SEBI Updates
Extension of timeline for implementation of redressal of investor grievances through the SEBI-compliant redressal (SCORES) platform and linking it to the online dispute resolution platform
The Securities and Exchange Board of India (SEBI) issued a circular on December 1, 2023, extending the timeline for implementation of the updated framework for monitoring and handling of investor complaints from December 4, 2023 (as per the circular dated September 20, 2023) to April 1, 2024.
However, as specified in the prior circular dated September 20, 2023, the entities must continue to file the Action Taken Report (“ATR”) on SCORES within 21 calendar days of receiving the complaint.
The relevant circular can be accessed at the following URL.
Click here to access the circular
Amendment to Circular dated July 31, 2023, on the online resolution of disputes in the Indian Securities Market regulatory updates
On December 20, 2023, the Securities Exchange Board of India (SEBI) released this circular to amend the Circular dated July 31, 2023, which provides the guidelines for the online resolution of disputes in the Indian securities market, based on the feedback received for providing clarity on certain aspects.
This Circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and shall come into force with immediate effect.
The relevant circular can be accessed at the following URL.
Click here to access the Circular
Extension of timelines for providing ‘Choice of Nomination’ in eligible DEMAT accounts and Mutual Fund folios regulatory updates
The Securities and Exchange Board of India (SEBI) issued a circular on December 27, 2023, where, based on the representation received from the market participants it has been decided to extend the last date for submission of ‘choice of nomination’ for demat accounts and mutual fund folios from December 31, 2023 to June 30, 2024.
Depository Participants, AMCs and RTAs will encourage the demat account holders/ mutual fund unit holders to fulfil the requirement by sending a communication through emails and SMS to all such demat account holders/ mutual fund unit holders who are not in compliance with the requirement of nomination. This communication shall provide guidance to provide nomination or opt out of the nomination.
All other provisions related to the requirement of Nomination shall remain unchanged.
The relevant circular can be accessed at the following URL.
Click here to access the Circular
Master Circular for online resolution of disputes in the Indian Securities Market
Securities Exchange Board of India (SEBI) issued a master circular on December 20, 2023, to change the existing dispute resolution mechanism in the Indian Securities Market establishing the Common Online Dispute Resolution Portal (ODR Portal) which harnesses online conciliation and online arbitration for resolution of disputes arising in the Indian Securities Market.
Applicability of the Master Circular:
- Disputes between Investors/ Clients and the listed Companies (including their registrar and share transfer agents) or any of the specified intermediaries/ regulated entities in the securities market (as specified in Schedule A) arising out of the latter’s activities in the securities market.
- Disputes between institutional or corporate clients and specified intermediaries/ regulated entities in the securities market (as specified in Schedule B) at the option of the institutional or corporate clients.
- Disputes between Market Infrastructure Institutions (MII) and its constituents which are contractual shall be included in the framework at a future date as may be specified while expressly excluding disputes/ appeals/ reviews/ challenges about the regulatory, enforcement role and roles of a similar nature played by MIIs.
The Master Circular also provides an introduction to the common Online Dispute Resolution Portal, how to initiate the Dispute Resolution process, the features of the ODR Portal and the allocation system, conciliation, arbitration, form of proceedings, fees etc.
The relevant circular can be accessed at the following URL.
Click here to access the Master Circular
RBI Updates
Processing of e-Mandates for recurring transactions regulatory updates
The Reserve Bank of India (RBI) on 12th December 2023 has issued a notification in terms of relaxation in Additional Factor of Authentication (AFA) while processing e-mandates/ standing instructions on cards, prepaid Payment Instruments and Unified Payments Interface, for subsequent recurring transactions:
The e-mandate framework prescribed an Additional Factor of Authentication (AFA), inter alia, while processing the first transaction in case of e-mandates/ standing instructions on cards, prepaid payment instruments and Unified Payments Interface, for subsequent transactions with transaction values up to ₹15,000/-, prescription of AFA was waived as per the last dated circular in this regard. Through the issuance of this circular, it has been decided to increase the limit from ₹15,000/- to ₹1,00,000/- per transaction for the following categories: (a) subscription to mutual funds, (b) payment of insurance premiums, and (c) credit card bill payments.
Click here to access the notification
Foreign Exchange Management (Manner of receipt and payment) Regulations, 2023
The Reserve Bank, in the exercise of powers granted by Section 47 of the Foreign Exchange Management Act, 1999, has issued new regulations titled “Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023,” superseding the previous notification from May 2, 2016. These regulations, effective upon their publication in the Official Gazette, define various terms, including ‘Act’ and ‘Authorised Bank.’
The important points in the notification issued on 21st December 2023 are detailed below:
- The regulations specify that no resident in India can make or receive payments from a person outside India, except as provided in the Act, rules, or regulations. The receipt and payment between residents in India and those outside India are to be conducted through an Authorised Bank or Authorised Person.
- Trade transactions, such as exports to Nepal and Bhutan, may be made in foreign currency, where the Nepal importer has been permitted by Nepal Rashtra Bank. For Trade transactions with member countries of the Asian Clearing Union (ACU), payment can be made through the ACU mechanism or as per the directions issued by the Reserve Bank. For transactions with countries other than member countries of ACU, payments can be made in Indian Rupees or foreign currency, depending on the countries involved.
- Additionally, payment and receipt for any current account transaction, excluding trade, between a resident in India and a person visiting from outside India, must be in Indian Rupees and any payments or receipts under regulation 3 can also be made by debit/credit to a bank account maintained in terms of the Foreign Exchange Management Act, 1999.
Click here to access the notification
Classification of MSMEs
The Reserve Bank of India (RBI) on 28th December 2023 has issued a notification on amendments made in the Master Direction- Lending to Micro, Small & Medium Enterprises (MSME) Sector:
- All the enterprises covered under the threshold criteria of Micro, Small and Medium enterprises are required to register online on the Udyam Registration portal and obtain a ‘Udyam Registration Certificate’. Banks will be guided by the classification recorded in the Udyam Registration Certificate for Priority Sector Lending purposes.
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Income Tax Updates
CBDT Notifies “POWERGRID Infrastructure Investment Trust” as prescribed mode of investment u/s 11(5) regulatory updates
The Central Board of Direct Taxes (CBDT) has amended Rule 17C to include “POWERGRID Infrastructure Investment Trust” as a prescribed investment mode. Thus, w.e.f. 18-12-2023, any investment made in acquiring units of such trust is eligible for exemption under section 11(5).
Section 11(5) prescribes the mode in which the income of a trust or institution claiming income-tax exemption under various provisions shall be invested or deposited.
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CBDT revises the definition of ‘Intra-group Loan’ & outlines its ‘Safe Harbour’ conditions under Rule 10TD regulatory updates
The Central Board of Direct Taxes (CBDT) has notified the Income-tax (Twenty-Ninth Amendment) Rules, 2023, to amend Rules 10TA and 10TD.
As per the revised definition, an “intra-group loan” refers to a loan given to a related foreign company. This loan:
- Excludes borrowings from financial companies, like a bank, or a business that regularly lends or borrows money.
- Excludes credit lines or other loans without a set repayment period.
In rule 10TD (Safe Harbour), under sub-rule (2A), the following changes have been effected:
- In the table, specifically in Sl.No. 4, column number (3), the word “CRISIL” will be removed from clauses (i) to (iv).
- A substitution of entries for advancing intra-group loans mentioned in clause (iv) of Rule 10TC, where the loan amount is in foreign currency, is made. This will be treated as the new entry for Sl.No. 5.
- Additionally, an explanation related to the reference rate and credit rating has been added after sub-rule (2A)
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CBDT notifies ITR forms 1 and 4 for assessment year 2024-25
The Central Board of Direct Taxes (CBDT) has notified two new return forms, ITR-1 (SAHAJ) and ITR-4 (SUGAM), for the Assessment Year 2024-25. These forms will come into effect from April 1, 2024.
Click here to access the notification
Tax Deduction Guidelines for E-commerce Operators: Section 194-O and CBDT Clarity
Section 194-O of the Income Tax Act mandates e-commerce operators to deduct 1% income tax on the gross sales amount effected through their digital platforms with an e-commerce participant. In this regard, the Central Board of Direct Taxes vide Circular No 20 of 2023 has issued guidelines, addressing concerns and providing clarity on the application of the provisions of Section 194 – O of the Act to various e-commerce models and scenarios.
The circular also clarifies that GST and other indirect taxes will not form part of the “gross amount” as long as they are charged separately in the invoice by the e-commerce participant and the tax is withheld based on credit in the books of account. Where payment is made before a credit is made to the books of accounts, in such case, tax shall be withheld on the entire amount paid as the indirect taxes’ bifurcation may not be available with the e-commerce operator.
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Direct Tax Collections for FY 2023-24
According to the reports, direct tax collections for FY 2023-24 show significant growth with a 20.66% increase in Net collections, reaching Rs. 13,70,388 crore. Gross collections register a 17.01% growth at Rs. 15,95,639 crore. Advance Tax collections stand at Rs. 6,25,249 crore, reflecting a 19.94% growth, while Rs. 2,25,251 crore in refunds have been issued.
Click here to access the press release
GST Updates
Extension of time limit for issuance of order u/s 73 (10) of CGST Act
The Government, on the recommendations of the Council, hereby, extends the time limit for issuance of the order for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized, relating to the period as specified below, namely: –
- for the financial year 2018-19, up to the 30th day of April 2024;
- for the financial year 2019-20, up to the 31st day of August 2024.
