Volume #15 | IssueNo. 294/2023 | November 2023
When I started writing in 2009, I had hardly imagined that I will last this long but here I am, sharing my musings through the 294th issue of Samhita. Over the last 14 years, several topics have been covered – triumphs and tribulations of ordinary people, highs and lows of the economy, learnings from personal and professional challenges and many a times just musings about simple, every day happenings around me.
This time I am compelled to focus on the micropreneurs (micro-entrepreneurs) in our society who are unsung and unheralded but uplift the economy in their own, quiet way.
- After watching the spectacular Ganga aarti on the Assi Ghat at Varanasi, in the early hours of a mild wintry November morning, I wanted something warm to drink. I was missing the masala lemon chai that I had had on a boat ride, in my previous visit to the holy city. And lo, there he was – Raj, the chaiwallah with a mobile stove and kettle for hot water along with a plastic bucket that had neatly arranged paper cups, half-cut fresh lemons, his specially ground masala and an elegant tray to serve. It was a fully-equipped mobile tea unit with the most important part pasted on the bucket outside – QR code for payment. It was so convenient and seamless. He was all set, selling hot chai early in the morning at 5.30am. Amazing to see the penetration of technology almost everywhere. Convenience, comfort and ease of use !
- I came across Jai, a Mehendi artist, recently through a reference. Originally from Ayodhya, he has made Bengaluru his home since 13 years. Attached to a small, Fancy Bangle Store (that’s how these small shops that sell cosmetics, bangles, bindis, rakhis, balloons etc. are known !), he has a team of his own and takes up mehendi contracts for weddings and other events. What impressed me most was that I texted him at 8pm and by 9pm he was at home, having answered my messages in Hindi in English script and finding his way through google maps. Jai came fully armed with his album of mehendi designs and client testimonials that he had got on his whatsapp. Patiently he explained the differences between Arabic and Indian mehendi designs (I never knew they were different), what ingredients he would use in the mix, from where he would source in Rajasthan, how many team members would come and what his charges would be. He was fluent in Hindi, and comfortable in Kannada with manageable English. His supreme confidence, pride in his trade and quick customer response struck me the most and I immediately made a booking advance – on his Gpay number. Cash was only an option and he preferred the banking channel. I was hunting for a mehendi artist for days and here was Jai, a micro entrepreneur, coming to my doorstep to offer his services and closing the ‘contract’ so to say ! Rajs and Jais have adopted to technology extensively and are contributing to our economy in their own way.
- I guess I have written about one of my relatives, Shekar (name changed) a few times in the past. He never fails to amaze me with his optimism, guts, resilience and ambition. All of this is coupled with his hardwork, dedication, commitment, excellent planning and execution. Less than a decade ago, he and his wife started off a small darshini hotel and today he has set up a 70 bed Paying Guest accommodation in the heart of Bengaluru with all amenities and tasty food that comes from his own hotel. Shekar is an ITI graduate who has tried his hand at almost everything in life from selling clothes in a store to working as a security guard to servicing medical equipments to becoming an entrepreneur. With his wife in tow, he has provided jobs to many and served several meals during the pandemic. Each time I speak to him, he is brimming with confidence and enthusiasm to do something different and something better. He is just about filling up his PG and there he is dreaming, nay, planning how to expand and where to set up another one on the same lines. Adapting to technology thanks to ease of use has helped him market through his insta page and self-made marketing videos. Personal challenges haven’t dampened his spirit nor the so-called vagaries of the economy. His motto is ‘chalte raho’!
As I urge you all to scroll down and catch up with the regulatory information for November, 2023 I am reminded of these lines from a popular Kannada song by Sonu Nigam
yenagali, munde saagu nee,
bayasiddella sigadu baalali……….
(Whatever happens, keep moving forward though you may not get all that you desire in life)
As we step into our 15th year of publication, I wish to place on record all the support and encouragement received over the years from several readers, technical support from our vendor-partners, articles and news compilations done by our own team members and also external professionals who have spared their valuable time, pro bono for keeping Samhita alive!
For any previous issues of Samhita and the readers’ feedback, please visit
SBO Rules for LLPs
In February 2022, the MCA had extended the applicability of several provisions of the Companies Act, 2013 to Limited Liability Partnerships(“LLPs”). One such provision was Section 90 of the Companies Act, 2013 pertaining to Significant Beneficial Owner (“SBO”). However, there was no clarity on implementation of the provisions as forms and registers specific to the LLPs were not notified. Ten months later, the MCA has notified rules that are similar to rules notified under the Companies Act, 2013. Highlights of the SBO Rules notified on November 09, 2023 are as follows:
I. Important Definitions
a. “significant beneficial owner” in relation to a reporting limited liability partnership, means an individual who acting alone or together or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting limited liability partnership, namely:-
i. holds indirectly or together with any direct holdings, not less than 10% of the contribution;
ii. holds indirectly or together with any direct holdings, not less than 10% of voting rights in respect of the management or policy decisions in such limited liability partnership;
iii. has right to receive or participate in not less than 10% of the total distributable profits, or any other distribution, in a financial year through indirect holdings alone or together with any direct holdings;
iv. has right to exercise or actually exercises, significant influence or control, in any manner other than through direct-holdings alone
The above definition is similar to definition of SBO under the Companies Act, 2013.
b. “majority stake” means;-
i. holding more than one-half of the equity share capital in the body corporate; or
ii. holding more than one-half of the contribution in a partnership entity; or
iii. holding more than one-half of the voting rights in the body corporate; or
iv. having the right to receive or participate in more than one-half of the distributable dividend or distributable profits or any other distribution by the body corporate including a partnership entity as the case may be;
c. “control” shall include the right to appoint majority of the designated partners or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their contribution or management rights or limited liability partnership agreements or other agreements or in any other manner;
d. “significant influence” means the power to participate, directly or indirectly, in the financial and operating policy decisions of the reporting limited liability partnership but is not control or joint control of those policies
II. Declaration of SBO
a. Every individual who is an SBO in the reporting LLP, shall submit declaration in Form No. LLP BEN-1 to the reporting LLP within 90 days from commencement of these Rules.
b. Every individual, who subsequently becomes an SBO, or where his significant beneficial ownership undergoes any change shall file a declaration in Form No. LLP BEN-1 to the reporting LLP within 30 days of acquiring such significant beneficial ownership or any change therein.
c. Where an individual becomes an SBO, or where his significant beneficial ownership undergoes any change within 90 days of the commencement of these rules, it shall be deemed that such individual became the SBO or any change therein happened on the date of expiry of 90 days from such commencement, and the period of 30 days for filing will be reckoned accordingly.
III. Obligations of Reporting LLPs
a. Every reporting LLP has been mandated to take necessary steps to find out if there is any individual who is their SBO and if identified, make the individual submit declaration in Form LLP BEN-1.
b. Every reporting LLP has been mandated to issue notice in Form LLP BEN-4 to its partner (other than individual) who holds not less than 10% of its contribution/voting rights/right to participate in distributable profits or any other distribution payable in a financial year.
c. Within 30 days of receipt of declaration in Form LLP BEN-1, the reporting LLP shall file the same in Form LLP BEN-2 with the ROC.
d. The reporting LLP shall maintain a register of Form LLP BEN-3.
IV. Non- Applicability of Rules
Following LLPs have been excluded from complying with the SBO rules:
a. held by Central Govt, State Govt or Local Authority
b. LLP is controlled by the Central Govt or by one or more State Govt, or partly by the Central Govt and partly by one or more State Govt
c. an investment vehicle registered with and regulated by the SEBI such as mutual funds, AIF, Real Estate Investment Trusts (REITs) and Infrastructure Investment Trust (lnVITs).
d. an investment vehicle regulated by the RBI, or the Insurance Regulatory and Development Authority of India, or the Pension Fund Regulatory and Development Authority.
In a move to strengthen the standards of risk management in the banking sector, the RBI vide notification dated November 16, 2023 has issued instructions to Commercial Banks and Non-Banking Financial Companies (NBFCs). These measures are aimed at curbing the growing exposure of lending institutions particularly NBFCs to the risk of lending unsecured credit to consumers. It also has an impact on the lending of Banks to NBFCs.
Following are the measures taken by RBI which are effective immediately except one:
A. Consumer credit exposure
i. Consumer credit exposure of commercial banks
Increase in the risk weights in respect of consumer credit exposure of commercial banks (outstanding as well as new), including personal loans by 25 percentage points from 100% to 125%. This excludes housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery.
ii. Consumer credit exposure of NBFCs
The consumer credit exposure of NBFCs (outstanding as well as new) categorised as retail loans shall attract a risk weight of 125% instead of 100%. This will be for loans excluding housing loans, educational loans, vehicle loans, loans against gold jewellery and microfinance/SHG loans.
iii. Credit card receivables
As per extant norms, credit card receivables of scheduled commercial banks (SCBs) attract a risk weight of 125% while that of NBFCs attract a risk weight of 100% . RBI has decided to increase the risk weights on such exposures by 25 percentage points to 150% and 125% for SCBs and NBFCs respectively.
B. Bank credit to NBFCs
In terms of extant norms, exposures of SCBs to NBFCs excluding core investment companies, are risk weighted as per the ratings assigned by Accredited External Credit Assessment Institutions (ECAI). RBI has decided to increase the risk weights on such exposures of SCBs by 25 percentage points (over and above the risk weight associated with the given external rating) in all cases where the extant risk weight as per external rating of NBFCs is below 100%. For this purpose, loans to HFCs, and loans to NBFCs which are eligible for classification as priority sector in terms of the extant instructions shall be excluded.
C. Strengthening credit standards
i. The Regulated Entities(REs) shall review their extant sectoral exposure limits for consumer credit and put in place, if not already there, Board approved limits in respect of various sub-segments under consumer credit as may be considered necessary by the Boards as part of prudent risk management. In particular, limits shall be prescribed for all unsecured consumer credit exposures. The limits so fixed shall be strictly adhered to and monitored on an ongoing basis by the Risk Management Committee.
The above instruction shall be complied at the earliest but not later than February 29, 2024.
ii. All top-up loans extended by REs against movable assets which are inherently depreciating in nature, such as vehicles, shall be treated as unsecured loans for credit appraisal, prudential limits and exposure purposes.
An article by The Hindu, states that these instructions are expected to result in higher capital requirements for lenders and thereby, an increase in lending rates for consumers. https://www.thehindu.com/business/Industry/what-is-rbis-latest-move-to-increase-risk-weight-for-lending-about-explained/article67553551.ece
Vide Trade Notice dated November 06, 2023, the DGFT has introduced a new facility of centralized Video Conference Facility at DGFT Headquarters. The facility is available w.e.f November 08, 2023, from 10 AM to 12 noon. Senior officials from DGFT HQ will be present in these VCs to address matters which could not be resolved by various Regional Authorities (RAs) of the DGFT. The existing facility of daily online VCs with all RAs of DGFT as well as individual appointment with concerned officers of RAs over VC will continue as usual.
Income Tax Department vide instruction dated November 10, 2023 has introduced revisions to the timelines, monetary limits, and workflow pertaining to withholding refunds under Section 245(2). The reasons for such withholding shall be recorded in writing. The monetary limit of refund has been set to Rs. 10 lakhs or more for applying the provisions of Section 245(2) of the Act.
CBDT vide Notification dated November 15, 2023 has issued a corrigendum to its notification no.3 of 2021 dated April 30, 2021. Procedure for submission of SFT for Depository and Mutual Fund Transactions has been revised through the corrigendum. These amendments are aimed at reporting of capital gains on the transfer of listed securities or units of mutual funds by Depository Institutions.
Vide notification dated November 02, 2023 the CBIC has introduced procedures for filing appeals with the Appellate Authority. Assessees who could not file appeals against an order within the time frame specified under section 73 or 74 of the CGST Act can file an appeal using Form GST APL-01 on or before January 31, 2024. The Notification provides clarity on the conditions and process for filing appeals under these circumstances.
The CBIC has issued an advisory dated November 07, 2023 on GSTIN amendment in the Bill of Entry after OOC. The system allows a one-time amendment of GSTIN, provided the PAN no. remains the same. The guidelines are issued to streamline import process.
Vide Rule 37A of CGST Rules, 2017 the taxpayers have to reverse the Input Tax Credit (ITC) availed on such invoice or debit note, the details of which have been furnished by their supplier in their GSTR-1 but return in GSTR 3B has not been filed by the Supplier. ITC is required to be reversed by such taxpayers, while furnishing a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year, as part of this legal obligation.
Functionality to generate automated intimation in Form GST DRC-01C which enables the taxpayer to explain the difference in Input tax credit available in GSTR-2B statement & ITC claimed in GSTR-3B return online is live. If the claimed ITC in GSTR 3B exceeds the available ITC in GSTR-2B by a predefined limit or the percentage difference exceeds the configurable threshold, taxpayer will receive an intimation in the form of DRC-01C. Upon receiving an intimation, the taxpayer must file a response using Form DRC-01C Part B. In case, no response is filed by the impacted taxpayers in Form DRC-01C Part B, such taxpayers will not be able to file their subsequent period GSTR-1.
Quote of the day
"In life, winning and losing will both happen. What is never acceptable is quitting."
- Magic Johnson
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.