MCA Updates
Extension of time for Filing of Form PAS-7: Regulatory Updates
According to Rule 9(2)(a) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, every public company that issued share warrants prior to the commencement of the Companies Act, 2013 and has not converted such warrants into shares must inform the details of such share warrants to the Registrar in Form PAS-7 within three months of the commencement of the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023. Web-Form PAS-7 has now been deployed on the MCA-21 Version 3.0 Portal. Stakeholders may file requisite details using this Web Form.
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Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Amendment Order, 2024:
Para 3 of the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 has been amended by way of insertion of a proviso to the effect that only those specified companies which are having payments pending to any MSEs for more than 45 days from the date of acceptance or the date of deemed acceptance of the goods or services under section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006) shall furnish the information in MSME Form-1. Further, the MSME Form-1 also stands substituted and is available on the MCA-21 Version 3.0 Portal. Regulatory Updates
The revised form requires the companies to provide detailed information on their financial transactions with MSME suppliers. This includes payments made within and beyond the 45-days period and outstanding amounts, along with reasons for any delays.
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Companies (Incorporation) Amendment Rules, 2024 – Use of the word “Nidhi” Regulatory Updates
As per the amendment made, if the proposed name of a Company includes the word “Nidhi”, a declaration from the applicant that the requirements mandated by the respective regulator have been complied with is not required. Further, if the proposed name of a Nidhi Company does not contain the last words “Nidhi Limited” as a part of its name shall not be considered undesirable.
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Companies (Appointment and Qualification of Directors) (Amendment) Rules, 2024 – Update Personal mobile number/e-mail address of DIN Holder with the fee:
Pursuant to the amendment made in the third proviso to rule 12A, if an individual desires to update his personal mobile number or e-mail address he shall do so by submitting e-form DIR-3 KYC only on or before 30th September of the financial year. Further, if he intends to update his personal mobile number or email address again at any time during the financial year in addition to the aforesaid updation, he shall update the same by submitting an e-form DIR-3 KYC on payment of fees of five hundred rupees.
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SEBI Updates
Enabling Credit Rating Agencies (CRAs) to undertake rating activities under IFSCA Regulatory Updates
CRAs are allowed to undertake the rating of financial instruments under the respective guidelines of the financial sector regulators/ authorities. Pursuant to this circular, to enable CRAs to undertake rating activities in the IFSC-GIFT City, the International Financial Services Centres Authority (IFSCA) is added to the list of financial sector regulators/ authorities as specified in Annexure 19 of the Master Circular for CRAs dated May 16, 2024.
IFSCA shall be responsible for dealing with any issues, complaints, enforcement actions, and furnishing information to third parties, including statutory or judicial bodies, in respect to the services provided by the CRAs in the IFSC.
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Enabling ESG Rating Providers (ERPs) to undertake ESG rating activities under IFSCA Regulatory Updates
ERPs are allowed to undertake or offer ESG rating of any product or issuer, as may be required by another financial sector regulator or authority, under the guidelines of such regulator or authority. To enable ERPs to undertake ESG rating activities in the IFSC- GIFT City, the International Financial Services Centres Authority (IFSCA) is hereby added to the list of financial sector regulators/ authorities as specified in Annexure 4 of the Master Circular for ERPs dated May 16, 2024.
IFSCA shall be responsible for dealing with any issues, complaints, enforcement actions, and furnishing information to third parties, including statutory or judicial bodies, in respect to the services provided by the ERPs in the IFSC.
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Reduction in denomination of debt securities and non-convertible redeemable preference shares
Amendments were made to Chapter V of the Master Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities, and Commercial Paper dated May 22, 2024.
Market participants have expressed that lower ticket size of debt securities may encourage more non-institutional investors to participate in the corporate bond market which in turn may also enhance liquidity.
The key amendments provide the following:
- An issuer is allowed to issue debt security or non-convertible redeemable preference share on a private placement basis at a face value of INR 10,000 (Indian Rupees Ten Thousand) subject to certain conditions.
- Several credit enhancements have been permitted with added responsibilities on Credit Rating Agencies to verify documentation.
The provisions of this circular shall be applicable to all issues of debt securities and non-convertible redeemable preference shares, on a private placement basis that are proposed to be listed from 03.07.2024.
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Dispatch of Consolidated Account Statement (CAS) for all securities assets Regulatory Updates
Considering the increasing reach of digital technology and as a green initiative measure, it has been decided to provide for email as the default mode of dispatch for Consolidated Account Statements (CAS) by Depositories, Mutual Fund – Registrar and Transfer Agents (MF-RTAs), and holding statement by Depositories Participant (DP).
The circular shall be effective from August 01, 2024
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Charges levied by Market Infrastructure Institutions – True to Label Regulatory Updates
It was observed that a volume-based slab-wise charge structure was followed by some MIIs on their members (i.e. stock brokers, depository participants, and clearing members). Additionally, members generally recover such charges from the end clients on a daily basis whereas MIIs receive aggregate charges from the members on a monthly basis. This resulted in a situation where the aggregated charges collected by the members from the end clients are higher than the end-of-month charges paid to the MII (due to slab benefit).
To address the aforesaid concerns, it has been decided that the MIIs would comply with the following additional principles:
- The MII charges which are to be recovered from the end client should be True to Labele. if a certain MII charge is levied on the end client by members, it should be ensured by MIIs that the same amount is received by them.
- The charge structure should be uniform for all its members instead of slab-wise viz. dependent on the volume/activity of members.
- The new charge structure designed by MIIs should give due consideration to the existing per unit charges realized by MIIs so that the end clients are benefitted from the reduction of charges.
The circular would be effective from October 01, 2024.
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Commencement notification of the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2022 Regulatory Updates
The SEBI by way of a notification dated July 25, 2024 declared that the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2022 shall come into force from the 1st day of November, 2024.
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RBI/FEMA Updates
Online submission of Form A2: Removal of limits on the amount of remittance Regulatory Updates
To improve the ease of doing business, it is now decided to permit all AD Category-I banks and AD Category-II entities to facilitate remittances on the basis of online/physical submission of Form A2 and other related documents, if and as may be necessary, subject to the conditions laid down in Section 10(5) of FEMA 1999. There shall be no limit on the amount being remitted on the basis of ‘online’ Form A2.
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Release of foreign exchange for Miscellaneous Remittances
Prior to issuing this circular, Authorised Dealers (ADs) were permitted to release foreign exchange for any current account transaction up to a maximum limit of USD 25,000 or its equivalent based on a simple letter containing basic information. It was also advised that the ADs need not obtain any other documents, including Form A2, and that the payment was to be made by the applicant through Demand Draft or a cheque drawn on his / her bank account. Regulatory Updates
For streamlining the regulatory compliances and operational procedures, it is now decided that ADs shall obtain Form A2 in physical or digital form for all cross-border remittances irrespective of the value of the transaction. Regulatory Updates
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Remittances to International Financial Services Centres (IFSCs) under the Liberalised Remittance Scheme (LRS)
At present, remittances under LRS to IFSCs can be made only for: Regulatory Updates
- Making investments in IFSCs in securities except those issued by entities/ companies resident in India (outside IFSC); and
- Payment of fees for education to foreign universities or foreign institutions in IFSCs for pursuing courses mentioned in the gazette notification no. SO 2374(E) dated May 23, 2022, issued by the Central Government.
For these permissible purposes, resident individuals can open Foreign Currency Account (FCA) in IFSCs.
It has been decided that Authorised Persons may facilitate remittances for all permissible purposes under LRS to IFSCs for:
- Availing financial services or financial products as per the International Financial Services Centres Authority Act, 2019 within IFSCs; and
- All current or capital account transactions, in any other foreign jurisdiction (other than IFSCs) through an FCA held in IFSCs.
For these permissible purposes, resident individuals can open Foreign Currency Account (FCA) in IFSCs. Regulatory Updates
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Master Direction – Overseas Investment Regulatory UpdatesRegulatory Updates
RBI issued Master Direction on Overseas Investment on July 24, 2024. These directions lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/ constituents with a view to implementing the Overseas Investment Rules and the Overseas Investment Regulations.
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Income Tax Updates
CBDT Awards Taxnet 2.0 Project for Upgrading ITD Network Infrastructure
The CBDT has awarded the Taxnet 2.0 project to M/s Bharti-Airtel Ltd to upgrade the ITD’s network infrastructure. This project will enhance security, reliability, and connectivity, replacing the existing Taxnet 1.0 system. Chosen through an open tender, Bharti-Airtel will provide advanced technology for improved service nationwide, supporting the government’s goal to modernize digital infrastructure and enhance public tax services. Regulatory Updates
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GST Updates
CBIC notifies amendments to CGST rules followed by the 53rd GST Council Meeting
The Central Board of Indirect Taxes and Customs (CBIC) has issued notifications to amend the Central Goods and Services Tax Rules, 2017 (CGST Rules), along with several other notifications, following the recommendations from the 53rd GST Council meeting held on June 22, 2024. CBIC has also issued circulars to clarify their stance on these amendments. Key amendments include changes related to input service distribution (ISD), corporate guarantees, procedures for appeals to the GST Appellate Tribunal (GSTAT), and the introduction of Form GSTR 1A. Regulatory Updates
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CBIC issues clarification exempting filing of Annual Return for FY 2023-24
The Central Board of Indirect Taxes and Customs (CBIC) has issued notifications exempting registered persons with an aggregate turnover not exceeding two crore rupees in the financial year 2023-24 from filing annual returns.
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CBIC notifies the tax rate for e-commerce operators. Regulatory Updates
The Central Board of Indirect Taxes and Customs (CBIC) notifies the change in the tax rate applicable to e-commerce operators by lowering it from 1% to 0.5%.
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CBIC issues clarifications on Recovery of Outstanding Dues and Pre-Deposit Adjustments under CGST Act
The CBIC clarifies procedures for recovery of outstanding dues when appeals to the GST Appellate Tribunal cannot be filed due to its non-constitution. Taxpayers can pay pre-deposit amounts through the Electronic Liability Register and provide an undertaking to stay in recovery proceedings. Payments made via FORM GST DRC-03 can be adjusted as pre-deposits once FORM GST DRC-03A functionality is available on the portal.
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CBIC issues guidelines on the Taxability and Valuation of Corporate Guarantees
These guidelines provide clarity on the taxability and valuation of corporate guarantees, ensuring uniform implementation across field formations. The key changes include the valuation method, applicability to previous and new guarantees, and the treatment of intra-group and exported services. Regulatory Updates
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CBIC issues clarification for refund of additional Integrated Tax (IGST) paid on account of upward revision in price of the goods subsequent to exports
The CBIC has issued a circular clarifying that exporters may apply for a refund of additional IGST paid due to upward price revisions of goods after export. They can file this application electronically in FORM GST RFD-01 on the common portal under the category “Any other” until a specific category for this purpose is created on the portal. Regulatory Updates
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CBIC issues clarification regarding the applicability of GST on certain services
The CBIC has issued a circular to clarify GST applicability and address operational challenges for various sectors, including railways, real estate, digital payments, and insurance. Key updates include the reinstatement of GST exemptions for certain railway services such as platform tickets and retiring rooms, effective from 15.07.2024, with past transactions regularized from 20.10.2023. Transactions between Special Purpose Vehicles (SPVs) and Indian Railways are now exempt from GST, and this exemption is retroactively applied from 01.07.2017. Statutory collections by RERA are confirmed as GST-exempt. Incentives in the digital payment ecosystem are considered subsidies and not taxable. GST liabilities for reinsurance of specified and government-sponsored insurance schemes, dating back to 01.07.2017, have been regularized. ‘Reinsurance’ now explicitly includes ‘retrocession’ services. Accommodation services costing up to ₹20,000 per person per month for at least 90 days are exempt from GST starting 15.07.2024, with past transactions regularized. Additionally, the circular provides clarifications on GST rates for goods, including solar cookers, fire water sprinklers, and parts of poultry-keeping machinery. It also revises the definition of ‘pre-packaged and labelled’ for agricultural products, ensuring that packages over 25 kilograms or liters are not subject to GST. Lastly, supplies made to or by agencies engaged by governments for distributing goods at subsidized rates are regularized for past periods. Regulatory Updates
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CBIC issues clarification on GST Rates and classification of goods on recommendation of GST Council
The GST Council has provided several clarifications and regularizations. Solar cookers using both solar energy and grid electricity fall under heading 8516 and attract a 12% GST rate. Similarly, all types of sprinklers, including fire water sprinklers, are subject to a 12% GST rate, with past liabilities regularized on an “as is where is” basis. Parts of poultry-keeping machinery are classified under tariff item 8436 91 00 and also attract a 12% GST rate, with amendments explicitly including these parts. The scope of ‘pre-packaged and labelled’ for agricultural produce has been redefined, excluding packages over 25 kg or liters from the 5% GST. Lastly, supplies made to or by government agencies involving pulses and cereals in unit containers with registered brand names (from July 1, 2017, to July 17, 2022) are regularized on an “as is where is” basis, subject to specific conditions regarding supplier certification and input tax credit reversal. Regulatory Updates
