DIRECT TAX
1. Extension of due dates for filing various forms CBDT has extended the time limit for filing applications for registration of trusts u/s 10(23C)/11/80G, electronic filing of Form No. 15CC, Equalization Levy Statement in Form No. 1, Form No. 15CC, uploading of declaration received in Form No. 15G/15H, Form No. 10BBB, Form 3CEAC, Form 3CEAD, Form 3CEAE and Form II SWF due to difficulties faced by the assessees in electronic filing of Forms and non-availability of the utility for e-filing of Forms. [Circular 16 of 2021 dated 29th August, 2021.]
2. CBDT under Direct Tax Vivad se Vishwas Act, 2020 extended the last date of payment of the amount (without any additional amount) to 30th September, 2021. [Notification No. 94 of 2021 dated 31st August, 2021.]
3. Insertion of Rule 9D – Income-tax (25th Amendment) Rules, 2021 The Finance Act, 2021 amended section 10(11) and section 10(12) to provide that exemption shall not be available for the interest income accrued during the previous year on the recognised and statutory provident fund account of the person to the extent it relates to the contribution made by the employee in excess of Rs. 2,50,000 / Rs. 5,00,000 in the previous year.
The CBDT has inserted Rule 9D to calculate the taxable amount of interest relating to the contribution made to a statutory or a recognised provident fund in excess of the threshold limit. [Notification No. 95 of 2021 dated 31st August, 2021.]
4. Insertion of Rule 26D and Form No. 12BBA – Income-tax (26th Amendment) Rules, 2021 – A senior citizen proposing to claim benefit of section 194P shall furnish a declaration in Form No. 12BBA in paper form to the specified bank. On furnishing the declaration, the specified bank will compute the total income of such senior citizen after considering the deduction allowable under Chapter VI-A and rebate allowable u/s 87A. The specified bank will deduct income-tax on the total income so computed at the rates in force. The specified bank shall properly maintain the declaration and the evidence furnished by the senior citizen and shall make available the same to the PCCIT or CCIT as and when required. [Notification No. 99 of 2021 dated 2nd September, 2021.]
5. Insertion of Rule 14C – Income-tax (27th Amendment) Rules, 2021 To ease the process of authentication of electronic records under the Faceless Assessment Regime, CBDT has provided that the persons who are mandatorily required to authenticate electronic records by digital signature shall be deemed to have authenticated the electronic records when they submit the record through their registered account in the Income-tax Department’s portal. [Notification No. 101 of 2021 dated 6th September, 2021.]
6. Extension of due dates for filing Income tax returns and various audit reports for A.Y. 2021-22 The due date of filing return of income, Tax Audit Report, Transfer Pricing Audit Report and filing revised / belated return for A.Y. 2021-22 was extended vide Circular No. 9/2021 dated 20th May, 2021, which is now further extended. [Circular 17 of 2021 dated 9th September, 2021.]
COMPANY LAW
I. COMPANIES ACT, 2013
1. MCA amends norms relating to creation and maintenance of databank of Independent Directors (IDs) MCA has notified the Companies (Creation and Maintenance of databank of Independent Directors) Second Amendment Rules, 2021. A new Rule 6 has been inserted requiring the Institute to submit an annual report on the capacity-building of IDs within 60 days from the end of every financial year to every individual whose name is included in the databank and also to every company in which such individual is appointed as an ID in prescribed format. [Notification No. S.O. 3406(E), dated 19th August, 2021.]
2. MCA issues FAQs on various issues concerning Corporate Social Responsibility The FAQs have been broadly classified into topics such as (a) Applicability of CSR, (b) CSR Framework, (c) CSR Expenditure, (d) CSR Activities, (e) CSR Implementation, (f) Ongoing Project, (g) Treatment of Unspent CSR Amount, (h) CSR Enforcement, (i) Impact Assessment, and (j) CSR Reporting & Disclosure. [General Circular No. 14 /2021, dated 25th August, 2021.]
II. SEBI
3. SEBI revises format for disclosure of shareholding pattern of promoters and promoter group entities In the interest of transparency for investors, SEBI has revised the format for disclosure of shareholding pattern. Consequently, all listed entities shall henceforth provide shareholding, segregated into promoter(s) and promoter group. At present, the shareholdings of promoter(s) and promoter group entities are collectively disclosed showing shareholding pattern of the promoter and promoter group. [Circular No. SEBI/HO/CFD/CMD/CIR/P/2021/616, dated 13th August, 2021.]
4. SEBI asks depositories to create, host, and maintain a system using ‘Distributed Ledger Technology’ In order to strengthen the process of security creation, monitoring of security created, monitoring of asset cover and covenants of the non-convertible securities, SEBI has asked depositories to create, host, and maintain a system using the distributed ledger technology. The new system shall come into effect from 1st April, 2022. However, testing of the system shall start from 1st January, 2022. [Circular No. SEBI/HO/MIRSD/MIRSD_CRADT/CIR/P/2021/618, dated 13th August, 2021.]
5. SEBI notifies single regulations on Share-Based Employee Benefits and Sweat Equity The market regulator, SEBI, has merged SEBI (Issue of Sweat Equity) Regulations, 2002 and SEBI (Share-Based Employee Benefits) Regulations, 2014 into a single regulation called SEBI (Share-Based Employee Benefits and Sweat Equity) Regulations, 2021. The new Regulation has provided flexibility in switching the administration of their schemes from the trust route to the direct route and vice versa. [Notification No. SEBI/LAD-NRO/GN/2021/40, dated 13th August, 2021.]
6. SEBI specifies additional penalty for repeated delivery default In order to put in place a sufficient deterrent mechanism to handle instances of repeated delivery defaults, SEBI has stated that in the case of a ‘Repeated Default’ by a seller or a buyer, an extra penalty of 3% of the total value of the delivery default will be imposed. Here, the term ‘Repeated Default’ shall be defined as an event wherein a default on delivery obligations takes place three times or more during a six-month period on a rolling basis. The penalty levied on ‘Repeated Default’ shall be transferred to the Settlement Guarantee Fund (SGF) of the Clearing Corporation. However, the Circular shall be effective after one month from the date of its issuance. [Circular No. SEBI/HO/CDMRD/DRMP/CIR/P/2021/619, dated 17th August, 2021.]
7. SEBI requires depositories to use distributed ledger technology to monitor security creation SEBI has asked depositories to use blockchain technology to record and monitor security creation as well as covenants of non-convertible securities. Distributed ledger technology has the potential to provide a more resilient system than traditional centralised databases. It offers better protection against different types of cyberattacks. The move is aimed at strengthening the process of security creation and monitoring of security created, asset cover and covenants of non-convertible securities. [Press Release No. 26/2021 dated 25th August, 2021.]
8. AMCs must disclose ‘risk-o-meter’ of scheme while disclosing its performance In order to enhance the quality of disclosure w.r.t. risk and performance, SEBI has asked AMCs to disclose the ‘risk-o-meter’ of the scheme wherever the performance of the scheme is disclosed and the ‘risk-o-meter’ of the scheme and benchmark wherever the performance of the scheme vis-a-vis that of the benchmark is disclosed. The provisions of this Circular shall be applicable with effect from 1st October, 2021. However, AMCs may choose to adopt the provisions of this Circular before the effective date. [Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/621, dated 31st August, 2021.]
9. SEBI asks investors to link PAN with Aadhaar before 30th September, 2021 SEBI has asked investors to link their PAN with Aadhaar by 30th September, 2021 for continual and smooth transactions in the securities market. As per CBDT Notification GSR 112(E) dated 13th February, 2020, the PAN of a person allotted as on 1st July, 2017 shall become inoperative if it is not linked with Aadhaar by 30th September, 2021 or any other date specified by CBDT. SEBI has also asked market intermediaries to ensure compliance of the said Notification. [Press Release 27/2021, dated 3rd September, 2021.]
FEMA
(i) Amendment in rate of interest on advance payment under export regulations Where an exporter receives advance payment with interest from a buyer / third party named in the export declaration made by the exporter, outside India, the exporter shall be under an obligation to ensure that the rate of interest payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points. This rate has now been amended to include any other applicable benchmark as may be directed by the RBI. No direction has yet been provided by the RBI in this matter. [Notification F. No. FEMA 23(R)/(5)/2021-RB, dated 8th September, 2021.]
