Wednesday, 16 May, 2018 - Thursday, 31 May, 2018

Vistra India Update 352

INCOME TAX

Determination of Fair Market Value of Unquoted shares

Rule 11UA provided that FMV of unquoted shares for the purpose of section 56 can be determined by a Merchant Banker or a Chartered Accountant.  Now, the Central government has notified that, Chartered Accountant cannot determine the FMV of unquoted shares for the purpose of section 56 under Discounted Cash Flow (DCF) method.

Further, Section 56 of the Income Tax provides that where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares would be treated as Other Income and taxed in the hands of the company.  Now the Central Government has notified that the above would not be applicable to a Startup company subject to certain conditions.

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COMPANY LAW

Clarification on the requirement for the Company to carry out the CSR activities in the local area and areas around it where it operates.

Section 135 of Companies Act 2013 provides that companies shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities. Concerns have been raised by some stakeholders with regard to the requirement for giving preference to the local area for incurring CSR spending. Ministry of Corporate Affairs has clarified that such requirement has to be followed in letter and spirit.

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GOODS AND SERVICES TAX

Extension of Due Dates of filing of Form GSTR – 3B and Form GSTR – 6

The Central Board of Excise and Customs (CBEC) vide Notification No. 23 & 25 2018 – has extended the due date for filing of following returns

Form GSTR – 3B – return for the month of April 2018 the due date extended to 22nd May 2018

Form GSTR – 6 – return for the months from July 2017 to June 2018 the due date extended to 31st July 2018

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CUSTOMS

Publishing of rate of exchange for conversion of the foreign currency

The Central Board of Excise and Customs (CBEC) vide Notification No. 43 /2018 - Customs (N.T.) notified the rate of exchange for conversion of the foreign currency into Indian currency or vice versa for Export and Import of goods, with effect from 18th of May 2018. 

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LABOUR LAWS

Reduction in Provident Fund Administrative charges under Employee Provident Fund (EPF) Act.

The Government of India has issued a notification dated 21 May 2018 revising the rate of administrative charges under the Employee’s Provident Fund Scheme (EPFS) and Employees Deposit Linked Insurance Scheme (EDLIS), 1976 effective from 1 June 2018.

The administrative charges to be paid by the employer has been reduced to 0.50 percent from 0.65 percent of the monthly pay (as defined under EPF Act) of the employee under EPFS Scheme.

Minimum administrative charges of INR 75 per month for every non-functional establishment having no contributory member and INR 500 per month for every other establishments would need to be paid under EPFS Scheme.

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Declaration of Provident Fund Interest rate for FY 2017-18

The Employees Provident Fund Organization (EPFO) has issued a circular dated 27 April 2017 declaring 8.55% as the interest rate for the year 2017-18.

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