DIRECT TAX
1. CBDT prescribes procedure for compliance check on sections 206AB and 206CCA – These two sections, effective from 1st July, 2021, provide for deduction or collection of tax at a higher rate in the case of non-filers of return of income. The CBDT has issued a new functionality, ‘Compliance Check for Sections 206AB & 206CCA’. This functionality is made available through the reporting portal of the Income-tax Department. It provides for compliance checks for single PAN or bulk verification. [Circular regarding use of functionality under sections 206AB and 206CCA. Circular 11 of 2021 dated 21st June, 2021; Notification No. 1 of 2021 dated 22nd June, 2021.]
2. Extension of time limits of certain compliances like filing of TDS returns for the last quarter of F.Y. 2020-21, issue of Form 16, filing of return of Equalisation Levy, etc., to provide relief to taxpayers in view of the pandemic. [Circular 12 of 2021 dated 25th June, 2021.]
3. CBDT issues guidelines to clarify provisions related to TDS u/s 194Q on purchase of goods – As per section 194Q, the buyer is responsible for deduction of tax from any sum paid to a resident seller for purchase of any goods, subject to certain threshold. CBDT has issued guidelines to remove the difficulties in implementation of section 194Q and in overlapping situations while implementing 194O and 206C(1H). [Circular 13 of 2021 dated 30th June, 2021.]
4. Guidelines for application of newly-inserted section 9B and amended section 45(4). [Circular 14 of 2021 dated 2nd July, 2021.]
5. Extension of various Income tax due dates including for imposition of penalty under Chapter XXI, linking of Aadhaar with PAN, for assessment or reassessment under the Income-tax Act and the time limit for completion of such action u/s 153 or u/s 153B, etc. [Notification No. 74 of 2021 dated 25th June, 2021.]
6. Last date of payment of amount under Vivad se Vishwas (without additional amount) which was earlier extended to 30th June, 2021 is further extended to 31st August, 2021. The last date of payment of amount under Vivad se Vishwas (with additional amount) has been notified as 31st October, 2021. [Notification No. 75 of 2021 dated 25th June 2021.]
7. Amendment to Rule 8AA and insertion of Rule 8AB – Income-tax (18th Amendment) Rules, 2021 – The Finance Act, 2021 inserted a new section, 9B, to provide that whenever a partner or member (specified person) receives any capital asset or stock-in-trade or both from a firm / AOP / BOI (specified entity), during the previous year in connection with the dissolution or reconstitution of such specified entity, it shall be deemed to be a transfer made by the specified entity to the specified person. Consequently, section 45(4) was amended. Section 48 was also amended to provide that the amount chargeable to income-tax as income of such specified entity u/s 45(4), which is attributable to the capital asset being transferred by the specified entity, shall be reduced from the full value of consideration while computing capital gains. CBDT notifies Rule 8AB for computation of sum attributable to capital asset u/s 48(iii). [Notification No. 76 of 2021 dated 2nd July, 2021.]
8. Insertion of Rule 8AC – Income-tax (19th Amendment) Rules, 2021 – CBDT has introduced Rule 8C to provide for computation of short-term capital gains and written down value of block of assets, where goodwill is a part of such block and depreciation has been obtained. [Notification No. 77 of 2021 dated 7th July, 2021.]
COMPANY LAW
I. COMPANIES ACT, 2013
(I) MCA clarifies that companies can conduct their EGMs via E-mode up to 31st December, 2021 – MCA has issued a clarification to allow companies to conduct their EGMs through VC / OVCM or transact items through postal ballot up to 31st December, 2021 in accordance with the framework provided in the various Circulars and subject to the conditions prescribed therein. [MCA General Circular No. 10/2021 dated 23rd June, 2021.]
(II) Companies (Accounting Standards) Rules, 2021 – The MCA notified the Companies (Accounting Standards) Rules, 2021. It applies to companies other than those preparing their financial statements using Ind AS framework. The Notification, effective 1st April, 2021, redefines a Small and Medium-Sized Company (SMC). The quantitative threshold limits to qualify as an SMC stand amended as follows: (a) turnover does not exceed Rs. 250 crores in the immediately preceding accounting year, and (b) borrowings, at any time during the immediately preceding year, do not exceed Rs. 50 crores. [MCA Notification dated 23rd June, 2021.]
(III) ICSI Guidance Note on CSR – The Institute of Company Secretaries of India has issued Guidance Note on Corporate Social Responsibilities. In this Guidance Note, provisions related to Business Responsibility Reports by Listed Companies, CSR in Insurance Companies, CSR in Banking Companies, CSR and Sustainable Development Goals, CSR and Corporate Governance, etc., have been elaborated in detail. [Published in June, 2021.]
(IV) MCA further extends due date for filing certain forms under the Companies Act and the LLP Act to 31st August, 2021 – Extension granted to companies / LLPs to file forms (other than a CHG-1 Form, CHG-4 Form and CHG-9 Form) which were / are due for filing from 1st April to 31st July, 2021 without any additional fees. [MCA General Circular No. 11/2021 dated 30th June, 2021.]
(V) MCA now allows companies to file charge-related forms without paying an additional fee up to 1st August, 2021 – In view of the Covid-19 pandemic, the MCA has decided to relax the timelines for filing of forms related to the creation / modification of charges. As a result, companies can file charge-related forms without paying an additional fee up to 1st August, 2021. [MCA General Circular No. 12/2021 dated 30th June, 2021.]
II. SEBI
(VI) SEBI introduces cross margin facility on commodity futures – In order to improve the efficiency of the use of the margin capital by market participants, SEBI has decided to introduce cross margin benefit between Commodity Index futures and futures of its underlying constituents or its variants. This shall reduce the cost of trading and may lead to enhanced liquidity in both the Commodity Index futures and its underlying constituent futures or its variants. [Circular No. SEBI/HO/CDMRD/CDMRD_DRM/P/CIR/2021/586, dated 29th June, 2021.]
(VII) SEBI issues SOP for company getting delisted through scheme of arrangement – SEBI has issued the Standard Operating Procedure (SOP) for listed subsidiary company desirous of getting delisted through a Scheme of Arrangement wherein the listed parent holding company and the listed subsidiary are in the same line of business. [Circular No. SEBI/HO/CFD/DIL1/CIR/P/2021/0585, dated 06th July, 2021.]
(VIII) Mutual Funds to provide justification to stakeholders if put option favourable to scheme is not exercised – Based on the recommendation of the Mutual Fund Advisory Committee, the SEBI has decided that, with effect from 1st October, 2021, if put option is not exercised by a Mutual Fund, and if exercising the put option would have been in favour of the scheme, then a justification for not exercising the put option shall be provided by the Mutual Fund to the Valuation Agencies (VA), Board of AMC and Trustees on or before the last date of notice period. [Circular No. SEBI/HO/IMD/DF4/P/CIR/2021/593, dated 09th July, 2021.]
(IX) SEBI reduces advance intimation timeline for modifications in commodity derivative contract – In order to bring in uniformity while giving effect to the contract modifications (so that they have the desired impact) and the modified contract represents a healthy replica of the physical market, SEBI has decided, in consultation with the stock exchanges, to reduce the number of days of advance intimation for all the three categories, i.e., non-material, material and material modifications which can be made only after approval from SEBI, to ten days. [Circular No. SEBI/HO/CDMRD_DOP/P/CIR/2021/592, dated 08th July, 2021.]
FEMA
(i) RBI has decided to collect information about LRS transactions in XBRL format instead of the Online Return Filing System (ORFS). Accordingly, AD Category – I banks shall upload the requisite information on the XBRL system on or before the fifth of the succeeding month from 1st July, 2021 onwards. [A.P. (DIR SERIES 2021-22) Circular No. 7, dated 17th June, 2021.]
(ii) Indian residents are permitted under LRS to make remittances to units set up in IFSCs in India for investment purposes since February 2021. For this purpose, Resident Individuals could also open a non-interest-bearing Foreign Currency Account (FCA) in IFSCs. The International Financial Services Centres Authority (IFSCA) has now amended regulations applicable to Banking Units in such IFSCs. Among other amendments, such Banking Units can now open accounts in a freely convertible foreign currency for individuals and corporate or institutional entities, resident in India or outside India, subject to such conditions as may be specified by the Authority. [Notification No. IFSCA/2021-22/GN/REG013, dated 5th July 2021.]
(iii) The Government had announced a hike in foreign investment limit for the Insurance Sector from 49% to 74% during the Budget on 1st February, 2021 and an appropriate Amendment Bill was passed into law (covered in the April, 2021 issue of this Journal) followed by formally notifying these amendments on 19th May, 2021 with Clarifications on the final rules for increasing the foreign direct investment limit to 74%. The FDI Policy for the same was also amended by the issuance of Press Note 2 of 2021 (covered in the July, 2021 issue of this Journal). The IRDAI has now amended regulations mandating requirement of Resident Indian Citizens at various management posts of Indian Insurance Companies having foreign investment. Further, there are disclosure and compliance requirements stated in respect of these new regulations. Full details are provided in the Notification. It should be noted that a corresponding amendment in the Non-Debt Instrument Rules, 2019 (NDI Rules) is pending after which the FDI amendments will take effect. [Notification No. F. No. IRDAI/REG/6/178/2021, dated 7th July, 2021.]
ICAI ANNOUNCEMENTS
