MCA Updates
Pending adjudication proceedings to continue as per the erstwhile provisions
The Ministry of Corporate Affairs, by way of notification in August 2024, amended the Companies (Adjudication of Penalties) Amendment Rules, 2014 wherein it provided that all proceedings of adjudicating officer and Regional Director will take place in electronic mode only, through the e-adjudication platform developed by the Central Government. It has now been clarified that the adjudication of proceedings already pending on the date of commencement of this rule will continue as per the prior provisions.
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RBI Updates
Due diligence in relation to non-resident guarantees availed by persons resident in India
The Reserve Bank of India has taken note of instances of guarantees (including Standby Letters of Credit or performance guarantees) issued by persons resident outside India, favoring persons resident in India, which are not permitted under the extant FEMA regulations. It has been notified that the AD Category-I banks may ensure that guarantee contracts advised by them to, or on behalf of, their resident constituents are in accordance with the FEMA regulations.
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RBI issues directions for Compounding of Contraventions under FEMA, 1999
The Government of India has notified the Foreign Exchange (Compounding Proceedings) Rules, 2024 dated September 12, 2024 in supersession of the Foreign Exchange (Compounding Proceedings) Rules, 2000.
In this regard, the authorized dealers have been advised to take necessary steps to ensure that checks and balances are incorporated in systems relating to dealing with and reporting of foreign exchange transactions so that contraventions of provisions of FEMA, 1999, attributable to the authorized dealers do not occur. Further all AD Category – I banks and Authorized banks have been advised to bring the guidelines contained in this circular to the notice of their constituents.
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SEBI Updates
Inclusion of Mutual Fund units in the SEBI (Prohibition of Insider Trading) Regulations, 2015
In order to strengthen the regulatory framework for prohibition of insider trading in units of Mutual Funds (‘MF’), MF units were included under the SEBI PIT Regulations in the year 2022.
In line with the above amendments, Asset Management Companies (AMC) have been asked to disclose the details of the holdings of Designated Persons of AMC, trustees and their immediate relatives on aggregate basis from November 1, 2024 on quarterly basis. The holdings as on October 31, 2024 are to be disclosed on the platform of the Stock Exchanges by November 15, 2024.
Thereafter, for all subsequent calendar quarters AMC are expected to provide the information within 10 calendar days from the end of the quarter.
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Monitoring shareholding of Market Infrastructure Institutions (MIIs)
In order to ensure ease of compliance and effective monitoring of the provisions related to minimum public shareholding, other shareholding limits and fit & proper criteria, the framework for monitoring and ensuring compliance with shareholding norms (currently applicable to listed Stock Exchanges and listed Depositories) shall now be applicable to all MIIs (i.e. both listed and unlisted)
All MIIs are required to disclose their shareholding pattern as per SEBI LODR Regulations, 2015 on their respective website.
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Extension in timeline for mandatory pay-out of securities directly to the client’s demat account & Change in timing for securities payout
SEBI had earlier, by its circular dated June 05, 2024, prescribed mandatory pay-out of securities directly to the client’s demat account which was originally to take effect from October 14, 2024.
In order to ensure smooth implementation, without any disruption to the market players and investors, it has been decided that the above-said circular will come into effect from November 11, 2024.
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Further, under Phase I, the securities for pay-out in the equity cash segment is to be credited directly to the respective client’s demat account by the Clearing Corporations. Consequently, the timing for the payout of securities in the equity cash segment has been revised from 1:30 PM to 3:30 PM.
Thus, as a result of direct payout, the securities shall be credited to the clients’ demat account on the same settlement day.
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Extension in timelines for disclosures by Social Enterprises on Social Stock Exchange (“SSE”)
The outer timeline for annual disclosures [LODR Regulation 91C (1)] and annual impact report [LODR Regulation 91E (1)] by Social Enterprises on Social Stock Exchange, for FY 2023-24 has been extended up to January 31, 2025.
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Relaxation from compliance with certain provisions of the SEBI (LODR) Regulations, 2015
As per regulation 36(1)(b), listed entities are required to send hard copies of statements containing the salient features of all the documents, as prescribed in Section 136 of the Companies Act, 2013 to those shareholders who have not registered their e-mail addresses with the listed entity or with any depository.
Further, the listed entities are required to send proxy forms to holders of securities in all cases mentioning that a holder may vote either for or against each resolution.
SEBI by way of its circular dated 03 October 2024, has provided relaxation from the aforesaid provisions until 30 September 2025.
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Income Tax Updates
CBDT Amends Income-Tax Rules Affecting Forms 10A and 10AB for Streamlined Compliance and Clarity
The CBDT has notified amendments in the Income-tax Rules, 1962, effective retroactively from October 1, 2024. The amendments impact Forms 10A and 10AB, introducing a revised declaration format where applicants confirm accuracy and notify any changes in their institution or trust. In Form 10A, the reference to “2C” was removed, with serial numbers and notes adjusted for greater clarity and compliance. Updated requirements for supporting documents are now based on the institution’s formation. The amendments aim to simplify registration under sections 12A and 80G of the Income-tax Act, clarifying responsibilities for applicants.
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CBDT Updates Income-Tax Rules to Simplify Non-Salary Income Reporting and Improve Compliance
The CBDT has amended the Income-tax Rules, 1962, with immediate effect. Key updates include changes to Rule 21AA, now aligning it with “section 89,” and modifications to Rule 26B, allowing taxpayers to report non-salary income and TDS/TCS details in the newly introduced Form No. 12BAA. Form No. 16 and Form No. 24Q have also been revised to enhance clarity in tax deduction and compliance.
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CBDT notifies amendment to Streamline TCS Reporting and Credit Allocation
The CBDT issued new Income-tax Rules (Ninth Amendment), effective October 16, 2024, revising provisions related to Tax Collection at Source (TCS) under Section 206C of the Income-tax Act, 1961. Key updates include adjustments to Rule 31AA, with revised clause references and a requirement to report non-collection or lower TCS rates. Rule 37-I now clarifies TCS credit allocations, and Form 27EQ includes a note for cases of reduced or no collection. These amendments enhance clarity in TCS reporting and credit processes.
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CBDT Mandates Electronic Submission of Key Income Tax Forms to Enhance Compliance
The CBDT mandated electronic submission for specified forms in Appendix-II of the Income Tax Rules, effective October 31, 2024. This includes Form 3CEDA (Advance Pricing Agreement rollback) and Form 3C-O (Section 35CCC approvals). The directive enhances digital compliance, reduces paperwork, and aligns with the CBDT’s goal of modernizing tax processes for more efficient and timely filing.
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CBDT Updates Guidelines for Condonation of Delay in Income Tax Return Filings
The CBDT issued a notification on October 1, 2024, superseding previous instructions on condonation of delay in filing income tax returns for refunds or carry forward of losses under Section 119(2)(b) of the Income-tax Act, 1961. The notification outlines monetary limits for claims: Principal Commissioners can handle claims up to ₹1 crore, Chief Commissioners up to ₹3 crores, and Principal Chief Commissioners for claims over ₹3 crores. The Central Processing Centre (CPC) in Bengaluru is authorized to process delay condonation applications. Claims filed beyond five years from the assessment year will not be entertained, and authorities must dispose of applications within six months. Additional conditions apply to supplementary claims and delays due to court orders, with the Board retaining the right to review grievances.
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Navigating the Direct Tax Vivad Se Vishwas Scheme
The Direct Tax Vivad Se Vishwas Scheme, 2024 (DTVSV Scheme, 2024) offers taxpayers a chance to resolve pending income tax disputes, as outlined in a CBDT notification from October 15, 2024. It covers appeals pending as of July 22, 2024, and objections filed with the Dispute Resolution Panel (DRP) under Section 144C, excluding cases related to search assessments and undisclosed foreign income or assets. Taxpayers must submit their declarations by December 31, 2024, to qualify for lower payment rates. The notification details the required forms, including Form 1 for declarations and Form 4 for final settlement, ensuring clarity in the resolution process. Overall, it provides essential guidance for taxpayers to avoid prolonged litigation and encourages them to act promptly to benefit from the Scheme before the year-end deadline.
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Condonation of delay in filing income tax return for AY 2023-24 in case of entities claiming deduction under section 80P of the Income-tax Act, 1961.
The Central Board of Direct Taxes (CBDT) has recently issued a notification on October 30, 2024, allowing for the condonation of delay in filing income tax returns for Assessment Year (AY) 2023-24, specifically for entities claiming deductions under Section 80P of the Income Tax Act, 1961. This notification offers relief to cooperative societies and eligible entities that were unable to file their returns within the prescribed timeline due to various reasons.
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Public Consultation Invited for Comprehensive Review of Income-Tax Act, 1961
The Budget 2024-2025 announced a review of the Income-tax Act, 1961, aiming to simplify language, reduce litigation and compliance, and eliminate obsolete provisions. An internal committee invites public suggestions in these areas via a webpage on the e-filing portal, accessible from October 6, 2024, with input submitted by validated mobile number.
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Income-Tax Department Acknowledges Taxpayer Compliance in Filing Tax Audit Reports
The Income-tax Department thanks taxpayers and professionals for filing over 34.84 lakh audit reports for AY 2024-25, marking a 4.8% increase from the prior year. Extensive outreach, helpdesk support, webinars, and awareness videos facilitated timely filings. The e-filing Helpdesk resolved 1.23 lakh queries, enhancing compliance and aiding smooth submission of audit forms.
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CBDT Issues Guidance Note on Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024
To address stakeholder queries on the Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, the CBDT has released a Guidance Note with FAQs. This note clarifies the scheme’s provisions, which were enacted through the Finance (No. 2) Act, 2024, and are accessible on the Income Tax Department’s portal.
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CBDT Issues Simplified Guidelines for Compounding of Offences Under Income-Tax Act
CBDT has issued revised guidelines for compounding of offences, streamlining procedures by removing offence categorization, eliminating filing limits, and reducing compounding charges. Simplified rules permit fresh applications post-defect correction and offer unified rates for TDS defaults. These updates, effective immediately, aim to ease compliance for companies and HUFs.
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CBDT Extends Income Tax Return Filing Deadline for AY 2024-25
The CBDT has extended the income tax return filing deadline for AY 2024-25 from October 31, 2024, to November 15, 2024, for assessees covered under clause (a) of Explanation 2 to Section 139(1) of the Income-tax Act.
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CBDT Sets New Tolerance Range for Transfer Pricing in AY 2024-25
The CBDT has established the transfer pricing tolerance range for AY 2024-25, setting it at 1% for “wholesale trading” transactions and 3% for all other transactions. “Wholesale trading” qualifies if the purchase cost exceeds 80% of total costs and monthly inventory remains 10% or less of sales. This notification provides certainty and minimizes risks in transaction pricing.
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GST Updates
New Amendments to GST Act
CBIC introduced the GST Amnesty Scheme under Section 128A of the CGST Act. This scheme allows for waivers of interest and penalties on tax demands from FY 2017-18 to FY 2019-20. Applications must be filed within specified timelines using designated forms and supported by payment details and relevant documentation. Amendments also cover a unified ITC refund mechanism for zero-rated supplies, ITC restrictions, self-invoicing rules, and extended filing deadlines. Additional modifications include revised rules for erroneous refunds, revised penalties, and updated forms effective from 1 November 2024.
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CBIC Notifies Special Procedure for Rectification of Input Tax Credit Orders
The CBIC has introduced a special procedure for registered persons to rectify orders confirming wrong input tax credit claims under sections 73, 74, 107, or 108 of the CGST Act. Applications must be filed electronically within six months, with rectified orders issued within three months, ensuring adherence to natural justice principles.
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CBIC Waivement of Late Fees for GSTR-7 Returns
The CBIC notified waivement of late fees for registered persons required to file GSTR-7 returns for June 2021 onwards, under section 128 of the CGST Act. The waiver applies to late fees exceeding ₹25 per day, capped at ₹1,000. Additionally, no late fee will apply if the total central tax deducted is nil. This notification takes effect from 1 November 2024.
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CBIC Amends GST Provisions for Metal Scrap Supplier
The CBIC amended the previous notification regarding the GST treatment of suppliers engaged in the supply of metal scrap under Chapters 72 to 81 of the Customs Tariff Act. Effective from October 10, 2024, this amendment excludes these suppliers from earlier provisions, aiming to streamline taxation in the metal scrap sector. This change aligns with recent GST Council recommendations that introduced Reverse Charge Mechanism (RCM) and Tax Deducted at Source (TDS) provisions for the sector.
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CBIC issued amendment on TDS Applicability on Metal Scrap Supplies Under GST
The CBIC introduced in the recent amendment making Tax Deducted at Source (TDS) applicable to registered persons receiving metal scrap supplies, specifically those covered under Chapters 72 to 81 of the Customs Tariff Act, 1975. This includes various metals and their scraps, such as iron, steel, copper, aluminum, and lead. Registered buyers of metal scrap from other registered persons are now required to deduct TDS under Section 51 of the CGST Act, 2017.
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CBIC issues Clarifications on GST Applicability for Various Services
The 54th GST Council meeting provided clarifications regarding GST applicability on several services. Affiliation services provided by universities to colleges and by educational boards to schools are taxable at 18%. DGCA-approved flying training courses are exempt from GST. GST on helicopter passenger transport has been regularized at 5% for seat-sharing, while charter services remain at 18%. Ancillary services related to goods transportation are treated as composite supplies. Import of services by foreign airline establishments, when provided without consideration, is also exempt. Further, GST payment for services of film distributors is regularized from 2017 to 2021.
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GST Rate Clarifications from the 54th GST Council Meeting
The GST Council’s 54th meeting clarified rates for specific products effective from October 10, 2024. Extruded savory snacks will be taxed at 12%, Roof Mounted Package Unit (RMPU) air conditioners for railways at 28%, and car seats will also attract 28% GST, aligning motorcycle seat rates. Previous periods will incur higher rates.
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CBIC issues Clarification on “As Is” Regularization in GST Payments
The GST Council’s 54th meeting clarified the “as is” or “as is, where is” regularization for past GST payments. Payments made at lower rates will be accepted as full discharge of tax liability, with no refunds for those who paid higher rates. This aims to address prevailing doubts in classification.
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CBIC issues Clarification of concerns related to Sec 128A of CGST Act
The CBIC offers relief to GST-registered taxpayers with pending tax notices under Section 73 of the CGST Act, 2017. Under Section 128A, this scheme waives all interest and penalties for non-fraud cases if taxpayers settle their GST liabilities for FY 2017-18, 2018-19, and 2019-20. Payments can be made via electronic cash ledger, Input Tax Credit (ITC), or a combination, with a deadline of March 31, 2025. The Ministry of Finance, through CBIC, has issued clarifications to ensure consistent application of the scheme across the board.
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Guidelines for Availing Retrospective Input Tax Credit Under CGST Act Amendments
The recent circular provides guidelines for tax authorities and taxpayers on availing benefits due to the retrospective insertion of Sections 16(5) and 16(6) in the CGST Act. Key scenarios addressed include cases where no demand notice has been issued under Sections 73 or 74; in such situations, tax authorities are directed to acknowledge the retrospective provisions when taking further action. In cases where adjudicating or appellate authorities are handling demands, they should account for the newly inserted provisions during their decisions. Additionally, where orders have been issued under Sections 73, 74, 107, or 108 without an appeal filed, eligible taxpayers can apply for rectification under Notification No. 22/2024, within a six-month timeframe. These procedural guidelines aim to facilitate uniform application of the law and efficient processing of claims under these amended provisions.
