MCA Updates
Beta Version of ‘View Public Documents’ service in the Ministry of Corporate Affairs (“MCA”), Version 3 V3 Portal wef 16 August 2023
The MCA has launched the Beta Version of View Public Documents (“VPD”) service in V3 on August 16, 2023, for V3 documents (only for testing purposes between 7:00 pm to 10:00 pm daily).
Also, the existing Version 2 VPD service shall remain available for the stakeholders.
The Companies (Incorporation) Second Amendment, 2023
These Amendment Rules have made revisions to the Form No. RD-1 (Filing application to Central Government (Regional Director).
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Condonation of delay in filing of Form-3, Form-4 and Form-11 under Section 67 of Limited Liability Partnership Act, 2008 read with Section 470 of Companies Act, 2013
The MCA, in exercise of its power under section 67 of the Limited Liability Partnership Act, 2008, has granted one-time relaxation in additional fees to those LLPs who could not file Form 3 (LLP Agreement and changes therein), 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) and Form 11 (Annual Return of LLP) within due date and provide an opportunity to update their filings and details in Master-data for future compliances.
The salient features are as follows:-
- Form 3 and Form 4 would be processed under Straight Through Process (STP) mode for all purposes except for changes in business activities. It is advised to file these forms in a sequential manner i.e., the filing for old events dates may be filed first and so on so as to update the master data in a proper manner.
- The filing of Form 3 and Form 4 without additional fees shall be applicable for the event that occurred on January 01, 2021 and onwards. For events dated prior to January 01, 2021, these forms can be filed with 2 times and 4 times normal filing fees as additional fees for small LLPs and other than small LLPs respectively.
- The filing of Form 11 without additional fee shall be applicable for the financial year 2021-22 onwards. Form 11 for previous years (prior to the financial year 2021-22) can be filed with 2 times and 4 times of normal filing fee as additional fees for small LLPs and Other than small LLPs respectively.
- These forms shall be available for filing from September 01, 2023 till November 30, 2023 (both dates inclusive).
- The LLPs availing the scheme shall not be liable for any action for delayed filing of Form 3, Form 4 and Form 11.
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SEBI Updates
Online Resolution of Disputes in the Indian Securities Market
Securities Exchange Board of India (SEBI) vide its circular dated August 04, 2023, issued a clarification pursuant to the feedback received on the SEBI circular dated July 31, 2023 on Online Resolution of Disputes in the Indian Securities Market and the said circular shall be applicable with immediate effect.
The following link will take you to the additions/substitutions and correction of language used in the clauses of the circular issued on July 31, 2023:
Click here to access the relevant Circular
Further, SEBI issued the Master Circular on August 11, 2023, combining both the above-mentioned circulars with all the necessary amendments.
Click on the link below to access the detailed circular containing the provisions, implementation mechanism, procedure, norms, code of conduct, etc:
Click here to access the Master Circular
Mandating Additional Disclosures by Foreign Portfolio Investors (FPIs) that fulfil certain objective criteria
The Securities Exchange Board of India (SEBI) mandated disclosing additional information by Foreign Portfolio Investors (FPIs) that fulfil certain Criteria considering the inherent risks for circumventing disclosure regulatory requirements under Substantial Acquisition of Shares and Takeovers Regulations, 2011 (SAST Regulations) or maintaining Minimum Public Shareholding (MPS) in its circular dated August 24, 2023.
The circular specifies the criteria for submitting information or documents, in addition to the manner of submission, timing, and consequences of non-compliance by FPIs. The circular shall come into effect on November 1, 2023, and can be accessed by clicking on the link below.
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Income Tax Updates
CBDT inserted New Rule 6ABBB. Form of statement to be furnished regarding preliminary expenses incurred under section 35D
The amendment introduces Form No. 3AF, which taxpayers must use to report preliminary expenses. This form needs to be submitted one month before the income tax return due date, either electronically with a digital signature or through an electronic verification code. Additionally, the amendment replaces Form No. 3AE in the Income-tax Rules, 1962, with new forms for audit reports under section 35D(4)/35E(6) of the Income-tax Act, 1961. These changes are intended to enhance record-keeping and transparency in deducting preliminary expenses.
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Ten-Year Zero Coupon Bond of REC Ltd
The Ministry of Finance has released Notification No. 56/2023 regarding a zero coupon bond from REC Ltd under the Income Tax Act, 1961. This notification classifies REC Ltd.’s Ten Year Zero Coupon Bond as a zero coupon bond under section 2(48) of the Income Tax Act. The bond has a ten-year one-month tenure and should be issued by March 31, 2025. Each bond matures at 1 lakh rupees, with a total discount of ₹ 2517.85 crores, and there will be five lakh bonds issued. This notification is crucial for investors and stakeholders as it provides clarity on tax treatment and other relevant aspects in compliance with the Income Tax Act, 1961.
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Tax Reduction Relaxation for Ship Lease in IFSC
This notification offers tax deduction relief for lease rent payments concerning ships within the International Financial Services Centre (IFSC). Under this notification, lessees in the IFSC won’t need to deduct tax (under section 194-I of the Income-tax Act) on lease rent or supplemental lease rent payments made to lessors within the IFSC. To benefit from this relaxation, the lessor must provide a statement-cum-declaration (Form No.1) to the lessee, specifying the ten consecutive assessment years for which they want to claim a deduction under section 80LA of the Income-tax Act. Once the lessee receives this declaration, they should refrain from tax deductions on payments to the lessor and report the details in their tax deduction statement (under section 200 of the Income-tax Act). This relaxation applies only to the years mentioned by the lessor in Form No. 1. The procedures and standards for data handling, document submission, and security will be set by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems).
In conclusion, it brings substantial tax deduction relief for lease rent payments related to ships in the IFSC. Businesses in the IFSC must adhere to the specified procedures and provide the necessary declarations to take advantage of these deduction benefits. Understanding and complying with the notification’s provisions will enable IFSC businesses to make informed financial decisions and ensure tax compliance.
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CBDT Extends Transfer Pricing Safe Harbour Rules up to AY 2023-24
The Central Board of Direct Taxes has extended the application of Transfer Pricing Safe Harbour Rules, specifically IT Rules 10TD(1) and (2A), until the assessment year 2023-24. This extension, effective from April 1, 2023, aims to provide certainty to taxpayers, reduce transfer pricing disputes, and maintain arm’s length pricing for eligible international transactions. These safe harbour rules have undergone previous extensions, with the current one ensuring their applicability for AY 2023-24.
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Amendment of Income Tax Rules for Valuation of Accommodation Perquisites
The CBDT has amended the Income Tax Rules, 1962, regarding the valuation of perquisites for employer-provided residential accommodation, effective from September 1, 2023. The changes involve city categorization, population limits, and revised perquisite rates based on the 2011 census. The amendment aligns the rules with the Finance Act of 2023, providing detailed guidelines for calculating residential accommodation perquisites. Notable changes include revised rates of 10%, 7.5%, and 5% of salary based on city categories, enhancing fairness and tax accuracy. This amendment reflects the government’s commitment to maintaining relevant regulations and benefits both employers and employees by enhancing taxation efficiency and transparency.
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CBDT covers ‘leased or rented house’ for inflation-linked valuation of rent-free accommodation
The CBDT has issued a corrigendum to amend Notification 65/2023, dated 18-08-2023. This notification modifies the norms for computing the value of rent-free accommodations provided to employees.
CBDT revised Rule 3 of the Income Tax Rules, 1962, in order to implement the amendments made by the Finance Act, 2023. The rule was revised to provide an updated procedure for computing the valuation of rent-free accommodations. This includes revised rates for the valuation of perquisites in cases where the accommodation is owned by the employer or taken on lease or rental.
Additionally, an inflation-linked cap was introduced. It is stipulated that if the same accommodation is provided to an employee for more than one year, the valuation in subsequent years will not exceed the valuation of the first year adjusted by the Cost Inflation Index.
However, it wasn’t explicitly stated whether the benefit of inflation-linked valuation is available if the employer doesn’t own the accommodation and instead rents or leases it.
Now, the CBDT has issued a corrigendum to clarify this matter. The board has amended the notification to specify that the benefit of inflation-linked valuation for computing rent-free accommodation shall be available even if the employer takes the accommodation on lease or rent.
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Exemption to UIDAI’s Specified Income
This notification clarifies the specified income related to the Unique Identification Authority of India (UIDAI). It covers various income sources for UIDAI, specifies conditions for its effectiveness, and applies retrospectively for assessment years from 2019-2020 to 2023-2024, ensuring transparency and alignment with tax procedures. This clarification aids stakeholders in understanding and managing tax-related matters involving UIDAI’s income.
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Introduction of Rule 134 and Form No. 71 for TDS Credit under Section 155(20)
The Central Board of Direct Taxes (CBDT) has issued a new rule, Rule 134, along with Form No. 71, related to applications under sub-section (20) of section 155 for the credit of tax deduction at source (TDS). The Finance Act of 2023 introduced a new sub-section (20) to Section 155, which will take effect from October 1, 2023. This newly added sub-section applies in cases where income has been reported in an income tax return for a specific assessment year, but the tax was deducted at source (TDS) in a subsequent financial year. To facilitate this amendment, the CBDT, through Notification No. 73/2023 dated August 30, 2023, has introduced Rule 134 into the Income-tax Rules, 1962. This rule mandates the submission of Form 71 to claim TDS credit in such scenarios.
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Functionality for revision of Form 27C available on e-filing portal
The filed Form 27C details can be revised. The User needs to choose the “Revised” option along with the relevant Financial Year and Month selection to proceed with the revision mechanism.
Further, the Form 27C filed for a particular Financial Year and Month combination can be revised only once. Once a revision is filed, no further revision for the same period shall be allowed.
The Form 27C provides a comprehensive guide for sellers to ensure compliance with the Income Tax Department’s mandates. By understanding and following these guidelines, sellers can avoid potential pitfalls and fulfil their tax obligations seamlessly.
Introduction of Rules 13 and 13A in Response to Amendments to Section 132: Valuation and Approval Procedures
In accordance with Notification No. 70/2023 dated August 28, 2023, issued by the CBDT, two new rules, Rule 13 and Rule 13A, have been introduced. These rules are a response to the amendments made in sub-sections (2) and (9D) of Section 132 by the Finance Act of 2023. regulatory updates
Rule 13 outlines the procedure and Form 6C for the approval process by the Principal Chief Commissioner of Income Tax (PCCIT), Chief Commissioner of Income Tax (CCIT), Principal Director General of Income Tax (PDGIT), or Director General of Income Tax (DGIT) to:
(a) Approve any person or entity whose services may be requisitioned for the purposes of Section 132(2)(ii). regulatory updates
(b) Approve any person, entity, or registered valuer to whom reference may be made as per Section 132(9D)(ii).
Rule 13A prescribes the valuation methods and Form 6CA for the submission of valuation reports. Under this rule: regulatory updates
(a) The value of an immovable property shall be determined as the stamp duty value along with the cost of construction and improvements. regulatory updates
(b) The value of items such as jewellery, archaeological collections, drawings, paintings, sculptures, any work of art, shares, or securities referred to in Rule 11UA shall be assessed according to Rule 11UA(1).
(c) In cases where valuing the property using the specified methods is not feasible, the value shall be considered as the price the property would ordinarily fetch on sale in the open market on the valuation date.” regulatory updates
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Guidelines Under Clause 10D of Section 10 of the Income Tax Act, 1961
The Finance Act of 2023 introduced significant amendments to the Income-tax Act, of 1961, specifically focusing on income-tax exemption related to life insurance policies. These changes include:
- Substituting the existing sixth proviso of clause (10D) of section 10 with new provisions:
- From the assessment year 2024-25, any sum received under a life insurance policy issued after April 15, 2023, excluding unit-linked insurance policies, will not be exempt if the annual premium exceeds ₹ 5,00,000 regulatory updates
- When premiums are payable for multiple life insurance policies issued after April 1, 2023, the exemption shall be available only to such policies where the aggregate premium does not exceed ₹ 5,00,000 in any previous year during the policy’s term.
- These rules do not apply in case of sums received on a person’s death.
- Introducing a new clause (xiii) in sub-section (2) of section 56: regulatory updates
Any sum received during a previous year under a life insurance policy, except for sums received under unit-linked insurance policies or income mentioned in clause (iv) of sub-section 2, which is not excluded from total income under section 10, and exceeds the aggregate of premiums paid during the policy’s term (not claimed as deduction elsewhere in the Act) will be subject to income tax under “Income from other sources.” regulatory updates
- Adding a sub-clause (xviid) in clause (24) of section 2:
This sub-clause includes sums referred to in clause (xiii) of sub-section (2) of section 56 in the definition of “income”. regulatory updates
These changes represent a significant shift in the taxation of sums received under life insurance policies, introducing new limits and conditions for exemptions. regulatory updates
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IT Department revamps website for enhanced taxpayer experience, includes a due-date alert function
The Income Tax Department revamps its national website www.incometaxindia.gov.in with a user-friendly interface, value-added features, and new modules. The revamped website is aesthetically redesigned with a mobile-responsive layout and contains dynamic due date alerts functionality that provides reverse countdowns, tooltips, and links to relevant portals for easier compliance.
CBDT Issues Guidelines for Assessing Officers (AOs) in Light of SC Judgment in Abhisar Buildwell Case
In a significant development, CBDT has issued guidelines for Assessing Officers (AOs) following the Supreme Court’s judgment in the Abhisar Buildwell case. These guidelines explain how to implement the judgment, which grants AOs the power to reopen completed or unabated assessments under section 147/148 of the Income Tax Act. This is subject to certain conditions, particularly in cases where no incriminating material is discovered during a search. regulatory updates
CBDT’s guidance provides clarity on various scenarios and actions that AOs should take. To ensure fairness and provide certainty to taxpayers, the CBDT instructs officers to apply the judgment in the following cases: regulatory updates
- Cases that are lead and tagged, as mentioned in the said judgment.
- All cases that are pending at appellate levels, before AOs, or any tax authority.
- Cases where appellate authorities have made decisions that are contrary to the Abhisar judgment.
Furthermore, CBDT requires AOs to categorize cases into two groups:
- Pending or abated assessments.
- Completed or unabated assessments. regulatory updates
The CBDT also specifies time limits for field formations to take the necessary actions. Additionally, it provides a specimen Miscellaneous Application (MA) format for filing before the Income Tax Appellate Tribunal (ITAT). This initiative aims to streamline the application of the Abhisar Buildwell judgment and ensure consistency in its implementation. regulatory updates
CBDT Notifies Rule 26 for TDS on Foreign Currency Income
CBDT, through Notification No. 64/2023 dated August 17, 2023, has introduced Rule 26, which prescribes the ‘telegraphic transfer buying rate’ as the foreign exchange rate for TDS on income payable in foreign currency. This rule applies to:
- Assessees located outside India,
- Units located in the International Financial Services Centre (IFSC)
- Units located in IFSC making payments to assessees in India.
Under this rule, the ‘telegraphic transfer buying rate’ relevant for calculating the Indian Rupee (INR) equivalent of foreign currency income shall be the rate prevailing on the date when the tax is required to be deducted at source under the applicable provisions by the payer. regulatory updates
The term ‘Telegraphic transfer buying rate’ is defined as the exchange rate adopted by the State Bank of India (SBI) for buying foreign currency. This rate takes into account the guidelines specified by the Reserve Bank of India (RBI) for purchasing such currency, provided that such currency is made available to the bank through a telegraphic transfer.” regulatory updates
CBDT Introduces Dispute Resolution Committee (DRC) via Office Order No. 1/2023
The CBDT has issued Office Order No. 1/2023 dated August 14, 2023, to create a Dispute Resolution Committee (DRC) in line with Section 245MA and Rule 44DAA. The DRC, comprising 3 members, is formed through a defined selection process, with a panel consisting of the Principal Director General of Income Tax (HRD) and two Chief Commissioner of Income Tax (CCIT) rank officers.
DRC members include 2 retired Indian Revenue Service members with CIT rank experience of 5 or more years and 1 serving officer not below the rank of Principal Chief Income Tax Commissioner (PCIT) or CIT. They serve for up to 3 years or until age 65, with potential reappointment, subject to age limits.
Members receive compensation, including a sitting fee, capped monthly remuneration, and travel allowances, as per rules. The CBDT holds final decision-making authority and flexibility on rule interpretation and can relax provisions when necessary. Any unaddressed conditions of service are referred to the CBDT on a case-by-case basis. regulatory updates
This Office Order establishes a comprehensive framework for the DRC’s operation and defines members’ roles and responsibilities. regulatory updates
CBDT Issues Clarification on Scrutiny Guidelines on Transfer of Cases to Central Charges for Non-search Persons
The CBDT released guidelines for selecting returns for complete scrutiny in FY 2023-24. These guidelines specify parameters and procedures for compulsory selection, covering cases related to surveys, searches, notices under various sections, registration/approval issues, recurring legal or factual matters, and specific tax evasion information. Notices under Section 148 require prior administrative approval for compulsory scrutiny, and cases outside Central Charges must be transferred within 15 days of notice service. Additionally, for non-search cases involving limited financial transactions with unrelated individuals, the CBDT clarified that transfer to Central Charges is not mandatory unless the cases meet specific criteria. regulatory updates
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GST Updates
Seeks to notify Special Procedure to be followed by the Electronic Commerce operators in respect of supplies of goods by composition taxpayers
This notification, issued under section 148 of the Central Goods and Services Tax Act, 2017, designates electronic commerce operators as persons responsible for collecting tax at source (TCS) under section 52. It outlines a special procedure for e-commerce operators regarding supplies of goods made by individuals paying tax under section 10 of the Act.
- Electronic commerce operators cannot facilitate the inter-state supply of goods by individuals.
- These operators must collect TCS for goods supplied by the individuals and remit it to the government as per section 52(3) provisions.
- They should report details of these supplies in FORM GSTR-8 electronically on the common portal.
This notification takes effect from October 1, 2023. regulatory updates
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Seeks to notify Special Procedure to be followed by the Electronic Commerce operators in respect of supplies of goods by unregistered persons
This notification outlines a special procedure for e-commerce operators regarding supplies of goods made by individuals exempted from obtaining registration.
- E-commerce operators can only allow the supply of goods by exempted persons if they have an enrolment number on the common portal.
- These operators cannot facilitate inter-state supply of goods by exempted persons.
- They are not required to collect TCS for goods supplied by exempted persons.
- They must report details of these supplies in FORM GSTR-8 electronically on the common portal.
- In cases where multiple e-commerce operators are involved, “the electronic commerce operator” refers to the one who releases payment to the exempted person for the supply.
This notification takes effect from October 1, 2023. regulatory updates
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Clarification regarding GST rates and classification of certain goods
This circular provides clarifications regarding the GST levy on several items based on recommendations from the GST Council’s 50th meeting held on July 11, 2023.
The items covered include
- Un-fried or un-cooked snack pellets made through extrusion
- Fish soluble paste
- Desiccated coconut
- Biomass briquettes
- Imitation zari thread or yarn
- Supply of raw cotton by agriculturists to cooperatives
- Plates and cups made from areca leaves
- Goods falling under HSN heading 9021.
These clarifications aim to address any uncertainties or questions related to GST taxation on these specific items. regulatory updates
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Clarifications regarding the applicability of GST on certain services
The CBIC has issued important clarifications regarding the applicability of GST to specific services. Regarding personal services provided by a company director, such as renting immovable property, the CBIC has clarified that these services are not subject to the Reverse Charge Mechanism (RCM).
Additionally, the CBIC has addressed the taxation of food and beverage supply in cinema halls. This is considered taxable as a ‘restaurant service’ under specific conditions, such as when it is offered independently of cinema screenings. However, if cinema tickets and the supply of food/drinks constitute a composite supply, the entire supply is subject to GST based on the cinema exhibition service rate.
