Volume #16 | IssueNo. 302/2024 | July 2024
Unexpected Bounties!
If you thought I am referring to the ‘unexpected bounties’ (if any) from the Union Budget 24-25, sorry. No. Life has more to it than a country’s budget with its hits and misses. That is, if we care to see. If we care to pause and observe. If we care to reflect. If we care to experience and enjoy. And of course if we care to share with others, the unexpected bounties it has to offer !!
Receiving the expected is happiness. However, receiving the unexpected is absolute bliss. The joy on our housekeeping team member, Satya’s face on receiving a dress material from me from my recent Jaipur trip (bought for the entire team) cannot be described in words. Her eyes lit up, she was bemused and asked ‘Madam, is it for me ? Is it really for me ? Is it free ? or shall I pay something ?’ She had expected it the least. She was grateful, joyful and overwhelmed – all at once.
Satya’s expressions took me down the memory lane. The excitement I experienced, when occasionally, instead of the customary green wrapper Nutrine chocolate, it was the prized, 25 paise Eclairs chocolate that we got from my mother on the monthly salary day. No amount of bigger bars or artisan chocolates that I can afford to have now, can delight me more. Back then, I would eagerly look forward to my mother’s rare ‘unexpected largesse’ !
As kids, come rainy season, we would wait eagerly for the announcement on AIR (there was only one radio station, mind you) or in the newspaper for government to declare a holiday for all schools. Expected happy news. If this didn’t happen, we would grudgingly walk to the school and at times be thrilled. Why ? Becos we would be shooed away by the ayahs and security saying ‘No school today’. Management would be busy fixing the leaky roofs and wet benches, thanks to 2-3 days of heavy downpour. (I still love my school which had modest infrastructure but some amazing teachers). Oh ! the joy of not having to attend classes unexpectedly is something to be experienced. I still savour the moments – of getting wet in the rain, carefreely walking back with friends, eating out of the school tiffin box at home, not having to worry about homework for the day. Small things in life but the unexpected break would give inexplicable joy for a young me. How many of you have experienced such moments ?
While there are multiple such anecdotes, let me cut to the present and most recent one which was absolutely blissful and came literally out of the blue. After completing a gruelling two-year kitchen management programme with the famed Oberoi group with a gold medal, my son started out as a Sous-chef at the award winning luxury resort, The Rajvilas, Jaipur. While we were happy with his achievement, we were overjoyed when the Hotel offered us, an all-paid 3 nights-4 days stay during his orientation. This was such a thoughtful gesture by the General Manager to throw open the hospitality of the property to us as parents. He recalled the joy on his father’s face when he had a similar experience years ago, enjoying the hospitality of the Oberoi property where he was posted, albeit after much goading. I understand he realised what it meant for an employee’s family to be delighted unexpectedly with a surprise offer to experience the ultimate in hospitality.
Oh boy, did it ? Of course it did surpass our expectations and gave us boundless joy – the palace like structure on a 33 acre, impeccably maintained, green expanse dotted with plenty of beautiful peacocks, soothing fountains and waterbodies, a spacious luxury tent that had a gold-thread embroidered ceiling, rooms with gold and natural vegetable-dyed frescos that looked fresh even after a quarter-century, extremely, extremely courteous staff, exquisite dining experience, traditional, performing folk-artists, gentle music, ambience befitting the royals (had to be in a heritage city like Jaipur), a thoughtful house-keeping boy who used his allocated budget (yes my son says each of them have budgets to delight a guest) to give us amazing little knick-knacks to take back and above all the genuine warmth and care we experienced from the entire team. The stay was out of the ordinary. Mindblowing and special because it was an Unexpected Bounty in the true sense !!
Grateful to Life for all these small, small and big, big startling things which turn into bounties if they come by when least expected. As a nation, hopefully we can expect the unexpected from our Olympians as well. Wishing them the very best to dazzle on the world stage !
Union Budget 24-25 is already a week old. Enough and more has been said about it by all and sundry. It has been Bountiful for some (angel tax removal, jewellery sector, salaried class, MSME) and Bountiless (removal of tax indexation) for others. It has been analysed, torn apart, dissected, applauded and criticised by various stakeholders, depending on the lens each one looks from. This 302nd issue carries just the highlights of this much written about annual exercise, alongside news from other regulators like MCA, SEBI, RBI, DGFT etc.
For any previous issues of Samhita and the readers’ feedback, please visit sharadasc.com
IT UPDATE
Post Election Budget Highlights
Finance Minister Nirmala Sitharaman introduced the Finance Bill 2024 and the Final Budget for the fiscal year 2024-25 in the Lok Sabha on July 23, 2024. The budget details the government’s financial strategy, revenue streams and proposed spending keeping in mind the fiscal prudence for the financial year. With focus of the Budget on Agriculture, Human Resource Development and Energy & Infrastructure, following are some of the major announcements made:
I. Support to MSMEs
- Rs.100 Crore credit guarantee scheme for MSMEs in Manufacturing sector
- Limit of Mudra Loans enhanced from 10 Lakhs to 20 Lakhs
II. Changes to Personal Taxation
- Standard deduction for salaried employees increased from ₹50,000 to ₹75,000.
- Deduction on family pension for pensioners enhanced from ₹15,000/- to ₹25,000/-
- The deduction with respect to the National Pension Scheme is proposed to be increased to 14% of Basic Pay in cases of non-government employees
- The new tax regime, the revised tax slabs is given below :
III. Changes to Capital Gain
Simplified table if given below for the changes
STCG = Short Term Capital Gain
LTCG = Long Term Capital Gain
To read other highlights of the Budget, refer to the link below
MCA Updates
Pursuant to the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023 effective October 27, 2023, every Public Company that has issued share warrants before the commencement of the Companies Act, 2013 and not converted such warrants into shares must inform the ROC in Form PAS-7 within 3 months from effective date.
MCA vide General Circular dated July 06, 2024 has informed that web-Form PAS-7 is now deployed on MCA V3 portal. Accordingly, filing of the form has been allowed without additional fees up to August 8, 2024.
MCA vide General Circular dated July 15, 2024, has notified an amendment to the Companies (Significant Beneficial Owners) Rules, 2018. Through the amendment, a new version of Form BEN-2 has been notified for filing in MCA V3 Portal. Key changes in the newly introduced Form BEN-2 are as follows:
- Allows users to fill the form for change in the existing SBO and particulars of existing SBO
- Allows users to fill a form for changes in the existing holding reporting company
- Forgot SBO ID option has been added
MCA vide notification dated July 15, 2024 has amended the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019. A proviso has been added in Para 3 of the Order to state that only specified companies with payments pending for more than 45 days to micro or small enterprises, from the date of acceptance or deemed acceptance of goods/services under Section 9 of the MSME Act, 2006 shall submit MSME Form-1. Further the following data points have been added in the form released in MCA V3:
- Details of Amount paid within 45 days
- Details of Amount paid after 45 days
- Amount Outstanding for 45 days or less
- Amount Outstanding for more than 45 days
In our view, the form should be filed by those companies which have payments to MSMEs pending for more than 45 days. However, they will be liable to mention details of even those dues to MSMEs which have been cleared within 45 days, which are outstanding for less than 45 days and more than 45 days in accordance with the data points added above.
Vide notification dated July 15, 2024 the MCA has notified a new version of Form MGT-6 – Return to the Registrar in respect of declaration under Section 89 received by the Company. In the new version released in MCA -V3, it is mandatory to enter the details of PAN/Passport for registered owner and beneficial owner. Further, a PAN validation feature has been added.
This is likely to throw up practical difficulties where the beneficial owner is a corporate entity incorporated outside India.
Through its notification dated July 16, 2024, the MCA has amended Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2024, pertaining to Directors KYC w.e.f August 01, 2024. The words “on or before 30th September of the Financial Year” have been added to the third proviso providing clarity on timelines applicable. Additionally, the amendment allows individuals to update their personal mobile number or email address at any time during the financial year by submitting e-form DIR-3 KYC with a fee of Rs.500/-.
Earlier, Directors had to wait for the DIR-3 KYC window to be open (i.e. April 01 to September 30) for effecting any change in their email id or mobile number linked to their DIN.
MCA vide notifications dated July 16, 2024 has specified that the words “Nidhi Limited” cannot be used at the time of incorporation of a Nidhi Company. The usage will be subject to Central Government’s notification relating to declaration of Nidhi Companies in its Official Gazette as per the provisions of Section 406 of the Companies Act, 2013. The Companies (Incorporation) Rules, 2014 and Nidhi Rules, 2014 have been amended accordingly.
Open MCA notification dated July 16, 2024- Incorporation Rules
Open MCA notification dated July 16, 2024- Nidhi Rules
On account of migration of eforms IEPF-1, IEPF-1A, IEPF-2, IEPF-4 to MCA V3 portal, the MCA vide circular dated July 16, 2024 has waived the additional fee on said forms and e-verification of claims filed in e-form IEPF-5 till August 16, 2024.
RBI Update
International Financial Service Centre (IFSC) has been in the limelight in recent years for being an attractive jurisdiction for companies and individuals to explore. Earlier MCA had recognised it as permissible jurisdiction for overseas listing. RBI and SEBI have also been actively notifying on this front; recent one being relaxation of ODI norms pertaining to IFSC by RBI. In addition to this, RBI vide circular dated July 10, 2024 has permitted remittances in IFSC under Liberalised Remittance Scheme (LRS) route i.e. by resident individuals. This move of RBI widens the array of options for overseas investment available to resident investors.
As per extant regulations, remittances under LRS to IFSC is allowed for making investments in IFSCs in securities except those issued by entities/ companies resident in India (outside IFSC); and payment of fees for education to foreign universities or foreign institutions in IFSCs for pursuing certain specified courses.
Pursuant to the aforesaid circular, remittances under LRS to IFSCs will be permitted for the following:
- Availing financial services or financial products as per the International Financial Services Centres Authority Act, 2019 within IFSC
- All current or capital account transactions, in any other foreign jurisdiction (other than IFSCs) through a Foreign Currency Account held in IFSC
Resident individuals have been permitted to open FCA in IFSCs for the aforesaid purposes.
SEBI Updates
Credit Rating Agencies (CRAs) and ESG Rating Providers (ERPs) are permitted to undertake rating of financial instruments under the respective guidelines of the financial sector regulators/authorities. SEBI vide circulars dated July 19, 2024 has enabled CRAs and ERPs to undertake rating activities in the GIFT-IFSC under the IFSCA. Further ratings undertaken by CRAs and ERPs as per the guidelines of IFSCA shall be under the purview of IFSCA. Accordingly, any issues, complaints, enforcement actions etc in respect of the services provided by CRAs or ERPs shall be dealt by IFSCA.
Open SEBI Circular dated July 19, 2024 – Credit Rating by CRAs in IFSC
Open SEBI Circular dated July 19, 2024 – Credit Rating by ERPs in IFSC
As per Master Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper dated May 22, 2024, the denomination of non-convertible securities shall be Rs. 1,00,000/-. SEBI vide circular dated July 03, 2024 has amended this requirement to permit issuance of debt securities or non-convertible redeemable preference shares on private placement basis at a Face Value of Rs. 10,000 subject to the following conditions:
- The issuer shall appoint at least one Merchant Banker
- Such debt security or non-convertible redeemable preference shares shall be interest/dividend bearing security paying coupon/ dividend at regular intervals with a fixed maturity without any structured obligations
SEBI in June, 2024 had released a consultation paper with its recommendations on ICDR and LODR for ensuring Ease of Doing Business. For highlights, refer 301st Issue of Samhita. One such recommendation under LODR, was with respect to streamlining publication of financial statements in newspapers via Quick Response Code (QR Code). SEBI vide notification dated July 08, 2024 has amended Regulation 52(8) of SEBI LODR to enable this option for entities which have listed non-convertible securities. It allows such entities to provide a window advertisement in the newspapers that refers to a QR Code which leads to links on the website of the entity as well as stock exchanges where the financial results can be viewed. However, this is subject to prior approval of debenture trustee.
It may be noted that this option of publishing financial statements through QR Code has not been made available for entities which have listed their equity securities or both equity securities and non-convertible securities.
Pursuant to Regulation 38A of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 (SECC Regulations), a Recognised Stock Exchange may, with the approval of SEBI, carry out the activities of administration and supervision of specified intermediaries on such terms and conditions as may be specified. SEBI vide circular dated May 2, 2024 had notified the framework for administration and supervision of Research Analysts (RAs) and Investment Advisers (IAs).
Vide circular dated July 12, 2024 (the Circular), in accordance with the SECC Regulations, SEBI has recognised and notified BSE Limited as a Research Analyst Administration and Supervisory Body (RAASB) and Investment Adviser Administration and Supervisory Body (IAASB). The Circular also highlights the following:
- BSE shall formulate bye-laws with respect to its activities as RAASB and IAASB and shall issue circulars, SOPs, FAQs etc.
- SEBI has notified a new fee structure for IAs and RAs which has come into effect from July 25, 2024. For applications made prior to the said date, the fee shall be payable to SEBI.
- After July 25, 2024, the fees payable by RAs/IAs shall be specified by the RAASB / IAASB, respectively, which shall not exceed the total fees payable to SEBI prior to the new fee structure.
DGFT Updates
DGFT vide Trade Notice dated July 23, 2024 has clarified that verification of authorisation of licenses, Authorisations, Scrips, Certificates, Instruments etc. issued by DGFT may be done using UDIN embossed on the electronically issued documents. No separate verification will be undertaken by DGFT.
As per Para 4.49(b) of the Handbook of Procedures 2023, if the Export Obligation is fulfilled in quantity but there is shortfall in value, no penalty shall be imposed if Authorisation holder has achieved minimum Value Addition prescribed. However, if Value Addition falls below the minimum Value Addition prescribed, Authorisation holder shall be required to deposit an amount equal to 3% of shortfall in FOB value in Indian Rupee, online through DGFT website.
Pursuant to DGFT’s Public Notice dated July 16, 2024 the composition fee payable has been reduced from 3% to 1%, as an ease of doing business initiative.
DGFT has issued public notice on July 25, 2024 notifying amendments to hand book of procedures in relation to EPCG Scheme with the intention to reduce compliance and improve ease of doing business.
IT Updates
E- Commerce Operators are required to collect Tax Collected at Source (TCS) on net taxable supplies under Section 52(1) of the CGST Act. As per CBIC notification dated July 10, 2024, the TCS rate has been reduced from present 1% (0.5% CGST + 0.5% SGST/ UTGST, or 1% IGST) to 0.5 % (0.25% CGST + 0.25% SGST/UTGST, or 0.5% IGST).
Vide CBIC notification dated July 10, 2024, the Government has exempted the registered person whose aggregate turnover in the financial year 2023-24 is up to two crore rupees, from filing annual return for the said financial year.
GST Updates
Vide notification dated July 10, 2024 the following rules of the Central Goods and Services Tax Rules, 2017 have been amended:
- Rule 21 & 36 – introducing form GSTR-1A
- Rule 28 – sub-rule (2) relating to provision of Corporate Guarantee
- Rule 39 – sub-rule (1) relating to Input Service Distributor (ISD)
- Rule 62 – sub-rule (1) Due date for filing of return in FORM GSTR-4 for Composition Taxpayers has been changed from 30 April to 30 June, from Financial Year 2024-25 onwards.
CBIC on July 11, 2024 has notified guidelines for recovery of amount outstanding post disposal of First Appeal considering GST Appellate Tribunal is not yet constituted. The Circular has provided guidelines that in such cases the Taxpayer can pay the pre-deposit amount as per regulations in the electronic ledger and the recovery proceedings shall be stayed until the appeal is disposed.
Much needed clarifications on Corporate Guarantee Service has been issued to ensure uniform implementation and reducing litigation. The CBIC circular dated July 11, 2024 addresses issues like valuation, ITC availability, export of corporate guarantee and such other matters.
August 2024
Quote of the day
"Do not get upset with people or situations, both are powerless without your reaction."
-Buddha
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.