REGULATORY REFERENCER

1. Amendment to Notification No. 85 of 2020 for extension of date in Vivad Se Vishwas Act, 2020. [Notification No. 9 of 2021 dated 26th February, 2021.]

2. Extension of dates specified in Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 for penalty and reassessment proceedings under Income-tax Act and completion of action under Prohibition of Benami Property Transaction Act, 1988. [Notification No. 10 of 2021 dated 27th February, 2021.]

3. When the Designated Authority passes an order under Vivad Se Vishwas Act, the Assessing Officer shall pass consequential order under the Act. [Circular 3 of 2021 dated 4th March, 2021.]

4. Insertion of Rule 3B to compute annual accretion referred to in the sub-clause (viia) of clause (2) of section 17 of the Act – Income-tax (1st Amendment) Rules, 2021. [Notification No. 11 of 2021 dated 5th March, 2021.]

5. CBDT amends Form 12BA, Form 16 and Form 24Q to incorporate changes related to Finance Act, 2020 The CBDT has amended Form 12BA, Form 16 and Form 24Q vide Income-tax (3rd Amendment) Rules, 2021. The Finance Act, 2020 has brought concessional tax regime for individual taxpayers. Further section 17(2) was amended to tax contribution made in excess of Rs. 7.50 lakhs in the hands of employees. The consequential changes related to the above amendments have been incorporated in the forms. [CBDT Notification No. 15/2021 dated 11th March, 2021.]
    
6. CBDT enhances the scope of Statement of Financial Transactions (SFT) In line with the announcement made in the recent Union Budget, the CBDT has amended Rule 114E. A new sub-rule 5A has been inserted to provide that for the purposes of pre-filling the return of income, an SFT shall be furnished by the specified persons, containing information relating to:

7. Insertion of Rule 29BA and Form 15E being Application for grant of certificate for determination of appropriate proportion of sum (other than salary), payable to non-resident, chargeable in case of the recipients. [Notification No. 18 of 2021 dated 16th March, 2021.]

COMPANIES ACT, 2013

(I) MCA notifies 5th March, 2021 as the effective date for enforcement of amendment to the provisions relating to annual returns MCA has notified amendment to section 92 which relates to Annual Returns. The amendment was introduced vide Companies (Amendment) Act, 2017 and will be effective from 5th March, 2021. Now companies would not be required to provide particulars of their indebtedness in their Annual Returns. Companies are also exempted from providing details pertaining to FIIs, their names and addresses, countries of incorporation, registration and percentage of shareholding held by them, etc. [MCA Notification No. S.O. (E) dated 5th March, 2021.]

(II) MCA introduces new E-form MGT-7A for filing of annual return by OPCs and Small Companies from F.Y. 2020-21 MCA has amended the Companies (Management and Administration) Rules, 2014 requiring every OPC and Small Company to file its annual return from F.Y. 2020-21 in Form No. MGT-7A (Abridged Annual Return). Further, the requirement of filing extract of Annual Return (Form MGT-9) is removed in case of such companies.[MCA Notification No. G.S.R. (E) dated 5th March, 2021.]

(III) MCA notifies amendment relating to remuneration of Independent Directors and Non-Executive Directors MCA has appointed 18th March, 2021 as the date on which provisions relating to remuneration to Independent Directors and Non-Executive Directors would come into force. This amendment was introduced vide Companies (Amendment) Act, 2020. The amendment prescribes the quantum of remuneration payable to an Independent Director in case a company has no profits or its profits are inadequate. [MCA Notification No. S.O. 1255 (E) dated 19th March, 2021.]

(IV) MCA amends schedule V; prescribes limit of remuneration payable to ‘other Directors’ in case of no profits MCA has notified an amendment to Schedule V, wherein a limit of yearly remuneration payable to ‘other Directors’ has been prescribed. The remuneration shall be Rs. 12 lakhs where the effective capital of the company is negative or less than Rs. 5 crores. The remuneration will be Rs. 17 lakhs if the effective capital is Rs. 5 crores or more but less than Rs. 100 crores. In case the effective capital is Rs. 250 crores and above, other Directors’ remuneration per year shall not exceed Rs. 24 lakhs plus 0.01% of the effective capital. [MCA Notification No. S.O. 1256 (E) dated 19th March, 2021.]

(V) Amendment to Schedule III to the Companies Act – The MCA has amended Divisions I (AS), II (Ind AS) and III (NBFCs, Ind AS) of Schedule III that is effective 1st April, 2021. The amendments require incremental disclosures in the financial statements including: a) disclosure of shareholding of promoters; b) current maturities of long-term borrowings; c) ageing schedules of trade payables, trade receivables, and capital work-in-progress; and d) specified Additional Regulatory Information that include: title deeds of immovable property not held in name of the company, details of Benami property held, relationship with struck off companies, ratio analysis, undisclosed income and details of Crypto / Virtual currency traded / invested. [MCA Notification G.S.R._(E ) dated 24th March, 2021.]

(VI) Companies (Accounts) Amendment Rules, 2021 – The MCA has mandated that for financial year commencing on or after 1st April, 2021, every company which uses accounting software for maintaining its books of accounts, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of accounts along with the date when such changes were made and ensuring that the audit trail cannot be disabled. [MCA Notification G.S.R._(E ) dated 24th March, 2021.]

(VII) Companies (Audit and Auditors) Amendment Rules, 2021 – The MCA has amended Rule 11 of the Companies (Audit and Auditors) Rules, 2014 that deals with ‘Other Matters to be included in Auditor’s Report’. The amendment which is effective 1st April, 2021 requires auditors to report on additional matters that include: a) management representation on no funds having been advanced / loaned to other persons / entities (Intermediaries) with the understanding that the intermediary whether directly or indirectly lends or invests in other persons or entities identified in any manner whatsoever by or on behalf of the company; b) whether dividend declared / paid during the year is in compliance with section 123; and c) whether the company has used such accounting software for maintaining its books of accounts which has a feature of recording audit trail facility. [MCA Notification G.S.R._(E ) dated 24th March, 2021.]

SEBI

(VIII) SEBI specifies investment limits for mutual fund schemes w.e.f. 1st April, 2021 SEBI has decided to put investment limits for mutual funds schemes with special features like Additional Tier 1 (AT1) and Additional Tier 2 (AT2) bonds. At present there are no specified investment limits for these instruments with special features and these instruments may be riskier than other debt instruments. Therefore, the prudential investment limits have been decided for such instruments. [Circular No. SEBI/HO/IMD/DF4/CIR/P/2021/032 dated 11th March, 2021.]

(IX) Ministry of Finance notifies new format of ‘Annual Report’ for SEBI The Ministry of Finance has notified the Securities and Exchange Board of India (Annual Report) Rules, 2021 whereby a new format for the Annual Report has been prescribed. Henceforth, such report shall include an analysis of the economic and investment environment in India along with a comparison with developed and peer countries and potential risk factors, stress factors indicated through market signals, etc. The Board shall have to submit a report to the Central Government giving a true and full account of its activities, policies and programmes during the previous financial year in the new format. The report shall be submitted within 90 days after the end of each financial year.[Notification No. G.S.R. 176(E) F. NO. 2/8/2019-RE dated 15th March, 2021.]

FEMA

(i) The Ministry of Home Affairs has issued a Notification superseding many of the earlier Notifications in respect of rights that Overseas Citizens of India (OCIs) enjoy in India. Among other points, the Notification states that:
(a) OCIs would enjoy parity with NRIs for purchase or sale of immovable property other than agricultural land or farmhouse or plantation property; and
(b) In respect of their rights in economic and financial fields not specified in the Notification or those not covered by the Notifications issued by RBI under FEMA, an OCI Cardholder shall have the same rights and privileges as a foreigner.

Kindly refer to the full Notification for other rights and privileges. [Notification – F. No. 26011/CC/05/2018-OCI dated 4th March, 2021.]

(ii) The Government had announced a hike in foreign investment limit for the insurance sector from 49% to 74% during the Budget presented on 1st February, 2021. In line with that, the Government has now introduced and passed into law (both in the Rajya Sabha and the Lok Sabha) the Insurance (Amendment) Bill, 2021 to raise the limit of foreign investment in Indian insurance companies from the existing 49% to 74%. A corresponding amendment in the Non-Debt Instrument Rules, 2019 (NDI Rules) is required. This should be announced soon. [The Insurance (Amendment) Bill, 2021 and news reports.]

(iii) DPIIT has issued a Press Note amending the Consolidated FDI Policy of 2020 by inserting a clause to state that downstream investment made by an Indian entity, which is owned and controlled by NRIs on a non-repatriation basis as per Schedule IV of the NDI Rules, 2019, shall not be considered for calculation of indirect foreign investment. This is because investments made by NRIs on a non-repatriation basis are deemed to be domestic investments at par with investments made by residents. It should be noted that OCIs, who enjoy similar relief, are not mentioned in the Press Note. Further, amendments made by Press Notes are not effective as law until corresponding amendments are made in the NDI Rules, 2019. However, in this case, the current NDI Rules in any case do not count investments made on a non-repatriation basis by both NRIs and OCIs towards indirect foreign investment. [Press Note No. 1 (2021 Series) dated 19th March, 2021.]

ICAI MATERIAL

Accounts and Audit

•  Educational material on Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations. [25th February, 2021.]

•  Technical Guide on Audit of Internal Financial Controls in Case of Public Sector Banks. [19th March, 2021.]

•  Guidance Note on Audit of Banks (2021 Edition). [20th March, 2021.]