Regulatory Updates_The PULSE_September 2022

Updates from the MCA

ADDITIONAL NORMS TO BE COMPLIED IN THE COMPANIES’ BOOKKEEPING RULES:

The Ministry of Corporate Affairs (MCA) notified the Companies (Accounts) Fourth Amendment Rules, 2022 on 05th August 2022 to ensure a Company has real-time access to the Books of accounts.

As per the amended rules, the books of account and other relevant books and papers maintained in electronic mode shall be readily accessible in India, at all times to use for subsequent reference (earlier there was no requirement of making it accessible at all times).

Further, the backup of the books of account and other books/papers maintained in electronic mode, whether at a place in India or outside India, it shall be kept in servers physically located in India on a ‘daily basis. The earlier requirement was to maintain the servers on a periodic basis.

Also, the Companies having service providers outside India, need to report to the Registrar of Companies, the name & address of the person in control of the books of accounts in India on an annual basis while filing the financial statement.

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PHYSICAL VERIFICATION OF REGISTERED ADDRESS OF COMPANY:

The MCA notified the Companies (Incorporation) Third Amendment Rules, 2022 on 18^th August 2022 by inserting Rule 25B for physical verification of the Registered office of the Company.

Key highlights

• As per the new rule, the Registrar of Companies (ROC) will carry out a physical check of a Company’s registered office.
• The physical verification will be done in the presence of two independent witnesses of the location of the Company’s registered Office.
• If required, ROC will also seek assistance from the local police to carry out the verification.
• The Registrar shall carry the documents filed on the MCA 21 portal in support of the address of the Company’s registered office for physical verification.
• To check the authenticity of documents, the authority shall cross verify the copies of supporting documents of such address collected during the physical verification and fully validate from the occupant of the property where the Registered Office is situated.
• The Registrar will also take a photograph of the Company’s registered office during the physical verification.

Once the verification is completed, a detailed report with various information, including location details and photographs, will be prepared along with their remarks, if any.

In case, if ROC finds that a company has no proper established Registered office and is not capable of receiving and acknowledging all communications and notices, the ROC shall send a notice to such Company and all its Directors, stating their intention to remove the name of the Company from the Register of Companies and a period of thirty days would be given from the date of the notice to the Company to respond with their explanations along with copies of relevant documents if any.

Report on physical verification of Companies Registered Office:

ROC will prepare the Physical Verification Report of the Registered Office of the Company in the prescribed format (refer to notification).

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AMENDMENT IN THE FORMS OF REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES:

The MCA notified Companies (Removal of Names of Companies from the Register of Companies) Second Amendment Rules, 2022 on 24th August 2022 to bring the same in line with the provisions of Registered office of Company (Section 12(9) of the Companies Act, 2013) and the newly inserted Rule 25B of the Companies (Incorporation) Rules, 2014(as mentioned in point 2 above).

• Amendment in Form No. STK-1, in paragraph (1), for the brackets and words “(tick whichever is applicable)”, the following shall be substituted, namely:-

” the company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.

• Amendment in Form STK-5, in paragraph 1, after sub-paragraph (iii) and before the long line, the following shall be inserted, namely:-

“(iv) the following companies are not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.

M/s.___________________________ (indicate names of companies) M/s.___________________________ “;

Amendment in Form No. STK-5A, in paragraph 1, for the brackets and words “[Strike off whichever is not applicable]”, the following shall be substituted, namely:-

“(iv) are not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.

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DECLARATION OF STATUTORY AUDITORS REQUIRED IN FORM DPT-3 AND FORM DPT-4:

The MCA notified amendment in Rule 16 of Companies (Acceptance of Deposit) Rules, 2014 on 29th August 2022 regarding return of deposit to be filed with the Registrar of Companies.

The amendments are as follows to the Company and its Statutory Auditors:

1) Form DPT-3 “Return of deposits” to be filed with the ROCto disclose the details of deposits along with Auditors certificate and a declaration to the correctness of amount specified in the form shall be submitted by the Auditors of the Company. Previously there was no requirement to obtain declaration by the Auditors in form DPT-3 which is now added through this amendment to enhance the responsibilities of the Statutory Auditors.

2) Particulars of Form DPT-3 have been amended and have been substituted with new form DPT-3.

3) Particulars of Form DPT-4 have been amended and have been substituted the new form DPT-4.

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FORM DIR-3 KYC AND WEB FORM DIR-3 KYC AS PER MCA V3 PORTAL:

On 29th August 2022, the MCA notified, that the existing Form DIR-3 KYC and web form DIR-3-KYC have been substituted with new Form DIR-3 KYC and web form DIR-3-KYC to align the same with MCA’s V3 portal.

A new entry has been inserted in the forms capturing the ‘details of the jurisdictional police station’ in the address details of directors.

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SIGNING OF CHARGE FORMS BY INSOLVENCY RESOLUTION PROFESSIONAL OR RESOLUTION PROFESSIONAL OR LIQUIDATOR:

The MCA notified amended in Companies (Registration of Charges) Rules, 2014 on 29th August 2022.

The amendment inserts a new rule 13 to the Companies (Registration of Charges) Rules, 2014 dealing with ‘Signing of charge e-forms by insolvency resolution professional or resolution professional or liquidator for companies under resolution or liquidation’.

The Rule provides that the necessary forms to create, modify, and satisfy charges during the corporate insolvency resolution process (Form No.CHG-1, CHG-4, CHG-8 and CHG-9) shall be signed by the Insolvency resolution professional or resolution professional or liquidator for companies under resolution or liquidation, as the case may be and filed with the Registrar.

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Updates from the SEBI

TRADING WINDOW CLOSURE PERIOD UNDER CLAUSE 4 OF SCHEDULE B READ WITH REGULATION 9 OF SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015 (“PIT REGULATIONS”) – FRAMEWORK FOR RESTRICTING TRADING BY DESIGNATED PERSONS (“DPS”)  BY FREEZING PAN AT SECURITY LEVEL:

Clause 4(1) of schedule B read with Regulation 9 of PIT Regulations, inter-alia, provides the restrictions on trading by the Designated Person (DPs) while in possession of the unpublished price-sensitive information (“UPSI”).

In order to rationalize the compliance requirement under Clause 4 of Schedule B read with Regulation 9 of PIT Regulations, improve ease of doing business and prevent inadvertent non-compliance of provisions of PIT Regulations by DPs, vide SEBI circular dated August 05, 2022, it has been decided that Stock Exchanges and Depositories shall develop a system to restrict trading by DPs of the listed company during trading window closure period. 

The detailed procedure for implementation of the system can be accessed by clicking the link mentioned below.

Click here to access the Circular

ENHANCED GUIDELINES FOR DEBENTURE TRUSTEES AND LISTED ISSUER COMPANIES ON SECURITY CREATION AND INITIAL DUE DILIGENCE:

The SEBI Board in its meeting on September 28, 2020, approved changes to the regulatory framework relating to debenture trustees (DTs), enhancing their role. Resultant amendments were made in all the relevant regulations, pursuant to which a circular on the creation of security and due diligence by DTs was issued.

Since the issue of the circular, SEBI has received feedback from market participants on the aspects of due diligence and security creation. On the basis of such feedback, it has been decided that certain aspects of the said circular be tweaked. Accordingly, the SEBI vide it’s circular dated August 04, 2022 issued the revised requirements and directions relating to encumbrance, creation of security and related due diligence by DTs. The detailed circular can be accessed by clicking the link mentioned below.

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Updates from the RBI

EXTERNAL COMMERCIAL BORROWINGS (ECB) POLICY – LIBERALISATION MEASURES:

The RBI in consultation with the Central Government has decided to take measures to liberalise the forex flows and, in this regard, the following relaxations are announced:

• the borrowing limit under the automatic route allowed per financial year has been increased from USD 750 million to USD 1.5 billion or its equivalent.
• the all-in-cost ceiling for ECBs is raised by 100 basis points provided that the Eligible Borrowers shall have an investment grade rating from Indian Credit Rating Agencies.

It is to be noted that the above relaxations would be available for ECBs to be raised till December 31, 2022.

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INCREASE IN REPO RATES BY 50 BASIS POINTS:

The Reserve Bank of India (RBI) on August,05 2022 has announced the following changes in the key rates:

Click here to access the Circular on change in Rates under LAF

Click here to access the Circular on the revised Repo Rate for Standing Liquidity Facility to PD’s

AUTHORISED DEALER CATEGORY-I LICENSE ELIGIBILITY FOR SMALL FINANCE BANKS (SFB):

The RBI had relaxed the eligibility criteria of the Small Finance Banks for obtaining an Authorised Dealer Category-I License. As per the revised norm, every SFB after completion of at least two years of operations as Authorised Dealer Category-II, will now apply for an Authorised Dealer Category-I License subject to such specified eligibility criteria.

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CREDIT INFORMATION COMPANIES UNDER THE PURVIEW OF RESERVE BANK INTEGRATED OMBUDSMAN SCHEME 2021 (RBIOS, 2021):

The RBI on November 12, 2021, had notified the Reserve Bank – Integrated Ombudsman Scheme, 2021 which covers various regulated entities such as commercial banks and NBFCs. Now the scheme has been revised to include the Credit Information Companies under its purview to address grievances against such companies.

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STAND-ALONE PRIMARY DEALERS (SPDS) CAN NOW DEAL IN FOREIGN CURRENCY SETTLED OVERNIGHT INDEXED SWAPS (FCS-OIS):

The RBI on August 08, 2022 amended the Rupee Interest Rate Derivatives (Reserve Bank) Directions to allow SPDs to offer FCS-OIS to persons not resident in India as well as to other AD Cat-I banks and eligible SPDs.

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OVERSEAS DIRECT INVESTMENT – CHANGE IN NORMS:

Pursuant to the amendments to the Foreign Exchange Management Act, 1999 brought in under the Finance Act, 2015, provisions of which were later notified in 2019, the Central Government on 22nd August 2022 has notified Foreign Exchange Management (Overseas Investment) Rules. Further, based on the powers conferred, the RBI on 22nd August 2022 notified Foreign Exchange Management (Overseas Investment) Regulations, 2022 and also issued the Foreign Exchange Management (Overseas Investment) Directions, 2022.

Key highlights of the ODI Guidelines are as follows:

• The ODI Rules govern investment in equity and immovable property, and the ODI Regulations govern investment in debt instruments.
• A person resident in India has now been permitted to invest in a foreign entity that has invested or invested into India, directly or indirectly, up to 2 layers of subsidiaries, without RBI approval.
• A resident individual making investments from RFC Account will not be subject to Liberalized Remittance Scheme limit.
• Financial remittances towards the loan to the foreign entity and/or in respect of the issuance of bank guarantee to/on behalf of the foreign entity are permitted only after ensuring that the Indian entity has made ODI and has control of the foreign entity.
• Any ODI in foreign start-ups should be made only from internal accruals of the Indian entity and not from borrowed funds and a resident individual can only use his own funds.
• An Indian entity not engaged in financial services activity in India, making ODI in a foreign entity, which is directly or indirectly engaged in financial services activity, except banking or insurance, and does not meet the net profit condition as required under these rules, may make ODI in an IFSC.
• An Indian entity which is not engaged in the financial services sector in India can now make ODI in a foreign entity engaged directly or indirectly in financial services activities, except banking or insurance.

Click here to access the Circular issued on ODI Regulation.

Click here to access the Circular issued on ODI Direction.

MASTER DIRECTION ON “LIBERALIZED REMITTANCE SCHEME”:

By updating the Master Direction on Liberalised Remittance Scheme, RBI has modified and amended the scheme to align the directions in line with the provisions contained in Overseas Direct Investment Guidelines. RBI issued direction on 24th August 2022, as a liberalization step to make it easier for residents to send money overseas for legal current-account, capital-account, or a mix of both operations.

Click here to access the Circular

Income Tax Updates

DOCUMENT TO BE SUBMITTED BY EMPLOYEE TO CLAIM EXEMPTION ON SUM RECEIVED FOR COVID-19 TREATMENT:

As per Section 17(2) of the Income-tax Act, 1961 “any sum paid by the employer with respect to any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family in respect of any illness relating to COVID-19 subject to conditions notified by Central Government”. 

The following are conditions notified by Central Government, namely:-

1. The employee shall submit the following documents to the employer, –
   1. the COVID-19 positive report of the employee or family member, or medical report if clinically determined to be COVID-19 positive through investigations, in a hospital or an in-patient facility by a treating physician of a person so admitted;
   2. all necessary documents of medical diagnosis or treatment of the employee or his family member for COVID-19 or illness related to COVID-19 suffered within six months from the date of being determined as COVID-19 positive; and
   3. a certification in respect of all expenditure incurred on the treatment of COVID-19 or illness related to COVID-19 of the employee or of any member of his family.
2. This notification shall be deemed to have come into force from the 1st day of April 2020 and shall apply in relation to the assessment year 2020-2021 and subsequent assessment years.

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CBDT NOTIFIES CONDITIONS & FORMS W.R.T. THE AMOUNT RECEIVED FOR COVID-19 TREATMENT FROM ANY PERSON:

As per Section 56 (2) (x) of the Income-tax Act, 1961  “any sum of money received by an individual, from any person, in respect of any expenditure actually incurred by him on his medical treatment or treatment of any member of his family** in respect of any illness related to COVID-19, shall not be considered as income of such person”.

In order to claim the amount received for Covid treatment the Central Government hereby specifies the following conditions, namely:-

1. The individual shall keep a record of the following documents, namely:-
   1. the COVID-19 positive report of the individual or his family member, or medical report if clinically determined to be COVID-19 positive through investigations in a hospital or an in-patient facility by a treating physician for a person so admitted;
   2. all necessary documents of medical diagnosis or treatment of the individual or family member due to COVID-19 or illness related to COVID-19 suffered within six months from the date of being determined as a COVID-19 positive;
2. Statement of any amount received for any expenditure actually incurred by an individual for his medical treatment or treatment of any member of his family, for any illness related to COVID-19 for the purposes of clause (XII) of the first proviso to clause (X) of sub-section (2) of section 56 of the Income-tax Act, 1961 shall be verified and furnished in Form No. 1. 
3. The details of the amount received in any financial year shall be furnished in Form No. 1 to the Income Tax Department within nine months from the end of such financial year or 31.12.2022, whichever is later.
4. CBDT notifies Form No. 1 to provide the requisite details w.r.t. the medical treatment of the individual/ treatment of members of his/her family, for any illness related to COVID-19.
5. This notification shall be deemed to have come into force from the 1st day of April 2020 and shall apply in relation to the assessment year 2020-2021 and subsequent assessment years.

**” family”, in relation to an individual, means—

• the spouse and children of the individual; and

• the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual.

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CBDT NOTIFIES CONDITIONS FOR EXEMPTION TO MONEY RECEIVED FROM EMPLOYER OR OTHER PERSON IN COVID CASES BY FAMILY OF DECEASED:

Section 56(2)(x) of the Income-tax Act, 1961 provides that “where any sum of money received by a family member of a person who died due to COVID-19 from the employer, the money so received shall not be considered as income of the family***If the money is received from any other person, the exemption amount shall be limited to Rs. 10 lakh in aggregate”. 

In this respect, the Central Government hereby specifies the following conditions, namely:-

1. the death of the individual should be within six months from the date of testing positive or from the date of being clinically determined as a COVID-19 case, for which any sum of money has been received by the member of the family;
2. the family member of the individual shall keep a record of the following documents, –
   1. the COVID-19 positive report of the individual, or medical report if clinically determined to be COVID-19 positive through investigations in a hospital or an inpatient facility by a treating physician;
   2. a medical report or death certificate issued by a medical practitioner or a Government civil registration office, in which it is stated that the death of the person is related to coronavirus disease (COVID-19).
3. The details of the amount received in any financial year shall be furnished in Form A to the Assessing Officer within nine months from the end of the such financial year or 31.12.2022 whichever is later.

***” family”, in relation to an individual, means—

• the spouse and children of the individual; and

• the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual.

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BOOKS OF ACCOUNTS TO BE MAINTAINED BY UNIVERSITY, CHARITABLE/MEDICAL INSTITUTIONS:

CBDT notifies Income-tax rules 17AA w.r.t. books of account and other documents to be kept and maintained by institution or trust or any university or other educational institutions under section 10 (23C) or section 12A vide Notification No. 94/2022-Income Tax dated 10th August 2022.

Section 10 (23C) of the Act provides a specific exemption available to certain Government and non-government universities and educational institutions.

Section 12A (1) (b) (i) – where the total income of the trust or institution as computed under this Act without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year—

“the books of account and other documents have been kept and maintained in such form and manner and at such place, as may be prescribed;

In this regard, the CBDT hereby inserted the following rules namely:-

1. Every fund or institution or trust or any university or other educational institution or any hospital or other medical institution is required to keep and maintain books of account and other documents under clause (a) of the tenth proviso to clause (23C) of section 10 of the Act or sub-clause (i) of clause (b) of sub-section (1) of section 12A of the Act shall keep and maintain the following, namely:-
   1. books of account, including the following, namely: –
      1. cash book;
      2. ledger;
      3. journal;
      4. copies of bills, whether machine numbered or otherwise serially numbered, wherever such bills are issued by the assessee, and copies or counterfoils of machine numbered or otherwise serially numbered receipts issued by the assessee;
      5. original bills wherever issued to the person and receipts in respect of payments made by the person; 
      6. any other book that may be required to be maintained in order to give a true and fair view of the state of the affairs of the person and explain the transactions effected.
   2. books of account, as referred in clause (a), for business undertaking referred in sub-section (4) of section 11 of the Act;
   3. books of account, as referred in clause (a), for business carried on by the assessee other than the business undertaking referred in sub-section (4) of section 11 of the Act;
   4. other documents as prescribed.
2. It may be kept in written form or in electronic form or in digital form or as print-outs of data stored in electronic form or in digital form or any other form of electromagnetic data storage device.
3. It shall be kept and maintained at its registered office or at such other place in India as the management may decide by way of a resolution.
4. It shall be kept and maintained for a period of ten years from the end of the relevant assessment year or up to the reopened u/s 147 has become final.

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THE CBDT AMENDS THE INCOME TAX RULE 17 AND FORM NO.10:

Section 10 (23C) of the Income-tax Act provides a specific exemption available to certain Government and non-government universities and educational institutions.

Section 11 of the Act provides an exemption for income derived from property held under trust wholly for charitable or religious purposes to the extent such income is applied for charitable or religious purposes in India. However, this exemption shall be subject to certain conditions.

Rule 17 – Exercise of option etc. under Explanation 3 to the third proviso to clause (23C) of section 10 or section 11.

1. The option to be exercised in accordance with the provisions of the Explanation to section 11(1) of the Act in respect of income of any previous year relevant to the assessment year beginning on or after the 1st April 2016 shall be in Form No. 9A and shall be furnished before the expiry of the time allowed under section 139(1) of the Act for furnishing the return of income of the relevant assessment year.
2. The statement to be furnished to the Assessing Officer or the prescribed authority under clause (a) of Explanation 3 to the third proviso to section 10 (23C) of the Act or under section 11 (2) (a) of the Act or under the said provision as applicable under section 10 (21) of the Act shall be in Form No. 10 and shall be furnished before the expiry of the time allowed under section 139 (1) of the Act, for furnishing the return of income.
3. The option in Form No. 9A referred to in sub-rule (1) and the statement in Form No. 10 referred to in sub-rule (2) above shall be furnished electronically either under digital signature or electronic verification code.
4. The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall—
   1. specify the procedure for filing of Forms referred to in sub-rule (3);
   2. specify the data structure, standards and manner of generation of electronic verification code, referred to in sub-rule (3), for purpose of verification of the person furnishing the said Forms; and
   3. be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to Forms so furnished.”.

In the principle rules, in the APPENDIX, Form No. 10 shall be substituted accordingly.

(Form No. 10 – Statement to be furnished to the Assessing Officer/ Prescribed Authority under clause (a) of Explanation 3 to the third proviso to clause (23C) of section 10 or under clause (a) of sub-section (2) of section 11 of the Income-tax Act, 1961)

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CBDT NOTIFIES INCOME TAX RULE 40G REFUND CLAIM UNDER SECTION 239A AND FORM NO. 29D:

Section 239A of the Income-tax Act, 1961 provides that a taxpayer may file an application before the Assessing Officer to get the refund of tax deducted under section 195 on any income (other than interest) if no tax deduction was required.

In exercise of the powers conferred by section 239A (1) read with section 295 of the Income-tax Act, 1961, the CBDT hereby makes the following rules in the Income-tax Rules, 1962 vide Notification No. 98/2022-Income Tax dated 17th August 2022.

Rule 40G – Refund claim under section 239

1. A claim for refund under section 239A shall be made in Form No. 29D.
2. The claim under sub-rule (1) shall be accompanied by a copy of an agreement or other arrangement referred to in section 239A.
3. The claim under sub-rule (1) may be presented by the claimant himself or through a duly authorised agent.”;

With respect to this, Form No. 29D is inserted in Appendix II of the principal rules. 

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NON-RESIDENTS HAVING NO PERMANENT ESTABLISHMENT (PE) IN INDIA EXEMPTED FROM SECTION 206C(1G):

CBDT notifies that provisions of Section 206C (1G) of the Income Tax Act shall not apply to a person (being a buyer) who is a non-resident in terms of section 6 and who does not have a permanent establishment (PE) in India vide Notification no. 99/2022-Income Tax dated: 17th August 2022.

Section 206C (1G) – “provides for the collection of tax by a seller of an overseas tour programme package from a buyer, being a person purchasing a such package, at the rate of 5% of the amount of the package”.

As per this provision, tax is required to be collected by:

1. An authorised dealer who receives an amount for remittance out of India under the Liberalised Remittance Scheme of the Reserve Bank of India; and
2. Seller of an overseas tour program package, who receives any amount from a person who purchases such a package.

However, tax shall be collected by the authorised dealer on the amount or aggregate of the amount over Rs. 7 lakh if the remittance is made for any purpose other than the purchase of an overseas tour programme package. If the remittance is made for an overseas tour programme package, the threshold limit of Rs. 7 lakh shall not apply, and tax shall be collected on the total remittance amount.

The section empowers the Central Government to notify a person wherein tax collection shall not be made under this provision.

Exercising such power, the Central Government has notified that provisions of section 206C (1G) shall not apply to an individual who is a non-resident and who is visiting India.

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THE CBDT AMENDS INCOME TAX RULE 128 & RELAXES CONDITIONS FOR FILING OF FORM NO. 67:

The CBDT amends rule 128 and relaxes conditions for filing of form no. 67 for claiming Foreign Tax Credit vide Notification No. 100/2022-Income Tax dated 18th August 2022.

Rule 128 of the Income-tax Rules, 1962, provides major relief to taxpayers in the matter of claiming Foreign Tax Credit (FTC). 

The Statement in Form No. 67 can now be furnished on or before the end of the relevant Assessment Year. The pre-amended rule required the FTC claim to be filed by the due date of furnishing the Income Tax Return. The amendment operates retrospectively so that this benefit is available to all FTC claims filed during the current Financial Year.

In the Income-tax Rules, 1962, sub-rule (9) in rule 128 shall be substituted as given below:-

“The statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the end of the assessment year relevant to the previous year in which the income referred to in sub-rule (1) has been offered to tax or assessed to tax in India and the return for such assessment year has been furnished within the time specified under section 139 (1) or 139 (4).

Provided that where the return has been furnished under section 139 (8A), the statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) to the extent it relates to the income included in the updated return, shall be furnished on or before the date on which such return is furnished.”.

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GST Updates

GST E-INVOICE LIMIT REDUCED TO RS. 10 CRORES W.E.F. 1ST OCTOBER, 2022:

With effect from 1st October 2022, every registered taxable person whose aggregate annual turnover exceeds Rs. 10 Crores in any of the financial years since 2017-18 shall be liable to issue E-Invoice. Earlier the limit was Rs. 20 Crores. The registered person who is required to issue E-Invoice shall upload its tax invoice in JSON file on Invoice Registration Portal (IRP) in accordance with e-invoice schema in INV-01 and shall get back digitally signed JSON from IRP with Invoice Reference Number (IRN) and QR Code.

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GSTN ISSUED ADVISORY ON SINGLE CLICK NIL FILING OF GSTR-1:

An Advisory dated 2nd August 2022 on Single click Nil filing of GSTR-1 has been introduced on the GSTN portal to improve the user experience and performance of GSTR-1/IFF filing. Taxpayers can now file NIL GSTR-1 returns by simply ticking the checkbox File NIL GSTR-1 available on the GSTR-1 dashboard. 

For the detailed advisory please refer to the below link:

Click here to access the circular

CBIC CLARIFIES GST RATES & EXEMPTIONS ON 16 SERVICES:

Clarifications regarding applicable GST rates & exemptions on certain services:

Representations have been received seeking clarification on the following issues:

1. Rate of GST applicable on supply of ice cream by ice-cream parlours during the period from 01.07.2017 to 05.10.2021;
2. Applicability of GST on application fee charged for entrance or the fee charged for issuance of eligibility certificate for admission or for issuance of migration certificate by educational institutions;
3. Whether storage or warehousing of cotton in baled or ginned form is covered under entry 24B of Notification No. 12/2017-Central Tax (Rate) which exempted services by way of storage and warehousing of raw vegetable fibres such as cotton before 18.07.2022;
4. Whether exemption under Sl. No. 9B of notification No. 12/2017-Central Tax (Rate) dated 28.06.2017  covers  services  associated  with  transit  cargo  both  to  and  from  Nepal  and Bhutan;
5. Applicability of GST on sanitation and conservancy services supplied to Army and other Central and State Government departments;
6. Whether  the  activity  of  selling space  for  advertisement  in  souvenirs  is  eligible  for a concessional rate of 5%;
7. Taxability  and the applicable  rate  of  GST  on the transport  of  minerals  from  mining  pit  head  to a railway  siding,  beneficiation  plant  etc.,  by  vehicles  deployed  with  driver  for  a  specific duration of time;
8. Whether  location  charges  or  preferential  location  charges  (PLC)  collected  in  addition  to the  lease  premium  for a long-term lease  of  land  constitute  part  of  the  lease  premium  or upfront  amount  charged  for a long-term lease  of  land  and  are  eligible  for  the  same  tax treatment;
9. Applicability of GST on payment of honorarium to the Guest Anchors;
10. Whether the additional toll fees collected in the form of higher toll charges from vehicles not having fastag is exempt from GST;
11. Applicability of GST on services in the form of Assisted Reproductive Technology (ART)/In vitro fertilization (IVF);
12. Whether the sale of land  after levelling, laying down of drainage lines etc., is taxable under GST;
13. Situations in which corporate recipients are liable to pay GST on renting motor vehicles designed to carry passengers;
14. Whether hiring of vehicles by firms for transportation of their employees to and from work is exempt under Sr. No. 15(b) of Notification No. 12/2017-Central Tax (Rate) transport of passengers by non-air-conditioned contract carriage;
15. Whether supply of service of construction, supply, installation and commissioning of dairy plant  on  turn-key  basis  constitutes  a  composite  supply  of  works  contract  service  and is eligible for concessional rate of GST prior to 18.07.2022;
16. Applicability of GST on tickets of private ferries used for passenger transportation. 

For more information:

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GST IMPLICATIONS ON RECOVERY OF LIQUIDATED DAMAGES BY RAILWAYS:

Guidelines for implementation of GST implications on recovery of liquidated damages:

To implement correct GST practice and ensure uniformity in the manner of payments in cases where liquidated damages are levied on the vendors for non-performance of conditions of a contract. CBIC, vide Circular No. 178/10/2022-GST dated 3rd August 2022, with regard to taxability of liquidated damage, has clarified that payment of such damages is not the desired outcome of the contract. Payment of liquidated damages is stipulated in the contract to ensure performance and to deter non-performance, unsatisfactory performance or delayed performance. It is merely a flow of money from the party who causes a breach of the contract to the party who suffers loss or damage due to such breach i.e., it is an amount paid only to compensate for injury, loss or damage suffered by the aggrieved party (viz. Railways) due to breach of the contract. Thus, liquidated damages do not constitute consideration received for supply by way of tolerating the breach or non-performance of contract and are not taxable.

Accordingly, the payment received by Railways in the form of liquidated damages against tolerating non-performance of conditions of a contract such as a delay in the rendering of supply is not liable to GST. 

Further, with respect to the payment to the vendor where liquidated damage has been levied, the amount payable to the vendor shall be paid the amount of supply including GST less the amount of liquidated damage without GST thereon. For the sake of brevity, the amount to be paid to the vendor for the supply against which liquidated damage is being recovered is illustrated as under- 

Assuming, vendor ‘A’ raised the invoice for INR 118 (INR 100 taxable value + INR 18 GS7), however, owing to certain non-performance, liquidated damage of INR 10 (10% of the taxable value) is recoverable by Railways from a such vendor. In the instant illustration, Indian Railways, in net, needs to pay 1NR 108 to ‘A’ (value of supply with GST.-INR 118 less amount of liquidated damages without GST: INR 10). Please note that such payment would also be subject to other deductions such as GST-TDS.

Railways/Units may take necessary action and ensure the aforementioned compliances.

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CLARIFICATION ON GST RATES & CLASSIFICATION (GOODS) – 47TH GST COUNCIL MEETING:

Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 47th meeting held on 28th – 29th June 2022 at Chandigarh:

• Electric vehicles, whether or not fitted with a battery pack, attract a GST rate of 5%.
• Stones otherwise covered in S. No. 123 of Schedule-I (such as Napa stones), which does not mirror polished, are eligible for a concessional rate under said entry.
• Mangoes under CTH 0804 including mango pulp, but other than fresh mangoes and sliced, dried mangoes, attract GST at a 12% rate.
• Treated sewage water attracts a Nil rate of GST.
• Nicotine Polacrilex Gum attracts a GST rate of 18%.
• Fly ash bricks and aggregate – the condition of 90% fly ash content applied only to fly ash aggregate, and not fly ash bricks.
• Applicability of  GST  on by-products of milling of  Dal/ Pulses such as Chilka, Khanda and Churi.

For detailed clarification on the individual items of the goods mentioned above please refer to the below circular.

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