MCA Updates
The Ministry of Corporate Affairs has announced the launch of company forms covering 9 e-forms [MSME, BEN-2, MGT-6, IEPF-1, IEPF-1A, IEPF-2, IEPF-4, IEPF-5, IEPF-5 e-verification report] on 15th July 2024 at 12:00 AM in V3 MCA21 portal. They had issued an advisory to the stakeholders about the unavailability of the V2 portal for filing these forms till 14 July 2024. Income Tax and GST updates, Regulatory Updates
SEBI Updates
SEBI enhances the Basic Services Demat Account (BSDA) limit to INR 10 Lakh from INR 2 Lakh to encourage financial inclusion and ease of investing
The facility of BSDA was introduced by SEBI in 2012 in order to achieve wider financial inclusion, encourage the holding of demat accounts, and to reduce the cost of maintaining securities in demat accounts for retail individual investors.
The eligibility of BSDA has been comprehensively reviewed and SEBI notified the revised features vide its circular dated June 28, 2024. Further, the Depository Participants (DPs) shall open only BSDA for Beneficial Owners (BO), if that BO falls under the eligibility criteria unless such BO specifically provides consent to avail regular demat account.
Furthermore, DPs are mandated to reassess the eligibility of all the existing BOs with respect to BSDA within two months from the date of this circular coming into effect and shall convert all such eligible demat accounts into BSDA unless such BO specifically provides consent to avail regular demat account. Income Tax and GST updates, Regulatory Updates
This circular shall come into effect from September 01, 2024.
Click here to access the circular
Obligations of Securities Market Intermediaries under the Prevention of Money Laundering Act, 2002 and its Rules
The PMLA Rules empower SEBI to specify the information required to be maintained by the securities market intermediaries and the procedure, manner and form in which such information is to be maintained. It also mandates the reporting entities which includes securities market intermediaries to evolve an internal mechanism having regard to any guidelines issued by the regulator.
In light of the above, SEBI has issued guidelines stipulating the essential principles for combating Money Laundering (ML) and Terrorist Financing (TF) and it provides for detailed procedures and obligations to be followed and complied with by all the registered intermediaries. On and from the issue of this Circular, the earlier circulars issued by SEBI on the subject of Anti-Money Laundering and Combating the Financing of Terrorism shall stand rescinded as stipulated in the master circular.
Click here to access the Master Circular
EXTENSION OF LAST DATE FOR SUBMISSION OF choice of nomination for Demat accounts and mutual fund (‘MF’) folios
SEBI vide its circular dated June 10, 2024 has granted relaxations on the consequences of non-submission of ‘choice of nomination’ for demat accounts and mutual fund folios to the existing investors. SEBI had earlier extended the last date for submission of ‘choice of nomination’ to June 30, 2024 failing which demat accounts/folios shall be frozen for debits. Income Tax and GST updates, Regulatory Updates
Based on representations received from the market participants, for ease of compliance and investor convenience, it has now been decided to do away with the freezing of demat accounts and MF folios. Income Tax and GST updates, Regulatory Updates
Further, the following relaxations are provided:
- Security holders holding securities in physical form shall be eligible for receipt of any payment including dividend, interest or redemption payment as well as to lodge a grievance or avail any service request from the RTA even if ‘choice of nomination’ is not submitted. Income Tax and GST updates, Regulatory Updates
- Payments including dividend, interest or redemption payment withheld presently by the Listed Companies/RTAs, only for want of ‘choice of nomination’ shall be processed accordingly.
Click here to access the Circular
SEBI notifies Framework of Financial Disincentives for Surveillance Related Lapses (‘FDSRL’) at Market Infrastructure Institutions (‘MII’)
Any lapse in detecting and deterring manipulative/abusive trading would show a lack of adequate actions for surveillance-related activity on the part of MIIs. This may have an adverse effect on the investors trust and confidence. In light of the above, SEBI notified FDSRL vide its circular dated June 06, 2024. Income Tax and GST updates, Regulatory Updates
The Financial Disincentive(s) will be imposed on the MII for any Surveillance Related Lapses. If imposed, the amount shall be credited by the MII concerned within 15 working days, to the Investor Protection and Education Fund established under the SEBI Act, 1992.
The provisions of this circular shall come into effect from July 1, 2024 and the framework of FDSRL at MIIs shall be applicable for any surveillance-related lapse occurring on or after the said date. Income Tax and GST updates, Regulatory Updates
Click here to access the Circular
Enhancement of operational efficiency and Risk Reduction – Pay-out of securities directly to client demat account
SEBI, vide Master Circular for Stock Brokers dated May 22, 2024, inter alia, specified various processes for handling of clients’ securities with regard to pay-in and pay-out of securities. Currently, the securities are pooled by the broker and then credited to the respective client demat accounts. Income Tax and GST updates, Regulatory Updates
Subsequently, SEBI vide its circular dated June 05, 2024 has now been made mandatory that the securities for pay-out shall be credited directly to the respective client’s demat account by the CCs.
The provisions of this circular shall come into force with effect from October 14, 2024.
Click here to access the Circular
Modification in Framework for Offer for Sale (OFS) of Shares to Employees through Stock Exchange Mechanism
SEBI Circular dated January 23, 2024 prescribed the procedure for offering shares to the employees in Offer for Sale (OFS) through stock exchanges as below: Income Tax and GST updates, Regulatory Updates
OFS to employees shall be on T+1 day along with the retail category under a new category called “Employee”
Employees shall place bids only at a cut-off price of T+1day. The allotment price shall be based on the Cut-off of the retail category, subject to discount, if any.” Income Tax and GST updates, Regulatory Updates
SEBI, after deliberations amended the above provision and provided the following:
Employees shall place bids only at the cut-off price of T day. The allotment price shall be based on the Cut-off of the T day, subject to discount, if any. Income Tax and GST updates, Regulatory Updates
The provisions of this circular shall come into effect from the 30th day of issuance of this circular.
Click here to access the Circular
Introduction of a special call auction mechanism for price discovery of scrips of Listed Investment Companies (ICs) and listed Investment Holding Companies (IHCs)
SEBI has observed that scrips of a few listed ICs and IHCs are traded infrequently and at a price that is significantly lower than the book value as reported by these companies in their latest audited financial statements. Additionally, these companies generally have no day-to-day operations and hold investments in different asset classes including in scrips of other listed companies. The disparity between the market price and book value of such ICs and IHCs is adversely affecting liquidity, fair price discovery and the overall interest of investors in scrips of such companies. Income Tax and GST updates, Regulatory Updates
In order to address the above concern, a framework has been put in place for “special call auction with no price bands” for effective price discovery of scrips of such ICs and IHCs. The operational guidelines with regard to this are set forth under this Circular.
Click here to access the Circular
Modification in duration for Call Auction in pre-open session for Initial Public Offer (IPO) and Relisted scrips
SEBI has observed that during the call auction in the pre-open session for certain IPO and relisted scrips, orders were placed at higher prices in large volumes and a significant portion of such orders were canceled just before the closure of the call auction session. This may have created false demand and supply and possibly manipulated the price of the scrips to the detriment of common investors.
In order to curb the misuse of the call auction session, SEBI has modified the current provisions relating to call auction sessions for IPO & relisted scrips and has introduced additional surveillance measures at stock exchanges. The provisions of this circular shall be applicable from the 90th day of issuance of the circular. Income Tax and GST updates, Regulatory Updates
Click here to access the Circular
Master Circulars
In order to enable the stakeholders to have access to all the applicable circulars/ directions in one place, SEBI has been issuing a series of Master Circulars. The list of master circulars issued recently by SEBI is tabulated below:
| Particulars | Date of Issue | Link to access the Master Circular |
| Master Circular Mutual funds | Jun 27, 2024 | Click here to access the Master Circular |
| Master Circular for Electronic Gold Receipts | Jun 24, 2024 | Click here to access the Master Circular |
RBI Updates
International Trade Settlement in Indian Rupees (INR) – Opening of additional Current Account for settlement of trade transactions
AD Category-I banks maintaining Special Rupee Vostro Account vide A.P. (DIR Series) Circular No.10 dated July 11, 2022 on International Trade Settlement in Indian Rupees were permitted to open an additional special current account for its constituents, exclusively for settlement of export transactions. To provide operational flexibility, the facility of opening such an additional special current account referred to above may be extended for settlement of their export as well as import transactions. Income Tax and GST updates, Regulatory Updates
Click here to access the Notification
Income Tax Updates
CBDT notifies changes in Form 27Q
The Central Board of Direct Taxes (CBDT) has notified certain modifications in Form 27Q which is used for furnishing information regarding tax deducted at source (TDS) for payments made to non-residents. A new Note 7A has been added, instructing tax deductors to indicate “P” when a lower deduction or no deduction is applicable due to a notification issued under section 197A(1F) of the Income-tax Act, 1961.
Click here to access the notification
CBDT notifies for Electronic Filing of Specific Income Tax Forms.
The Director General of Income Tax (Systems), with Board approval, mandates electronic submission and verification of Forms 3CN, 3CS, 3CEC, 3CEFB, 59, and 59A. This notification is effective from June 27, 2024. Income Tax and GST updates, Regulatory Updates
Click here to access the notification
Direct Tax Collection Updates
As per the reports direct tax collections up to June 17, 2024, reached Rs. 5.15 Lakh Crores, a 22.19% increase from the same period last year. Refunds disbursed during the period totaled Rs. 53.3 thousand Crore. Income Tax and GST updates, Regulatory Updates
Click here to access the press release
GST Updates
CBIC issues clarification on the time of supply of services of spectrum usage and other similar services
The CBIC notifies that under the DoT’s spectrum allocation model, telecom operators (bidders) are liable to pay GST on spectrum allocation services via reverse charge. If payments are made in installments, GST is due when payments are made or due, whichever is earlier. The Frequency Assignment Letter acts as a bid acceptance document, and invoices must be issued based on the due dates specified in the contract. Income Tax and GST updates, Regulatory Updates
Click here to access the circular
CBIC issues clarification on time of supply of services of construction of road and maintenance thereof of National Highway Projects of National Highways Authority of India (NHAI)in Hybrid Annuity Mode (HAM) model
Under HAM concession agreements, the highway development projects follow the DBOT model. The payment terms cover both construction and O&M and are treated as a continuous supply of services under CGST. Tax liability arises at the time of invoice issuance or payment receipt, whichever is earlier. If invoices are not timely, liability is based on service provision. Interest in installments is also taxable.
Click here to access the circular
CBIC issues clarification on place of supply applicable for custodial services provided by banks to Foreign Portfolio Investors
Under SEBI regulations, custodial services involve safekeeping securities and related activities. According to the IGST Act, custodial services provided by banks to Foreign Portfolio Investors (FPIs) are not considered services to ‘account holders.’ Therefore, the place of supply for these services is not determined under Section 13(8)(a) but under the default rule in Section 13(2) of the IGST Act, which considers the location of the service receiver. Income Tax and GST updates, Regulatory Updates
Click here to access the circular
CBIC issues clarification on the availability of input tax credit on ducts and manholes used in the network of optical fiber cables (OFCs) in terms of section 17(5) of the CGST Act, 2017
Input tax credit (ITC) on ducts and manholes used in optical fiber cable (OFC) networks for telecommunication services is not restricted under clauses (c) and (d) of Section 17(5) of the CGST Act. These items are considered “plant and machinery” as they are essential for the OFC network and are not excluded from the definition in the CGST Act, making ITC available for them. Income Tax and GST updates, Regulatory Updates
Click here to access the circular
CBIC issues clarification regarding the taxability of the transaction of providing a loan by an overseas affiliate to its Indian affiliate or by a person to a related person
As contained in Section 7(1)(c) of the CGST Act, supply between related persons is taxable even without consideration. However, loans with interest or discount are exempt under Notification No. 12/2017-Central Tax (Rate). Processing fees are generally taxable. For loans between related parties, if no processing fee is charged, it is not considered a supply of services under GST. If a processing fee is charged, it is taxable. Thus, loans between related entities without additional fees do not attract GST. Income Tax and GST updates, Regulatory Updates
Click here to access the circular
CBIC issues clarification regarding ITC by the insurance companies on the expenses incurred for repair of motor vehicles in case of reimbursement mode of insurance claim settlement
Insurance companies providing general insurance for motor vehicles settle claims in two modes: Cashless and Reimbursement. As per Section 17(5) of the CGST Act, ITC for motor vehicle repair services is available to insurance companies. Despite policyholders paying garages initially, the insurance company, which reimburses the repair costs, is considered the recipient under Section 2(93) of CGST. Hence, ITC is available to insurance companies for repair expenses under reimbursement mode. If invoices exceed the approved claim cost, ITC is available only for the reimbursed amount. If invoices are not in the insurance company’s name, ITC is not available.
Click here to access the circular
CBIC issues clarification on the taxability of ESOP/ESPP/RSU provided by a company to its employees through its overseas holding company
CBIC clarified that no supply of service occurs between a foreign holding company and a domestic subsidiary when the former issues ESOP/ESPP/RSU to the latter’s employees, and the subsidiary reimburses the cost on a cost-to-cost basis. However, if an additional amount is charged, GST is leviable on the extra amount as consideration for the service, payable by the domestic subsidiary on a reverse charge basis. Income Tax and GST updates, Regulatory Updates
Click here to access the circular
CBIC issues clarification on the time limit under Section 16(4) of CGST Act, 2017 in respect of RCM supplies received from unregistered persons
The CBIC clarified that for supplies from unregistered suppliers under the Reverse Charge Mechanism (RCM), where the recipient issues the invoice as per section 31(3)(f) of the CGST Act, the relevant financial year for calculating the time limit to avail Input Tax Credit (ITC) under section 16(4) is the year the recipient issues the invoice. The recipient must pay the tax and meet other conditions under sections 16 and 17. If the invoice is issued late, the recipient must pay interest and may face penalties. Income Tax and GST updates, Regulatory Updates
Click here to access the circular
CBIC notifies the mechanism for providing evidence of compliance with conditions of Section 15(3)(b)(ii) of the CGST Act, 2017 by the suppliers with regard to post-supply discounts
The CBIC clarified that post-supply discounts can be excluded from the taxable value if conditions in Section 15(3)(b) of the CGST Act are met, including the recipient reversing the related input tax credit (ITC). Where the amount of tax involved in the discount given by the supplier to the recipient via issuance of credit notes exceeding Rs 5,00,000/-, the supplier must procure a CA/CMA certificate from the recipient for the reversal of ITC at his end. However, if the amount of tax involved is below Rs 5,00,000/- a declaration from the recipient would suffice.
