MCA Updates
Revision of LLP Form 3 and Form 4 regulatory updates
This notification has substituted Form 3 (Information with regard to Limited Liability Partnership Agreement and changes, if any, made therein) and Form 4 (Notice of appointment, cessation, change in name/ address/ designation of a designated partner or partner and consent to become a partner/ designated partner).
The Ministry of Corporate Affairs (“MCA”) has introduced additional disclosure requirements in Form 3. Specifically, where the partner/ designated partner is a body corporate, the form must now include the additional information such as Name, type of body corporate and details of LLPIN/ CIN/ FCRN/ other identification numbers associated with it.
The Government’s intent behind incorporating the additional requirements is to improve the accuracy and completeness of the information provided in the form.
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Holding of AGM and EGM through VC or OAVMregulatory updates
MCA vide its Circular clarified that it has been decided to allow companies to convene Annual General Meetings (“AGM”) and Extra-Ordinary General Meetings (“EGM”) through Video Conference (“VC”) or Other Audio-Visual Means (“OAVM”) or transact items through postal ballot in accordance with the framework up to September 30, 2024.
However, this Circular shall not be construed as an extension of statutory time for convening AGMs for 2023 by the companies under the Companies Act, 2013 and the Companies which have not adhered to the statutory timelines shall be liable to penal action under the relevant provisions of the Act.
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SEBI Updates
Change in mode of payment w.r.t SEBI IPEF Bank A/cregulatory updates
To facilitate ease of payment to the market participants, the Securities Exchange Board of India (“SEBI”), with effect from September 04, 2023 changed the mode of payment to SEBI Investor Protection and Education Fund (“SEBI IPEF”) only by way of the specified link provided in the Home page of the SEBI website. In this regard, a new bank account was opened to make payment to SEBI IPEF.
The circular specifies the requisite details to be furnished for the purpose of making the payment and enables the user to make payment through Net banking, NEFT/RTGS, debit cards and UPI modes. The circular can be accessed by clicking on the link given below.
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The new format of an abridged prospectus for public issues of Non – Convertible Debt Securities and/ or Non – Convertible redeemable preference shares regulatory updates
In order to provide greater clarity, and consistency in disclosures across various documents and to provide critical information, the SEBI vide its circular dated September 04, 2023, has revised the format for disclosures in the Abridged Prospectus for public issues of Non-Convertible Debt Securities and/ or Non-convertible Redeemable Preference Shares which is a mandatory attachment for issuing form of application for purchasing of securities of the company.
The circular shall be applicable for all the public issues opening on or after October 01, 2023, for which the format of the Abridged Prospectus shall be as per Annex I to the circular.
The circular also requires the issuers/ Merchant Bankers to make available a copy of the abridged prospectus on their website and to insert a Quick Response (QR) Code on the last page of the Abridged Prospectus which will lead to the Prospectus.
The circular can be accessed by clicking the link given below.
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Redressal of Investor grievances through the scores platform and linking it to the online dispute resolution platform
In order to strengthen the existing investor grievance handling mechanism through SEBI Complaint Redressal (“SCORES”) by making the entire redressal process of grievances in the securities market comprehensive by providing a solution that makes the process more efficient by reducing timelines and by introducing auto-routing and auto-escalation of complaint, the SEBI vide its circular dated September 20, 2023 has specified the updated process for addressing complaints received through the SCORES platform for Entities and for monitoring the complaints by designated organizations.
The provisions of this circular shall come into force w.e.f December 04, 2023.
The detailed circular can be accessed by clicking on the link given below, regulatory updates
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Extension of Timelines (I) for nomination in eligible Demat accounts and (II) for submission of PAN, nomination and KYC details by physical security holders and voluntary nomination for trading accounts
Vide the SEBI circular dated September 26, 2023, it has been decided to extend the deadline for submission of “Choice of Nomination” for demat accounts holders and submission of PAN, Nomination, Contact details, Bank A/c details, and Specimen signature for their corresponding folio numbers for physical security holders to December 31, 2023, based on the comments received from investors, the Registrars Association of India, and various other stakeholders.
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Extension of timeline for verification of market rumours by Listed entities
The SEBI on September 30, 2023, issued a circular to extend the timeline for Listed Companies with such market capitalization from such effective date as specified in Proviso to Regulation 30 (11) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) to mandatorily verify and confirm, deny or clarify market rumours. The extension applies to the following categories of listed entities as mentioned below:
| S. No | Market Capitalization | Extended from | Extended to |
| 1. | Top 100 Listed entities | 01st October, 2023 | 01st February, 2024 |
| 2. | Top 250 Listed Entities | 01st April, 2023 | 01st August, 2024 |
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Income Tax Updates
Amendment of Income Tax Rule 11UA – Valuation of Unquoted Equity Shares
The Finance Act of 2023 amended the Income-tax Act, of 1961 to include consideration received from non-residents for shares issued by an unlisted company under section 56(2)(viib). This means that if the consideration exceeds the Fair Market Value (FMV) of the shares, it will be subject to income tax as ‘Income from other sources.’ The government sought input from stakeholders and the public on Draft Rule 11UA for valuing shares. Following feedback and discussions, Rule 11UA has been modified as of September 25, 2023. The key changes include:
- Expanding the valuation methods for non-resident investors to include five additional methods alongside the existing Discounted Cash Flow (DCF) and Net Asset Value (NAV) methods.
- Price matching the FMV of equity shares for resident and non-resident investors when considering shares received from a notified non-resident entity within a specific timeframe.
- Offering price matching options for resident and non-resident investors in Venture Capital Funds or Specified Funds.
- Providing valuation methods for Compulsorily Convertible Preference Shares (CCPS).
- Establishing a safe harbour of a 10% variation in value.
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CBDT issued procedure for Income Tax at any Lower Rate or No Deduction certificate applications via TRACES
The Ministry of Finance, under the Central Board of Direct Taxes, has issued a notification No.02/2023 on September 27, 2023. This notification introduces a revised procedure, format and standards for filing applications for the grant of certificates under sub-rule (4) of Rule 28AA of the Income Tax Rules,1962. These certificates are essential for the deduction of income tax at lower rates or for no deduction of income tax under sub-section (1) of section 197 of the Income tax Act, 1961. The new procedure will be effective from October 1, 2023.
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CBDT extends filing deadlines for Form 10B, 10BB and ITR-7 for the AY 2023-24
The CBDT, through Circular No. 16/2023 dated 18th September 2023, has responded to concerns from taxpayers and stakeholders regarding the filing of Form 10B, Form 10BB, and ITR-7 for the Assessment Year 2023-24. The circular introduces the following key points:
Extension for Form 10B and Form 10BB: The CBDT has extended the deadline for submitting Audit reports in Form 10B/ Form 10BB for the Previous Year 2022-23. The original deadline of 30th September 2023 has been pushed to 31st October 2023. This extension is beneficial for funds, trusts, institutions, universities, educational institutions, hospitals, and medical institutions, giving them extra time to compile and submit accurate reports.
Extension for Form ITR-7: The due date for filing the Return of Income in Form ITR-7 for the Assessment Year 2023-24 has also been extended. Initially, the deadline was 31st October 2023, but it has now been extended to 30th November 2023. This extension primarily benefits assessees falling under clause (a) of Explanation 2 to sub-section (1) of section 139 of the Income-tax Act, 1961, providing them with additional time to ensure their tax returns are filed accurately and comprehensively.
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CBDT committed to the speedy processing of Income Tax Returns
The Income Tax Department has been processing Income Tax Returns (ITRs) efficiently for the Assessment Year 2023-24. As of September 5, 2023, 6.98 crore ITRs have been filed, with 6.84 crore ITRs verified. Over 88% of the verified ITRs have been processed, resulting in the issuance of more than 2.45 crore refunds. The average processing time for verified ITRs for AY 2023-24 is now just 10 days, a significant improvement compared to previous assessment years.
However, there are certain categories of ITRs that cannot be processed due to missing information or actions by taxpayers:
- Approximately 14 lakh ITRs for AY 2023-24 have been filed but have not yet been verified by taxpayers. Verification is essential for processing, and taxpayers are urged to complete this step promptly.
- Around 12 lakh verified ITRs require additional information, and the Department has communicated with the taxpayers through their registered e-filing accounts. Taxpayers are requested to respond quickly to these requests.
Additionally, there are cases where ITRs have been processed, and refunds determined, but they cannot be issued because taxpayers haven’t validated their bank account information. Taxpayers are encouraged to validate their bank accounts through the e-filing portal.
The Income Tax Department is committed to processing ITRs swiftly and issuing refunds promptly and they seek the cooperation of taxpayers in this endeavor.
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Gross Direct Tax collections for the Financial Year 2023-24 (as on 16.09.2023) register a growth of 18.29%
The provisional figures for Direct Tax collections for the Financial Year 2023-24 as of September 16, 2023, reveal:
- Net collections of ₹8,65,117 crore, showing a 23.51% increase compared to the same period in the previous Financial Year (FY 2022-23).
- The Net Direct Tax collections include Corporation Tax (CIT) at ₹4,16,217 crore and Personal Income Tax (PIT) including Securities Transaction Tax (STT) at ₹4,47,291 crore.
- Gross collection of Direct Taxes, before adjusting for refunds, is ₹9,87,061 crore, indicating an 18.29% growth compared to the corresponding period in FY 2022-23.
- The Gross collection comprises Corporation Tax (CIT) at ₹4,71,692 crore and Personal Income Tax (PIT) including Securities Transaction Tax (STT) at ₹5,13,724 crore.
- Advance Tax collections for FY 2023-24 stand at ₹3,55,481 crore, marking a 20.73% growth compared to the prior FY (2022-23). The Advance Tax collection includes Corporation Tax (CIT) at ₹2,80,620 crore and Personal Income Tax (PIT) at ₹74,858 crore.
- Refunds totalling ₹1,21,944 crore have been issued in FY 2023-24 until September 16, 2023.
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GST Updates
Seeks to make amendments (Third Amendment,2023) to the CGST Rules,2017
The Central Board of Indirect Taxes and Customs (CBIC) has introduced significant amendments through Notification No.45/ 2023 dated September 6, 2023, pertaining to the Central Goods and Service Tax (CGST) rules. These changes are set to bring clarity to the valuation of supplies in the realm of online gaming and casinos.
Rule 31B – Valuation of Supply in Online Gaming:
Under this rule, the CBIC outlines the Valuation of supply concerning online gaming, which includes online money gaming. The key provisions are as follows:
- The Value of supply for Online gaming, including actionable claims associated with online money gaming, is determined as the total amount paid or payable to or deposited with the supplier. This payment can be made in the form of money, money’s worth, or virtual digital assets on behalf of the player.
- It’s crucial to note that any amount returned or refunded to the player or any unused amount by the player cannot be deducted from the value of the supply.
Rule 31C– Valuation of Supply of Actionable Claims in Casinos regulatory updates
This rule pertains to the valuation of actionable claims in the context of casinos. It sets forth the following valuation criteria:
- The value of supply of actionable claims in a casino is determined as the total amount paid or payable by or on behalf of the player. This payment can occur when purchasing tokens, chips, coins or tickets for use in the casino or when participating in casino events, games, competitions or activities where tokens, chips, coins or tickets are not required.
- Similar to Rule 31B, any amount refunded by the casino to the player upon returning tokens, chips, coins or tickets or through other means, cannot be subtracted from the value of the supply of actionable claims in the casino.
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Seeks to make amendments (Third Amendment, 2023) to the CGST Rules, 2017 in supersession of Notification No. 45/ 2023 dated 06.09.2023 regulatory updates
The CBIC has notified Central Goods and Services Tax (Third Amendment) Rules, 2023 in suppression of earlier Central Goods and Services Tax Rules (Third Amendment) Rules, 2023. These rules provide value of supply of specified actionable claims, form and manner of submission of returns by the supplier of online money gaming from outside India etc.
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