. Such is the number and frequency of regulatory changes that the news becomes obsolete by the day if not by the hour. The spate of announcements by the various ministries and statutory bodies over the last one month can only be matched by the
incessant rains in Bangalore. While most of the country was like a furnance with temperatures hovering around 45 degrees, Bangalore has been receiving respite showers regularly, making it the proverbial ‘air conditioned city’. Any inconveniences due to the downpour is only because of the unchecked greedy, growth marauding the beautiful city. Nature seems to be saying ‘you reap what you sow’, ‘you have asked for it’, ‘you are getting what you deserve’ !!
Perhaps this is true of the shower of notifications, circulars, amendments, clarifications… … …in light of the various scams and mismanagements, big and small, Government has tightened the rules for doing business in India through various enactments, important one being the Companies Act, 2013. Giving in to representations and lobbying it gave in and enacted the Companies Amendment Act, 2015… … … this was the 1st anniversary gift so to say. In my opinion this is not enough, just tested waters at the surface. Actual issues pinching entrepreneurship and growth have not been addressed yet. In addition to this you will see through this issue that RBI, DGFT, DIPP etc. have made some changes that can be grouped as ‘ease of doing business’. TDS rules have been tightened to ensure that almost all transactions including purchase of consumer durables and jewellery are accounted for and transparent. Getting a digital signature has become more difficult thanks to the numerous earthed and unearthed corporate scams that have necessitated more documents, verification and timelines. The irony is technology is a business facilitator and an enabler but vulnerable as it is and ingenuous as the human mind is, it is creating hurdles too.
Bearing in mind the relevance of the various changes announced, we have summarised the highlights for quick reading. As always they are backed up by the original notifications for reading and reference. Should you wish to refer to any of our older issues of Lexspeak, do visit our Resource Centre at sharadasc.com.

Warm regards

Highlights of the Amendment Act gazetted on 25th May, 2015

  1. Requirement of minimum paid up capital (Rs. 1 Lakh for Private Companies and Rs. 5 Lakh for Public Companies) is done away with. However prescribing such limit is still retained by Central Government.
  2. Having a Common Seal is not mandatory.
  3. Filings related to Commencement of Business omitted. Company can start its operations immediately after incorporation.
  4. Penalty of Rs. 1 Cr to Rs. 10 Cr for violation of acceptance/invitation of deposits.
  5. Dividend to be declared only after setting off of Previous year losses / depreciation not provided from current year profits.
  6. Directors report to disclose any fraud reported by Auditor to the Board / Audit Committee.
  7. Ordinary resolution sufficient for Related Party Transaction.

Accordingly some of the provisions of the Act have become effective from 29th May, 2015 onwards. Corresponding rules will be effective from the date of publication in the official gazette.

The Government is slowly but surely moving towards paperless regulatory environment with a view to reducing processing time, increasing transparency and comfort of doing Business in India.

Integrated Form

“Ease of Doing Business” in India is slowly becoming a reality thanks to technology intervention. Amongst various initiatives taken by the Indian Government, www.eBiz.gov.in is a ebiz portal that acts as a single window agency for obtaining registrations, permits and clearances for 14 services viz., Industrial Licence, Industrial Entrepreneur Memorandum, PAN, TAN along with Company incorporation, IEC, PF, ESIC, FCGPR etc. spanning services of several departments. While the forms are still not available for use on the portal it is a welcome response to industry’s requirement to save start up time, cutting out bureaucratic delays and endless follow ups.

SDF form for exports dropped

In a case of 2 departments working in tandem DGFT has agreed to SDF form being dropped by RBI. Now exporters need not file SDF form. A mere declaration on the Shipping Bill regarding FEMA compliance and realisation and remittance of export receipts will do. In line with this, declaration in terms of Shipping Bill (Electronic Declaration) Regulations, 2011 has also been modified.

Online Updation of Importer / Exporter profile in DGFT website

Government’s endeavour and commitment to move towards paperless processing has led to a facility that has been provided to importer/ exporter to upload their basic details and documents by logging into the DGFT website (www.dgft.gov.in) within 15th June, 2015. This shall avoid submission of documents each time he/she/it applies for authorisations/scrips under different schemes of the FTP.

Applications for issue of EPCG Authorisations is now online

Beta version of Form ANF-5A is released and now it is possible to upload the supporting documents by affixing Digital signature along with the online Form for grant of EPCG Authorisations. This will avoid submission of hard copies. W.e.f. 1st July, 2015 submission of physical application and supporting documents will be totally dispensed with.
  • In line with the announcement made in the Union Budget 15-16, Service Tax has been increased from 12.36% to 14% which subsumes education cess. However Swach Bharath Cess is not yet notified
  • Rates for various services w.e.f. 01.06.2015:
  • Normal – 14% ; GTA Transports – 4.2%; Builder-Residential – 3.5%; Builder-Commercial – 4.2%; Civil Contractor with Material – 5.6%; Erection/electrical with Material – 5.6%; Repair Maintenance. of Building or goods – 9.8%; Lodging – 8.4%; Restaurant – 5.6%; Catering – 8.4%; Hall with Catering – 9.8%; Vehicle Rent – 5.6%
  • Consequently, rate of service tax payable by a service provider offering both taxable and exempt service and taking CENVAT credit without maintaining separate books of accounts has now gone up from 6% to 7%.
RBI has now permitted recognised non-resident ECB lenders to extend loans in Indian Rupees instead of foreign currency. However the lender must mobilise Indian Rupees through a swap undertaken with an AD Cat-I bank in India, on certain terms and conditions. This is possible only as long as there is an underlying ECB.
New Guidelines issued by Controller of Certifying Authority for issuing Class 2 DSC which shall come into force very soon are very stringent and elaborate in procedures and documentation.
New simplified Income Tax return Form ITR 2A proposed which can be filed by Individual / HUF who does not have Capital Gains, Income from Business/Profession or Foreign Asset / Foreign Income. Software for these forms are likely to be available by 3rd week of June, 2015 and accordingly time limit for filing returns is extended upto 31st August, 2015.
  • Interest on Recurring Deposit (RD) above Rs. 10,000/- p.a. shall be liable for TDS. 20% TDS if PAN is not quoted.
  • All transactions in real estate including agricultural land to be made through account payee cheque or RTGS if it is of Rs. 20000/- or more. Farmer with only agricultural income exempt from this. In case of violation, penalty will be imposed on seller equal to cash component.
  • PAN no. mandatory for purchase of consumer durables and jewellery more than Rs. 1 Lakh.
  • W.e.f. 1st June, 2015 IT department can levy late fee of Rs. 200 per day in case of delayed filing of TDS return.
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.

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