DIRECT TAX
1. Extension of various due dates: (a) The time limit for linking PAN with Aadhaar has been extended from 30th September, 2021 to 31st March, 2022; (b) The due date for the completion of penalty proceedings under the Income-tax Act has been extended from 30th September, 2021 to 31st March, 2022; (c) The time limit for issuing notice and passing the order by the Adjudicating Authority under the Prohibition of Benami Property Transactions Act, 1988 has been extended to 31st March, 2022. [Notification No. 113 of 2021 dated 17th September, 2021.]
2. Amendment to Rule 10D – Income-tax (30th Amendment) Rules, 2021: Applicability of Safe Harbour Transfer price specified under Rule 10TD extended to A.Y. 2021-22. Earlier, the same was applicable only for A.Y. 2020-21. [Notification No. 117 of 2021 dated 24th September, 2021.]
3. Insertion of Rules 11UE and 11UF – Income-tax (31st Amendment) Rules, 2021: The Taxation Laws (Amendment) Act, 2021 amended the Income-tax Act so as to provide that no tax demand shall be raised in future on the basis of the amendment made to section 9 of the Act by the Finance Act, 2012 for any offshore indirect transfer of Indian assets if the transaction was undertaken before 28th May, 2012 (i.e., the date on which the Finance Bill, 2012 received the assent of the President). It further provided that the demand raised for offshore indirect transfer of Indian assets made before 28th May, 2012 shall be nullified on fulfilment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc., shall be filed and such other conditions as may be prescribed are fulfilled.
Rule 11UE provides for the specified conditions to be eligible to claim relief and Rule 11UF provides the form and manner of furnishing the undertaking for withdrawal of pending litigation, claiming no cost, damages, etc. [Notification No. 118 of 2021 dated 1st October, 2021.]
4. CBDT exempts certain non-resident persons from the requirement of furnishing of return of Income u/s 139 subject to fulfilment of prescribed conditions: The benefit of exemption is available from A.Y. 2021-22 onwards. [Notification No. 119 of 2021 dated 11th October, 2021.]
COMPANY LAW
I. COMPANIES ACT, 2013
1. MCA directs RoCs to extend due date of AGM for F.Y. ending 31st March, 2021 by two months: The Central Government received representations seeking extension of Annual General Meetings (AGM) for F.Y. 2020-21 due to many difficulties faced by stakeholders during the second wave of Covid-19. In view of these hardships, the Central Government advised the Registrars of Companies (RoCs) to accord approval for extension of time for a period of two months beyond the due dates by which companies are required to conduct AGMs for the F.Y. 2020-21 ended on 31st March, 2021. [Office Memorandum issued by Office of the Director-General of Corporate Affairs, Ministry of Corporate Affairs, dated 23rd September, 2021. Pursuant to this Office Memorandum, the respective RoCs have issued orders extending the period of holding of AGM, e.g., RoC, Pune has issued such order for Companies in Maharashtra within its jurisdiction on 23rd September, 2021.]
2. MCA extends due date of filing of cost audit report in e-form CRA-4 for F.Y. 2020-21: MCA has extended the due date for filing of Cost Audit Report for F.Y. 2020-21 with the Central Government. Now, companies can file cost audit report by 30th November, 2021 if the cost audit report is submitted by the Cost Auditor to the Board by 31st October, 2021. In case a company has extended the time for holding its AGM, then e-form CRA-4 may be filed within 30 days of receipt of the cost audit report. [MCA Circular No. 15/2021 F.No.01/40/2013 CL-V (PT-I)], dated 27th September, 2021.]
II. SEBI
3. SEBI amends risk management framework for mutual funds: With the objective of management of key risks involved in mutual fund operations, SEBI has revised the Risk Management Framework (RMF) for mutual funds. The new framework shall provide a set of principles or standards, which inter alia comprise the policies, procedures, risk-management functions and roles and responsibilities of the management, the Board of the AMC and the Board of Trustees. [Circular No. SEBI/HO/IMD/IMD-1 DOF2/P/CIR/2021/630, dated 27th September, 2021.]
4. SEBI extends timelines to conduct annual compliance audit by investment advisers: SEBI has extended the timeline to conduct annual compliance audit by investment advisers (IAs) by three months. SEBI had received representations from IAs seeking extension due to the Covid-19 pandemic. Accordingly, IAs are now required to conduct the annual compliance audit by 31st December, 2021 for the financial year ending 31st March, 2021. Correspondingly, the date for obtaining a certificate from an auditor has been extended till 31st December, 2021. [Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/632, dated 30th September, 2021.]
5. SEBI discontinues usage of pool accounts for mutual fund transactions: With an aim to protect mutual fund investors against misuse of their investments, SEBI has decided to discontinue the usage of pool accounts by all platforms in transactions of mutual fund schemes. In addition, stock brokers / clearing members facilitating mutual fund transactions shall not accept mandates for SIPs or lump sum transactions in their name. [Circular No. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/635, dated 4th October,2021.]
6. SEBI revises formats for filing ‘Financial Information’: SEBI has decided to revise the formats for reporting of financial information and limited review report. The new format shall contain the items mentioned in the statement of profit and loss (excluding notes and detailed sub-classification) as prescribed in Schedule III of the Companies Act, 2013 and the extent and nature of security created and maintained in case of secured non-convertible debt securities. [Circular No. SEBI/HO/DDHS/CIR/2021/0000000637, dated 5th October, 2021.]
7. Revised Formats for Limited Review / Audit Report for issuers of non-convertible securities: SEBI, vide Notification dated 7th September, 2021, has amended Regulation 52 of the SEBI (LODR) Regulations, 2015, inter alia mandating entities that have listed non-convertible securities to disclose financial results on a quarterly basis, including assets and liabilities and cash flows, as well as requiring certain changes in the line items in the financial results. Accordingly, SEBI has issued a Circular providing the revised formats for limited review report / audit report. [Circular SEBI/HO/DDHS/CIR/2021/0000000638 dated 14th October, 2021.]
FEMA
1. Increase in FDI limit for telecom sector: The Government has increased the FDI limit for the telecom sector from 49% to 100% under automatic route. The FDI in telecom sector shall be subject to para 3.1.1 of the FDI policy which requires prior Government approval in case of investment by any entity from a border-sharing country. The increase in FDI limit will, however, take effect only once appropriate amendments are made under the Exchange Management (Non-Debt Instruments) Rules, 2019. [Press Note No. 4 (2021 Series) dated 6th October, 2021.]
RBI
1. Enhancement in family pension of employees of banks; Treatment of additional liability: The RBI has permitted the following course of action to all member banks of the Indian Banks’ Association (covered under the 11th Bipartite Settlement and Joint Note dated 11th November, 2020) in relation to the increased expenditure resulting from the revision in family pension for employees: (a) The liability for enhancement of family pension shall be fully recognised as per applicable accounting standards; (b) The expenditure may, if not fully charged to the P&L Account during the financial year 2021-22, be amortised over a period not exceeding five years beginning with the financial year ending 31st March, 2022 subject to a minimum of 1/5th of the total amount involved being expensed (spent) every year; and (c) Appropriate disclosures of the accounting policy followed in this regard shall be made in the ‘Notes to Accounts’ along with disclosures of the amount of unamortised expenditure and the consequential net profit if the unamortised expenditure had been fully recognised in the P&L. [Notification No. RBI/2021-22/105 DOR.ACC.REC.57/21.04.018/2021-22 dated 4th October, 2021.]
ICAI ANNOUNCEMENT
1. Time limit of generating UDIN aligned with SQC: With an aim to align the time limit for generating UDIN with the Standards on Auditing and Standard on Quality Control (SQC 1), the ICAI has decided that the time limit of generating UDIN would be 60 days from the date of the signing of certificates / reports / document instead of 15 days henceforth. Further, for the documents where the respective regulator / other stakeholders require UDIN immediately on signing or within a specified period,
the same shall be provided by the member. Also, the UDIN so generated has to be communicated to ‘Management’ / ‘Those Charged with Governance’ for disseminating it to the stakeholders from their end. [17th September, 2021.]
