Thursday, 15 December, 2016

Vistra India Update 317

December 1st -15th, 2016

Income Tax

Re-opening of cases under section 147 of Income tax Act 1961

As part of recent initiatives taken to curb black economy in the country, the Central government is encouraging people to move to digital mode of payment while making financial transactions. This will result in the increase in online financial transactions and also would help in disclosure of the financial transactions.  In this regard the Central Government has clarified that re-opening of cases u/s 147 of the Income Tax Act 1961 is feasible only when the assessing officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year and not merely on the basis of any reason to suspect. Mere increase in turnover, because of use of digital means of payment or otherwise, in a particular year cannot be a sole reason to believe that income has escaped assessment in earlier years.

Click to view the circular

Procedure for purpose of furnishing and verification of Form 26A for removing of default of short deduction and/or Non deduction of Tax at source

Section 201(1) of Income Tax Act 1961 provides that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident—

(i) has furnished his return of income under section 139;

(ii) has taken into account such sum for computing income in such return of income; and

(iii) has paid the tax due on the income declared by him in such return of income, 

and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed

The certificate from an accountant referred in sub clause (iii) above should be in Form 26A. Now the Central government has notified the procedure for filing Form 26A and has outlined the role of deductor, accountant and government in this regard.

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Company Law

Companies (Transfer of Pending Rules) 2016

Ministry of Corporates Affairs has notified the rules for operationalizing the transfer of pending proceedings viz. arbitration, compromise, arrangements including winding up etc under the Companies Act, 1956 to National Company Law Tribunal (NCLT). The applications and petitions relating to voluntary winding up of companies pending before a High Court on the date of commencement of this rule, shall continue with and be dealt with by the High Court. The rules also provide the parameter for transfer of pending proceedings of Winding up on the ground of inability to pay debts and Winding up matters on the grounds other than inability to pay Debts.

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Companies (Compromises, Arrangements and Amalgamations) Rules 2016

Ministry of Corporates Affairs has notified the rules relating to Compromises Arrangements and Amalgamations proceedings at the tribunal under the Companies Act, 2013. The rules mainly provide the procedures relating to application for ordering the meeting relating to proposed Compromises Arrangements and Amalgamations, Disclosures in application, Directions at hearing of the application, conduct of the proceedings and other matters in relation to such Compromises Arrangements and Amalgamations proposals under the Companies Act.

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National Company Law Tribunal (procedure for reduction of share capital of Company Rules) 2016

Ministry of Corporates Affairs has notified the rules relating to procedure to be followed at the Tribunal for reduction of share capital. The Rules mainly provide for methods and forms for filing the application for petition of reduction in share capital, issue of notices and directions by Tribunal, Publishing Notice etc.

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Commencement of certain sections of Companies Act, 2013

With the introduction of Rules relating to Compromises Arrangements and Amalgamations, reduction of share capital and operationalizing of National Company Law Tribunal, Ministry of Corporate Affairs has notified the commencement of certain provisions of the Companies Act, 2013 relating to those matters.

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RBI and FEMA

Non-Banking Financial Company - Account Aggregator (NBFC-AA)

The Reserve Bank of India had issued the Non-Banking Financial Company - Account Aggregator (Reserve Bank) Directions, 2016 (the directions) on September 2, 2016. These directions will come into effect upon notification in the Gazette of India classifying the business of account aggregator as non-banking financial company with appropriate amendment to Section 45I of the RBI Act. The said directions issued by the Bank have been published in the Gazette of India (Part III—Sec 4) on November 26, 2016.

Business of an “account aggregator” is defined under these Directions as the business of providing under a contract, the service of, retrieving or collecting such financial information pertaining to its customer, as may be specified by the Bank from time to time; and consolidating, organizing and presenting such information to the customer or any other financial information user as may be specified by the Bank.

No entity other than a company is allowed to undertake the business of an Account Aggregator. Further, no company shall commence or carry on the business of an Account Aggregator without obtaining a certificate of registration from the Bank.

In compliance with the directions, entities that are already carrying on the business of an Account Aggregator, as on November 26, 2016, shall apply to the Bank for registration as an Account Aggregator within a month from November 26, 2016.

Click to view the relevant circular

Click to view the relevant circular

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Eighteenth Amendment) Regulations, 2016

RBI made amendments in Annexure B of Schedule I of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, (Notification No. FEMA 20/2000-RB dated 3rd May 2000). They shall come into force from the date of their publication in the Official Gazette.

Amendment to the Regulations in Annexure B of Schedule I are with respect of paragraphs dealing with Foreign Investment Cap, Entry route, other conditions in the following sectors:

i. Agriculture and Animal Husbandry

ii. Manufacturing

iii. Defence

iv. Broadcasting carriage services and cable networks under Information Services in Services Sector.

v. Airports under Civil Aviation Sector

vi. Single Brand Retail Trading. 

vii. Pharmaceuticals

Click to view the relevant circular

Customs

Publishing of rate of exchange for conversion of the foreign currency

The Central Board of Excise and Customs (CBEC) vide Notification Nos. 145 & 147 /2016 - 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 2nd and 16th of December 2016 respectively.  

Click to view the relevant circular

Click to view the relevant circular

Events

Moscow | 19 Feb - 20 Feb
Stockholm | 20 Feb
Berlin | 26 Feb - 1 Mar
Hong Kong | 2 Mar
Krakow | 8 Mar
Hong Kong | 12 Mar
Bucharest, Romania | 28 Mar - 29 Mar

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