DIRECT TAX
1. Extension of due dates for filing various forms – CBDT has extended the time limit for electronic filing of Form No. 15CC, Equalization Levy Statement in Form No. 1, Form No. 64D, Form No. 64C, Form No. 10BBB and Form II SWF due to difficulties faced by assessees in electronic filing of forms and non-availability of the utility for e-filing of forms. [Circular 15 of 2021 dated 3rd August, 2021.]
2. Insertion of Rules 21AI and 21AJ and Forms 10IG and 10IH – Income-tax (21st Amendment) Rules, 2021 – CBDT has inserted Rule 21AI to prescribe the method of calculating exempt income of a specified fund for the purposes of section 10(4D) and Rule 21AJ to determine the income of a specified fund attributable to units held by a non-resident taxable u/s 115AD. [Notification No. 90 of 2021 dated 9th August, 2021.]
3. Insertion of Rule 10RB and Form 3CEEA – Income-tax (23rd Amendment) Rules, 2021 – CBDT has notified new Rule 10RB prescribing the manner for computation of relief in tax payable u/s 115JB(1) due to operation of newly-inserted sub-section (2D) of section 115JB. The assessee is required to make an application in Form 3CEEA electronically to claim relief u/s 115JB(2D). [Notification No. 92 of 2021 dated 10th August, 2021.]
COMPANY LAW
I. COMPANIES ACT, 2013
(I) MCA appoints 1st September, 2021 as the effective date for section 4 of the Companies (Amendment) Act, 2020: Section 4 of the Companies (Amendment) Act, 2020 which amends section 16 of the Companies Act, 2013 shall be effective from 1st September, 2021. As per section 16(3), the Government shall allot a new name to the company as per newly-inserted Rule 33A and the Registrar shall enter the new name in the Register of Companies in place of the old name and issue a fresh certificate of incorporation with the new name which the company shall use thereafter. [Notification No. S.O. 2904(E), dated 22nd July, 2021.]
(II) MCA tweaks norms relating to change in the name of company. Inserts new Rule for allotment of a new name to existing companies u/s 16(3): The MCA has notified the Companies (Incorporation) Fifth Amendment Rules, 2021 whereby a new rule 33A relating to the allotment of a new name to an existing company u/s 16(3) of the Companies Act, 2013 has been inserted. [Notification No. G.S.R. 503(E), dated 22nd July, 2021.]
(III) Government has identified 2,38,223 shell companies between 2018 and 2021: Union Minister of State for Corporate Affairs Rao Inderjit Singh in a written reply to a question in the Rajya Sabha informed that the Government has identified a total of 2,38,223 companies as shell companies between 2018 and 2021. The Minister further stated that the Special Task Force set up to look into the issue of ‘shell companies’ has recommended use of certain red-flag indicators to identify such companies. [Press Release dated 27th July, 2021.]
II. SEBI
(IV) SEBI further extends timelines for compliance with regulatory requirements by Debenture Trustees: In view of the prevailing situation due to the Covid-19 pandemic and representations received from Debenture Trustees, SEBI has decided to further extend the timelines for compliance with the regulatory requirements by them for the quarter / half-year / year ending 31st March, 2021, up to 31st October, 2021. [Circular No. SEBI/HO/MIRSD/CRADT/CIR/P/2021/597, dated 20th July, 2021.]
(V) SEBI issues norms on Mandatory Nomination for Eligible Trading and Demat Accounts: The SEBI has issued norms on Mandatory Nomination for Eligible Trading and Demat Accounts wherein it has specified that the investors opening new trading and / or demat account(s) on or after 1st October, 2021 shall have the choice of providing nomination or opting out of the nomination. In addition, the online nomination and declaration form need to be signed using e-Sign facility. [Circular No. SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601, dated 23rd July, 2021.]
(VI) Top-100 listed entities can have extra time for holding Annual General Meeting: After consideration of the request received from the Institute of Chartered Secretaries of India (ICSI), SEBI has decided to extend the timeline for conduct of AGMs by top-100 listed entities by market capitalisation. Accordingly, such entities can hold their AGMs within a period of six months from the date of closing of the financial year 2020-21. [Circular No. SEBI/HO/CFD/CMD1/P/CIR/2021/602, dated 23rd July, 2021.]
(VII) SEBI asks Registrar and Transfer Agents (RTA) to implement ‘Inter-Operable Platform’ for enhancing investors’ experience in Mutual Fund transactions: In order to make it more convenient for the existing and future investors to transact and avail services while investing in Mutual Funds, SEBI has asked RTA to implement standardised practices and system interoperability amongst themselves to jointly develop a common industry-wide platform that will deliver an integrated, harmonised, elevated experience to the investors across the industry platform. [Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/604, dated 26th July, 2021.]
(VIII) SEBI reduces trading lot size from 100 units to 1 unit in REITs and InvITs: SEBI has notified the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 and the Securities and Exchange Board of India (Real Estate Investment Trusts) (Amendment) Regulations, 2021 wherein provisions related to minimum application value and trading lots have been amended. The minimum application value will be in the range of Rs. 10,000 to Rs. 15,000 and the trading lot will be of one unit for REITs and InvITs. [Notification No. SEBI/LAD-NRO/GN/2021/28 and No. SEBI/LAD-NRO/GN/2021/27, dated 30th July, 2021.]
(IX) SEBI allows non-scheduled Payments Banks to register as ‘Bankers to an Issue’: SEBI has permitted non-scheduled Payments Banks to register as ‘Bankers to an Issue’ (BTIs). Now, non-scheduled Payments Banks, which have prior approval from RBI, shall be eligible to act as BTIs subject to fulfilment of the conditions stipulated in the BTI Regulations. In addition, a Payment Banks registered as a BTI shall also be permitted to act as a self-certified syndicate bank. [Circular No. SEBI/HO/MIRSD/MIRSD_DOR/P/CIR/605/2021, dated 3rd August, 2021.]
(X) SEBI amends LODR norms to further strengthen independence of Independent Directors: SEBI has notified the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2021 provision related to Independent Directors (ID) in order to further strengthen the independence of IDs. Now, the appointment, re-appointment or removal of an independent director of a listed entity shall also be subjected to the approval of shareholders by way of a special resolution. [Notification No. SEBI/LAD-NRO/GN/2021/35, dated 3rd August, 2021.]
(XI) Mutual Funds need to maintain current accounts in multiple banks for ease of doing business: SEBI: Based on the request of the Mutual Fund industry, SEBI has clarified that Mutual Funds should maintain current accounts in an appropriate number of banks for the purpose of receiving subscription amounts and for payment of redemption / dividend / brokerage / commission, etc., to facilitate financial inclusion, convenience of investors and ease of doing business. [Circular No. SEBI/HO/IMD/IMD-I/DOF5/P/CIR/2021/610, dated 4th August, 2021.]
FEMA
(i) The Government has reviewed the FDI policy on the petroleum and natural gas sector and has increased the limit of FDI in PSU oil companies from 49% to 100% under automatic route in cases where ‘in-principle’ approvals for strategic disinvestment of a PSU have been granted by the Government. The changes have been made in the Consolidated FDI Policy Circular of 2020. However, the increase will be effective once corresponding amendments are made in the NDI regulations. [Press Note No. 3 (2021 Series), dated 29th July, 2021.]
(ii) IRDAI had removed the requirement of ‘Indian-owned and controlled’ by way of an Amendment Act from 25th March, 2021. Accordingly, the IRDAI has now withdrawn the guidelines in relation to ‘Indian-owned and controlled’. [Circular No. IRDAI/F&A/CIR/MISC//211/07/2021, dated 30th July, 2021.]
(iii) Overseas investments and acquisition of immovable properties outside India by persons resident in India are still governed by FEMA Regulations 120 and 7(R), respectively. These were under review since quite some time. RBI has now put out drafts for FEM (Non-debt Instruments – Overseas Investment) Rules, 2021 and FEM (Overseas Investment) Regulations, 2021. Comments / feedback on the draft rules / regulations are invited from all stakeholders till 23rd August. There are quite a few important changes proposed in the draft regulations. [Press Release: 2021-2022/661 dated 9th August, 2021.]
ICAI ANNOUNCEMENTS
• Extension of validity of Peer Review Certificate (PRC) having original expiry date falling anytime from 1st to 31st July, 2021 has been extended till 31st August, 2021 in cases where no extension benefit has been availed as per any of the earlier ICAI announcements. [22nd July, 2021.]
• Deferred provisions of Volume-I of Revised Code of Ethics, 2019, namely, ‘Responding to Non-Compliance with Laws and Regulations’ (NOCLAR), fees – relative size and tax services to audit clients is made applicable and effective from 1st April, 2022. [26th July, 2021.]
ICAI MATERIAL
Corporate Laws
• Handbook on Claims under the Insolvency and Bankruptcy Code, 2016. [6th August, 2021.]
• Handbook on Do’s and Don’ts for IPs under the Insolvency and Bankruptcy Code, 2016. [13th August, 2021.]
Valuation
• Booklets on valuation:
- Learnings from Judicial Pronouncements on Valuation – How Far the Verdicts and Findings Relevant Now? [13th August, 2021.]
- ESOP Valuation – Model and Issues. [13th August, 2021.]
- Valuation of Startups. [13th August, 2021.]
- Learnings from the Observations of Peer Review of Valuation Reports. [13th August, 2021.]
