Volume #15 | IssueNo. 290/2023 | July 2023
Truth be told!
Data is the new oil. Data is power. Both, organisations as well as Governments rely heavily on data for decisions. Therefore, the source of data, its compilation, agency responsible, process used, its analysis and presentation, purpose – all become crucial to lend credibility to the exercise.
Sample this data from the MCA portal:
18,61,272 forms have been filed on V3 portal since 1st April 2023.
Portal performance and pdf generation time has been significantly improved.
16,665 LLPs have been incorporated from 1st April to 19th July 2023 which is higher than the previous year count of 8,764 in the same period.
11,865 company incorporation forms have been filed from 1st to 19th July 2023 which is higher than the previous year count of 10,208 forms in the same period.
This kind of system generated data does not lie. It is not a survey-based statistic. MCA (Ministry of Corporate Affairs) has even taken the trouble of giving previous year’s figures for comparison. Well, does this speak the truth? the complete truth? No, if you go by the daily frustrating experience, we professionals are subjected to by the unreliable portal since January 2023. While the HITS are highlighted, what about the MISSES which may be in larger number, sheerly because of the poor portal performance? Almost every incorporation is getting delayed by 1 or 2 months, with founders having to pay additional fee for extension of time – just because the third party software MCA has deployed, chooses to play truant with us. Professionals who are meant to spend time on understanding and interpreting the laws, advising corporates are reduced to filing clerks, since most often, a single form takes close to 2 to 3 days to file. It is nothing short of a nightmare that is causing deep stress and anguish. No exaggeration here, since I see my team struggling every single day against new technical errors. They exercise the highest amount of patience and diligence but many a times, throw their hands in despair, after several failed attempts to file even at late night. Agreed that MCA with the help of our alma mater ICSI is trying to resolve tickets for us but IT IS JUST NOT ENOUGH! I sincerely wish MCA does some deep diving into tickets raised and correctly resolved (yes sometimes they are just closed with no actual solution) and put out data. Also hold the service provider ACCOUNTABLE to set the system right.
Trust is built with data but data that is the ABSOLUTE TRUTH and not a MASKED TRUTH. This is akin to the famous story in the Mahabharata war of how Guru Drona was made to lay down his weapons. Yudhishtra (who always speaks the truth) announces “Ashwathama, hatha kunjara”. The truth was that Ashwathama, the elephant was killed, but by uttering the word ‘kunjara’ softly, Drona was made to believe that his son Ashwathama was killed. Truth was spoken but only the convenient truth and not the actual truth!
While I am too small to offer any advice in the ongoing MCA V3 portal saga, following can be considered :
- Acknowledge and accept the problems and flaws in the system.
- Try earnestly to solve in the true sense. Mere tickets and escalations that claim resolution do not help.
- Hold the service provider accountable. They must designate specific persons for resolution.
- If V3 has to be suspended temporarily, so be it. Fix it right, once and for all.
- Declare a moratorium on additional fee and penalty for next 90 days so that unjustified costs are not levied on the users. Else it is a case of unjust enrichment of the regulator.
- Borrow lessons from IT platform implementation which faced similar glitches earlier.
It is time, credibility is reclaimed through honest data. Trust is rebuilt through genuine action. We have all benefited over the years from the MCA’s switch to technology and will continue to support as professionals.
I will leave it to you to decide whether the ‘hero story’ in this 290th issue is of the V3 portal or the PMLA article. Do scroll down to read more on the PMLA requirements as also the other regulatory updates released by various ministries during July, 2023. For any previous issues of Samhita and the readers’ feedback, please visit https://sharadasc.com/samhita/
Ministry urges practising professionals to comply with PMLA!
In the 288th issue of our newsletter, we had carried updates on notifications under Prevention of Money Laundering Act (“PMLA”) notified on May 03, 2023 and May 09, 2023. Vide the said notifications, it was stated that practising professionals such as CA, CS and CWA carrying certain prescribed transactions on behalf of their clients would be considered as Reporting Entity under PMLA. Accordingly necessary compliance under PMLA such as registration of Reporting Entity on FINNET 2.0 portal (FIU-India), appointment of Principal Officer and Designated Director, customer due diligence, internal mechanism to detect and report suspicious transactions etc are to be ensured.
The Financial Intelligence Unit -India (“FIU-India”), the national agency for monitoring money laundering and financing terrorism under the Ministry of Finance released a notification on July 17, 2023, requiring such Reporting Entities to comply with the provisions of PMLA. Further, on July 19, 2023, the Institute of Company Secretaries of India (“ICSI”) has informed its members about the AML & CFT Guidelines to guide practising professionals in complying with the provisions of PMLA.
Click on the article below to read important aspects of the FIU notification and its guidelines.
SEBI has been issuing various circulars under the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (“LODR”). On July 11, 2023, SEBI has released a Master Circular to provide access to all such circulars issued till June 30, 2023 in one place.
The Appendix to Master Circular provides a list of circulars that stand rescinded. However, it is also clarified that any prior action done or taken based on such rescinded circulars, any right acquired or liability incurred under such rescinded circular will be deemed to be as per this Master Circular and any reference to repealed circular in any other circular or guidelines issued by SEBI shall be construed as reference to the corresponding provisions in this Master Circular.
SEBI has issued a circular on July 13, 2023 regarding compliance of disclosures under Regulation 30 and 30A of the SEBI LODR. The said circular is effective from July 15, 2023. The circular consists of 4 Annexures as follows:
- Annexure I- details to be provided while disclosing events specified in Part A of Schedule III which deals with disclosure of events that are deemed to be material. Annexure 18 to Master Circular on SEBI LODR dated July 11, 2023 stands partially modified to this extent.
- Annexure II- timelines for disclosing events specified in Part A of Schedule III and Regulation 30A.
- Annexure III- guidance on when an event/information can be said to have occurred. Annexure 19 to the Master Circular on SEBI LODR dated July 11, 2023 stands partially modified to this extent.
- Annexure IV- guidance on the criteria for determination of materiality of events/information.
SEBI has released updated Master Circular on the SEBI (Issue and Listing of Non-Convertible Securities) (“ILNCS”) Regulations, 2021 on July 07, 2023. The Master Circular covers various procedural and operational circulars relating to issue of Non-Convertible Securities, Securitized Debt Instruments & Security Receipts and Municipal Debt Securities. Annexure to the Master Circular specifies the list of circulars that stand rescinded. However, any action done or taken based on rescinded circulars or any application made to SEBI under the rescinded circular will be deemed to have been made as per this Master Circular.
SEBI vide circular dated July 12, 2023 has notified BRSR Core regulatory framework for assurance and ESG disclosures for value chain with respect to the Business Responsibility and Sustainability Report (“BRSR”). Highlights of the circular are as follows:
- The BRSR Core consisting of 9 ESG attributes have been updated with few new KPIs. Further intensity ratios based on revenue adjusted for Purchasing Power Parity have been included. The format of BRSR Core for reasonable assurance after incorporating the said changes has been provided in Annexure I to the circular.
- The BRSR format after incorporating new KPIs of BRSR Core is provided in Annexure II. Annexure 16 to Master Circular on SEBI LODR stands partially modified to this extent.
- Phase wise applicability for listed entities to undertake reasonable assurance of BRSR Core has been provided in the circular.
- ESG Disclosure for value chain shall be made by listed entities as per BRSR Core. Value chain includes the top upstream and downstream partners of a listed entity, cumulatively comprising 75% of its purchases / sales (by value) respectively. The said disclosure is applicable to top 250 listed entities on a comply-or-explain basis from FY 2024-25 and limited assurance of the same shall be applicable on a comply -or-explain basis from FY 2025-26.
- Assurance provider – Board of listed entity to ensure assurance provider has necessary expertise for undertaking reasonable assurance. There shall be no conflict of interest with such assurance provider.
Comments were received regarding practical difficulties that may arise from the removal of the threshold for Liberalised Remittance Scheme (“LRS”) payments other than for education and medical treatment. During meetings with the RBl, Banks and Card networks, some financial institutions have desired more time to modify their current IT systems to address issues arising from the implementation of the provision of TCS on credit card transactions. Accordingly, the CBDT has released a circular on June 30, 2023 for removing difficulty in implementation of changes relating to TCS on LRS and on purchase of overseas tour program package.
CBDT Circular No.14/2019 dated 03.07.2019 was issued to clarify the taxability of income earned by a non-resident investor from outside India (off-shore investment) routed through investment fund. This Circular was made applicable to Category I or Category II Alternative Investment Funds (AIFs). By Finance Act 2023, the definition of ‘investment fund’ under the Income-tax Act, 1961 was amended to include reference to International Financial Services Centres Authority. Accordingly, a clarificatory circular has been issued on July 12, 2023.
Vide notification dated July 17, 2023, CBDT has introduced rules, specifically addressing proposals related to International Financial Services Centre (IFSC). The amendment primarily focuses on provisions related to non-resident income, offshore banking units, alternative investment funds, and reporting requirements. It provides exemptions for income accrued from non-deliverable forward contracts or offshore derivative instruments, subject to specified conditions.
The Ministry of Finance has issued a notification on July 07, 2023 to include GST Network(“GSTN”) under the provisions of the Prevention of Money-laundering Act, 2002. This inclusion allows the Enforcement Directorate to share relevant information or material with GSTN if they have reasons to believe that there has been a violation of GST provisions.
In a move to provide clarity on treatment of certain matters under the GST, the CBIC has issued circulars on the following matters:
- ITC Availability for Warranty Replacement
- TCS Liability for Multiple E-commerce Operators
- Taxability of Shares in Subsidiary Company
- GST Refund Issues
- Applicability of E-invoices for supplies to Govt. Departments
- Taxability of Services between Head Office and Branch Office in different states
The CBIC has provided relief to Tax payers by extending last date to August 31, 2023 for the following matters :
- GSTR-4 Non-filers to rectify their status
- To submit applications to revoke GST registration cancellation.
- GSTR-9 Annual Return Non filers to rectify their status.
- GSTR-10 Return Non filers to rectify their status.
Quote of the day
"If you don't have trust inside your company, then you can't transfer it to your customers."
- Roger Staubach
Disclaimer: 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. S. C. Sharada & Associates disclaims all liability on action taken without professional advice.