Hi Folks “If you don’t stand for something, you will fall for anything”, said someone. Today the so-called world leaders stand for something so low and abysmal that they cant fall any further. They already are in the pits and trying to drag the world citizenry into a morass. It is no brainer to guess who this Axis of Evil is. The question is from where is the next Mahatma going to rise from ? will it be a single individual ? a group ? a country ? a community ? the youth ? women ? people with a purpose but with no specific identity ? masses on social media ? It is interesting to watch what unfolds during these turbulent times. Paying tribute to Mahatma Gandhi on his 69th death anniversary, observed as Martyr’s Day. Let me also take this opportunity to share with you that 30th January was also my dear uncle Late Y N Rama Rao’s 100th birthday. I had written 2-3 times about him in Lexspeak over the years. He is not amongst us now but his memories, his chatty conversations, his infectious laughter and genuine love for all of us during his 98 year long innings, still remain fresh. No wonder so many people turned up for his centenary celebrations yesterday. People like him are true people leaders ! As all of us wait for the Big Impact Budget slated for tomorrow, take a quick look at what important regulatory announcements were made during the last couple of weeks. Should you wish to refer to any of our older issues of LexSpeak, do visit our Resource Centre at sharadasc.com.Warm regards As part of the Ministry’s efforts towards promoting greater Ease of Doing Business to stakeholders, new version of Form SPICe (INC-32) will enable the Companies PAN and TAN application w.ef. 30th January, 2017. For details, look for the pop up message on www.mca.gov.in. W.e.f 4th January, 2017, certain provisions of the Companies Act, 2013 shall not apply or shall apply with such exceptions, modifications, and adaptations as specified, to a Private Company which is licensed to operate by the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI) or the Insurance Regulatory and Development Authority of India from the International Financial Services Centre located in an approved multi services Special Economic Zone set up under Special Economic Zones, Act, 2005. They will henceforth be referred to as Specified IFSC Private Company. Specified IFSC Private Company enjoys certain flexibilities – Registered office to remain within the SEZ, CSR not applicable for 5 years, 2 Board meetings in a year, certain provisions of Private placement not applicable and many more. The FATF (Financial Action Task Force) has identified jurisdictions in the world with strategic deficiencies in their frameworks to combat money laundering and the financing of terrorism and proliferation. As a member of FATF, India has barred direct investment by an Indian Party in an overseas entity set up or acquired abroad directly as JV/WOS or indirectly as step down subsidiary located in countries identified as ‘non co-operative countries and territories’ by FATF or as notified by RBI. Vide Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Second Amendment) Regulations, 2016, effective from 2nd January, 2017, investments in high-risk countries such as North Korea, Iran, Afghanistan, Laos, Uganda etc. are prohibited. A startup recognized as such by DIPP can now issue convertible notes (Debt which is repayable or convertible into equity shares within 5 years) to non-residents for an amount of Rs. 25 lacs or more in a single tranche. Such amount must be remitted only through banking channels, from NRE / FCNR (B) / Escrow Account of the remitter and reporting done to RBI as prescribed. Such convertible notes may be transferred from a resident to a non-resident and vice-versa subject to RBIs’ pricing guidelines. Government approval will be required if the investment does not fall in the sector which is under automatic route. It may be noted that a few months back Companies Act, 2013 was modified to permit issue of Convertible Notes. Entrepreneurs to recall that only startups which are recognized as STARTUPS BY DIPP (as per Notification dtd. 17th February, 2016) can issue convertible notes. Limit on withdrawals from ATMs enhanced from Rs. 4,500 to Rs.10,000 per day per card, operative within the existing overall weekly limit. Similarly, limit on withdrawal from current accounts has been enhanced from Rs. 50,000 to Rs. 1,00,000 per week and it also extends to overdraft and cash credit accounts. Double Taxation Avoidance Agreement and Protocol for Prevention of Fiscal Evasion between India and Cyprus was signed on 18th November, 2016. However, the date of enforcement of the Agreement was 14th December, 2016. The Central Government has now notified that the said Agreement and Protocol shall be effective in the Union of India w.ef. 1st April, 2017.

An amnesty scheme has been floated in relation to EPF. The Scheme comes into force on 1st January, 2017 and shall cease to operate on 31st March, 2017. Important features of the Scheme are –    Employers who have not enrolled employees and deposited PF for period beginning from 01.04.2009 to 31.12.2016 can avail the scheme. –    Declaration in respect of membership of left out employees to be furnished in prescribed form. –    Within 15 days of furnishing declaration, employers’ contribution to be remitted as per the Scheme along with interest as per Section 7Q of the Act and damages and the employees’ contribution shall be deducted from the employees’ wages and remitted. –    If Employees’ contribution has not been deducted from their wages, such amount need not be remitted by the Employer under this Scheme. –    A return stating that all compliance has been done, to be submitted by employer to the Regional Provident Fund Commissioner. –    If the employer complies, then payment of nominal damages of Re. 1/year is sufficient. Previously Services provided under Entry 29(g) by a business facilitator or a business correspondent to a banking company with respect to basic savings bank deposit account covered under Pradhan Mantri Jan Dhan Yojana in the banking company’s rural area branch, by way of account opening, cash deposits, cash withdrawals, obtaining e-life certificate, Aadhar seeding were exempted. Now, the scope has been widened to provide services to a banking company with respect to accounts in its rural area branch. Earlier, under Entry 34 of the Mega Exemption, services provided from a non taxable territory to a Government Company, local authority, a Government Authority or an individual for any purpose other than commerce, industry or any other business or profession was exempt. Subsequently, a proviso was inserted to state that this exemption will no longer be available in respect of Online Information and Data Access or Retrieval Services (OIDAR) with effect from 1.12.2016. This proviso has now been further amended to state that the exemption would not be available even to services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India. Earlier, the term ‘Aggregator’ was defined as a person who ‘owns and manages a web based software application, and by means of the application and a communication device, enables a potential customer to connect with persons providing service of a particular kind under the brand name or trade name of the aggregator’. A proviso has now been inserted to state that aggregator shall not include such person who enables a potential customer to connect with persons providing services by way of renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes if such person providing the services has a service tax registration number and the entire consideration is received by the service provider directly. The abatement for all classes of tour operators has been reduced to 40%. For availing the abatement, the Cenvat credit of inputs and capital goods used for providing the taxable service will not be allowed. Section 2(1)(d) of the Service Tax Rules enumerates the persons liable to pay service tax. W.e.f. 22nd January, 2017, service tax will be paid by the person in charge of the vessel, wherein services are provided or agreed to be provided by a person in a non-taxable territory to a person in a non-taxable territory, by way of transportation of goods by vessel from a place outside India up to the customs station of clearance in India.

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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