1. Companies (Incorporation) Amendment Rules, 2019
Ministry of Corporate Affairs (MCA) has amended Companies (Incorporation) Rules, 2014 to provide, among others, the following:
1. Introduced one time filing of Form INC 22A on or before 25th April 2019 detailing the particulars of the Company and its registered office for Companies Incorporated on or before 31st December, 2017
2. In case Companies fails to file the form before the date specified, the Company shall be marked as “ACTIVE Noncompliant” and until it is rectified by filing the form, the Company shall not be able to file with ROC the change in authorized capital (SH-07), change in paid up capital (PAS-3), Change in Directors except cessation (DIR-12), change in registered office (INC-22), Amalgamation, Demerger (INC-28)
3. The status of “ACTIVE Noncompliant will continue until the form is filed
4. A late filing fee of INR 10,000 is applicable for forms filed after the due date
5. Companies which have been struck off or under the process of being striking off or under liquidation or amalgamation or dissolution as recoded by registrar are not required to file the form
2. Extension of due date for filing MSME Form I
The Government of India in its notification dated January 22, 2019 had mandated Public or Private Company, Micro or Small Companies which satisfy the following two conditions to file MSME disclosures in MSME in Form 1.
i) Company which has received Goods and/or Services from Micro or Small Enterprises;
ii) Payment due/not paid to such Micro and Small Enterprise for 46 days (i.e. exceeding 45 days) from the date of acceptance of Goods and/or Services from MSME suppliers.
The initial return was to be filed with within 30 days from the date of this notification ie., on or before 21st February 2019. However, as MSME Form 1 is not yet deployed on MCA 21 portal, Ministry of Corporate Affairs (MCA) has now notified that the period 30 days for filing the MSME Form 1 is to be reckoned from the date of the deployment of the e-form on MCA 21 portal.
3. Companies (Adjudication of Penalties) Amendment Rules, 2019
In order to bring in efficiency in Adjudication procedures, Ministry of Corporate Affairs (MCA) has amended Companies (Adjudication of Penalties) Rules, 2014 to provide new procedure for adjudication of Penalties. Among other things, the changes includes:
1. Requires the servicing of Notices in specified manner using the details in respect of address (including electronic mail ID) provided in the KYC documents filed.
2. The Notice to draw attention to the relevant penal provisions of the Act and the maximum penalty which can be imposed on the company, and each of the officers in default, or the other person
3. The response to be submitted in electronic mode only and Maximum time for reply to show cause notice has been reduced to 30 days from 45 days
RBI AND FEMA
4. Update to Master Direction relating to Establishment of Branch Office (BO) / Liaison Office (LO) / Project Office (PO) or any other place of business in India by foreign entities
Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any Other Place of Business) Regulations, 2016 are amended to make procedural changes where any establishment of Branch Office (BO) / Liaison Office (LO) / Project Office (PO) or any other place of business in India by foreign entities is to engage partly or wholly, in any of the activities covered under Foreign Contribution (Regulation) Act, 2010 (FCRA), it shall obtain a certificate of registration under the said Act and shall not seek permission under FEMA 22(R). Accordingly the Form FNC has also been suitably modified and the following phrase added under the heading ‘Declaration’ in Part II clause (ii), at the end of the existing sentence. “We will not undertake either partly or fully, any activity that is covered under Foreign Contribution Regulation Act, 2010 (FCRA) and we understand that any misrepresentation made or false information furnished by us in this behalf would render the approval granted under the Foreign Exchange Management (Establishment in India of a branch office or liaison office or a project office or any other place of business) Regulations, 2016, automatically void ab initio and such approval by the Reserve Bank shall stand withdrawn without any further notice”.
5. Amendment to rules governing Startup companies registered with Department for Promotion of Industry and Internal Trade (DPIIT).
DPIIT under the Ministry of Commerce and Industry has vide its notification issued on February 19, 2019 expanded the definition of start-ups and also amended the rules to obtain certification required under Section 80 IAC of Income Tax Act, 1961 to grant exemption from applicability of section 56(2)(viib) of the said Act. Some of the key changes are as follows:
• Period of consideration as start up is increased from 7 years to 10 years from the date of incorporation. Earlier only startups in Bio-Technology are given 10 years period.
• Turnover limit for any of the financial years since incorporation is increased from Rs. 25 Crores to Rs. 100 Crores
• For the purpose of computing maximum limit of Rs. 25 crores as paid up capital plus share premium, shares issued to non-resident, a venture capital company or a venture capital fund registered as Category I AIF or a specified company per SEBI regulations can be excluded.
• Conditions imposed regarding minimum income and net-worth of angel investors are removed.
• Conditions are now imposed with respect to investment in Land & Buildings (other than used as stock in trade), subsidiaries, Loans & Advance other than in normal course of business, jewellery other than the one held as stock in trade, shares and securities.
• If the conditions are met and DPIIT accords the startup the recognition, there will not be any further approval required from CBDT to claim under section 56(2)(viib) if the startup fulfilled all the conditions mentioned for such exemption.
GOODS AND SERVICES TAX
6. Furnishing of details of inter-State supplies made to unregistered persons in FORM GSTR-3B and FORM GSTR-1
Board was informed that a number of registered person have not declared the inter-State supplies made to unregistered persons. In view of the same vide Circular No. 89/08/2019-GST dated 18.02.2019 CBIC has instructed that every registered dealer is required to furnish the details of inter-State supplies made to unregistered persons in Table 3.2 of FORM GSTR-3B and Table 7B of FORM GSTR-1.
7. Compliance of Rule 46(n) of the CGST Rules, 2017 while issuing invoices in case of inter- State supply
Board was informed that a number of registered person are not mentioning the place of supply along with the name of the State in case of a supply made in the course of inter-State trade or commerce which is non-compliance as per rule 46(n) of the CGST Rules. In view of the same vide Circular No. 90/09/2019-GST dated 18.02.2019 CBIC has instructed that all registered persons making supply of goods or services or both in the course of inter-State trade or commerce shall specify the place of supply along with the name of the State in the tax invoice.
8. Amendment to Section 12 of IGST Act
Based on the GST Council recommendations in their 32nd Meeting held on 10th January 2019 various modifications were issued to make it effective. One of the notification which was issued by Central Board of Indirect Taxes and Customs on 29th January 2019 was relating to amendment to Section 12 of IGST Act.
Vide Notification Number 01/2019 – Integrated Tax, the amendment to section 12 of IGST Act was made to specify that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods. The effective date of this amendment is from 1st February 2019.
9. Publishing of rate of exchange for conversion of the foreign currency
The Central Board of Excise and Customs (CBEC) vide Notification No. 13/2019 - 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 22nd of February 2019 respectively.
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