Wednesday, 16 January, 2019 - Thursday, 31 January, 2019

Vistra India Update - 368

INCOME TAX

Centralized Verification Scheme 2019

The Central Government has notified Centralized Verification Scheme 2019 to set up Centralized Verification Centre for centralized issuance of notice and for processing of information or documents and making available the outcome of the processing to the Assessing Officer.  The notice shall be issued under digital signature of the Designated Authority by delivering a copy by electronic mail or by placing a copy in the registered account on the portal followed by an intimation by Short Message Service. The response to the notice also needs to be submitted online. No person shall be required to appear personally or through authorized representative before the Designated Authority at the Centre in connection with any proceedings

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COMPANY LAW

Companies (Acceptance of Deposits) Amendment Rules, 2019

Ministry of Corporate Affairs (MCA) has amended Companies (Acceptance of Deposits) Rules, 2014 to prescribe Form DPT-3. The amendment also provides that every company (other than Government company) shall file a onetime return of outstanding receipt of money or loan not considered as deposits from 01st April, 2014 to the date of publication of this notification in the Official Gazette, in Form DPT-3 within ninety days from 22nd January, 2019 

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Companies (Prospectus Allotment) Amendment Rules, 2019

Ministry of Corporate Affairs (MCA) has amended Companies (Prospectus Allotment) Rules, 2014 to provide that the requirement of issue of securities in dematerialized form by unlisted public companies is not applicable, among others, to wholly owned subsidiary.

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RBI AND FEMA

New External Commercial Borrowings (ECB) Framework

In December 2018 Reserve Bank of India has consolidated various regulations that govern foreign currency and rupee denominated borrowings between a person resident in India and a person resident outside India and issued one comprehensive Regulation titled ‘Foreign Exchange Management (Borrowing and Lending) Regulations, 2018” To reflect the changes made in the Regulations RBI has now come up with new framework that will govern External Commercial Borrowings. This Framework will get operationalized by revising Master Direction No. 5 issued on January 1, 2016 and updated periodically since then.  The new Framework is effective from the date of its publication i.e., January 16, 2019. 

Important features of the new Framework are as follows:

i. Merging of Tracks: Merging of Tracks I and II as “Foreign Currency denominated ECB” and merging of Track III and Rupee Denominated Bonds framework as “Rupee Denominated ECB”.

ii. Eligible Borrowers: This has been expanded to include all entities eligible to receive FDI. Additionally, Port Trusts, Units in SEZ, SIDBI, EXIM Bank, registered entities engaged in micro-finance activities, viz., registered not for profit companies, registered societies/trusts/cooperatives and non-government organisations can also borrow under this framework.

iii. Recognised Lender: The lender should be resident of FATF or IOSCO compliant country. Multilateral and Regional Financial Institutions, Individuals and Foreign branches / subsidiaries of Indian banks can also be lenders as detailed in Annex.

iv. Minimum Average Maturity Period (MAMP): MAMP will be 3 years for all ECBs. However, for ECB raised from foreign equity holder and utilised for specific purposes, as detailed in the Annex, the MAMP would be 5 years. Similarly, for ECB up to USD 50 million per financial year raised by manufacturing sector, which has been given a special dispensation, the MAMP would be 1 year as given in the Annex.

v. Late Submission Fee (LSF) for delay in Reporting: Any borrower, who is otherwise in compliance of ECB guidelines, except for delay in reporting drawdown of ECB proceeds before obtaining LRN or Form ECB 2 returns, can regularize the delay by payment of LSF as per the laid down procedure.

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GOODS AND SERVICES TAX

GST Council in its 32nd Meeting held on 10th January 2019 has recommended various modifications as listed below:  Central Board of Indirect Taxes and Customs by way of issue of various Notifications & Orders on 29th January 2019 has implemented the GST Council recommendations as detailed below

  • Withdrawal of reverse charge in case of procurement from unregistered persons:
  • GST payable under reverse charge basis on all purchases made from unregistered persons is omitted and Central government will notify the category of goods or services on which GST on RCM basis shall be payable.
  • Amendments under Composition Scheme:
  • Threshold limit for the composition scheme increased from INR 1 crore to 1.5 crore.
  • Composition dealers are allowed to provide service upto 10% of turnover in preceding financial year or INR 5 Lakhs whichever is higher. Rate of tax on such supply of services shall be 1% of IGST or half percent of CGST & SGST each.
  • Restriction on availment of input tax credit on goods or services in relation to Motor Vehicles or Vessels or Aircraft except if the Motor Vehicles or Vessels or Aircraft is used for providing the taxable services.
  • Definition of ‘Export of services’:
  • Allows realization of export of services in Indian rupees in case of export of services wherever permitted by the RBI.
  • Availment of input tax credit on goods or services in relation to services provided by the employer to employees is allowed subject to the condition that the same goods or services are provided as part of legal obligation.
  • Registered person is allowed to issue consolidated credit / debit notes in respect of multiple invoices issued in a Financial Year without linking the same to individual invoices.
  • Import of services by entities which are not registered under GST but are otherwise engaged in business activities shall be liable to pay tax when services are received from a related person outside India.
  • An establishment is now allowed to obtain multiple registrations for each place of business in the same state or Union Territory subject to certain conditions.  The concept of Business Vertical is no more required for obtaining multiple registrations.
  • Utilization of input tax credit subject to certain conditions:
  • The registered dealer is allowed to utilize credit on account of CGST, SGST / UTGST, only after exhausting all the credit on account of IGST available to him.
  • Threshold liable for registration of special category states:
  • Central Government is empowered to extend the threshold limit liable for registration upto INR 20 lakhs from existing INR 10 lakhs.

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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. 05/2019 - 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 18th of January 2019 respectively.  

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