Insights

Vistra India Update 380

July 16 to 31 2019

INCOME TAX

1.    Extension of date for filing of Income Tax Returns

The Central government has extended the due date for filing income tax returns (ITR) by individuals for the financial year 2018-19 by a month till August 31, 2019. Earlier the date was July 31, 2019. Now the taxpayers would get sufficient time to file their returns in a hassle-free manner.

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2.    Exemption from filing income tax returns for certain class of persons

Nonresident, not being a company or a foreign company who have any income chargeable under Income Tax Act 1961 (Act) during a previous-year from any investment in an investment fund set up in an International Financial Services Centre (IFSC) located in India is exempted from the requirement of furnishing a return of income under section 139 of the said Act from AY 2019-20 onwards subject to the following conditions.

a.    Any income-tax due on income of the said class of persons has been deducted at source and remitted to the Central Government by the investment fund at the tax-rate in force as per provisions of section 194LBB of the said Act and

b.    There is no other income during the previous year for which the said class of persons, is otherwise liable to file the tax-return.

Further, exemption is not available in cases where a notice under 142 or section 148 or section 153A or section 153C of the said Act has been issued for filing a return of income for the assessment year specified therein.

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COMPANY LAW

3.    Extension of due date for filing Form BEN-2

Ministry of Corporate Affairs (MCA) has extended the due date for filing BEN-2 (Significant Beneficial Owner) to 30th September, 2019 without payment of additional fees. 

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4.    Companies (Appointment and Qualification of Directors) 3rd Amendment Rules 2019

Ministry of Corporate Affairs (MCA) has amended Companies (Appointment and Qualification of Directors) Rules 2014 to provide, among others, the following:

Yearly submission of Form DIR-3-KYC on or before 30th September of the following Financial Year
Submission of web-form DIR-3 KYC-WEB through the web service in relation to any subsequent financial year.
For updating email ID or phone number, eForm DIR-3 KYC has to be filed.
Introduced new form DIR-3 KYC-WEB

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RBI AND FEMA

5.    External Commercial Borrowings (ECB) Policy – Rationalization of End-use Provision

Hitherto ECB proceeds cannot be utilised for working capital purposes, general corporate purposes and repayment of Rupee loans except when the ECB is availed from foreign equity holder for a minimum average maturity period of 5 years. Further, on-lending for these activities out of ECB proceeds is also prohibited. With a view to further liberalise the ECB framework, it has been decided, to relax the end-use restrictions. Accordingly the following measures are announced:

ECBs with a minimum average maturity period of 10 years for working capital purposes and general corporate purposes. Borrowing by NBFCs for similar maturity period is now allowed for on lending and for the above purposes is also permitted.

ECBs with a minimum average maturity period of 7 years can be availed by eligible borrowers for repayment of Rupee loans availed domestically for capital expenditure as also by NBFCs for on-lending for the same purpose. For repayment of Rupee loans availed domestically for purposes other than capital expenditure and for on-lending by NBFCs for the same, the minimum average maturity period of the ECB is required to be 10 years.

It has been decided to permit eligible corporate borrowers to avail ECB for repayment of Rupee loans availed domestically for capital expenditure in manufacturing and infrastructure sector if classified as SMA-2 or NPA, under any one time settlement with lenders. Lender banks are also permitted to sell, through assignment, such loans to eligible ECB lenders, except foreign branches/ overseas subsidiaries of Indian banks, provided, the resultant external commercial borrowing complies with all-in-cost, minimum average maturity period and other relevant norms of the ECB framework.

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GOODS AND SERVICES TAX

6.    Clarification on doubts related to supply of Information Technology enabled Services (ITeS services)

The Board received various representations seeking clarification on issues related to supply of Information Technology Enabled Services (hereinafter referred to as “ITeS services”) such as call center, business process outsourcing services, etc. as defined in subrule (e) of rule 10 TA of the Income Tax Rules, 1962 (as ITES services are not defined in GST Law)   and the Intermediary services to overseas entities and whether they qualify to be “export of services” or otherwise.   Vide Circular No. 107/26/2019-GST board has clarified certain issues in this regard as mentioned below..

If a registered dealer supplies Information Technology Enabled Services (ITeS services) such as backend services like office operations, call centers or contact center services, data processing and data mining, insurance claim processing, legal databases etc., on  his own account either directly to his customers or clients of his customer on behalf of his customer:, then such services will not be treated as Intermediary Services.
If a registered dealer supplies back end services such as support services, during pre-delivery, delivery and post-delivery of supply (such as order placement and delivery and logistical support, obtaining relevant Government clearances, transportation of goods, post-sales support and other services, etc.) by arranging or facilitating the same between client and its customer, then such services will be treated as Intermediary Services.
If a registered dealer provides two sets of services as mentioned above, then whether the supplier of such services would fall under the ambit of intermediary or not will be depend on the facts and circumstances of each case.

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7.     Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export promotion

The Board received various representations checking the procedure to be followed in respect of goods sent / taken out of India for exhibition or on consignment basis for export promotion.  Vide Circular No. 108/27/2019-GST board has clarified that the goods sent outside India for exhibition or on consignment is in the nature of “sale on approval basis”.  The consignment should be sent along with a delivery challan.  The supply would be treated as Export only at the time when actual sale takes place outside India or on completion of six months if such goods are not brought back into India. 

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CUSTOMS

8.    Publishing of rate of exchange for conversion of the foreign currency

The Central Board of Excise and Customs (CBEC) vide Notification No. 52/2019 - 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 19th of July 2019 respectively.  

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