Income Tax
1. Extension of Relaxation given on filing of Form 15CA & CB
In view of difficulties faced by taxpayers in electronic filing of Forms 15CA/15CB on www.incometax.gov.in. The CBDT has decided that taxpayers can submit the aforesaid Forms in manual format to the authorized dealers till June 30, 2021. Said date was extended to July 15, 2021. Now, the board has given further relaxation and allowed manual filing of Forms till August 15, 2021.
2. Sovereign Gold Bond Scheme 2021-22–Series-IV- Issue price (09-Jul-2021)
In terms of Government of India Notification No.4(5)-B(W&M)/2021 dated May 12, 2021,Sovereign Gold Bonds 2021-22 (Series IV) will be opened for the period July 12-16, 2021 with Settlement date July 20, 2021. The issue price of the Bond during the subscription period shall be Rs4,807 (Rupees Four thousand eight hundred seven only) – per gram, as also published by RBI in their Press Release dated 9 July, 2021. The Government of India in consultation with the Reserve Bank of India has decided to allow discount of Rs 50 (Rupees Fifty only) per gram from the issue price to those investors who apply online and the payment is made through digital mode. For such investors the issue price of Gold Bond will be Rs 4,757 (Rupees Four thousand seven hundred fifty seven only) per gram of gold.
SEBI
1. SEBI further extends timelines for compliance with regulatory requirements by Debenture Trustees
In view of the prevailing situation due to Covid-19 pandemic and representations received from the Debenture Trustees, the SEBI has decided to further extend the timelines for compliance with the regulatory requirements by Debenture Trustees for the quarter/ half year/ year ending March 31, 2021, up to October 31, 2021
2. SEBI ISSUES CIRCULAR ON "BLOCK MECHANISM IN DEMAT ACCOUNT OF CLIENTS UNDERTAKING SALE TRANSACTIONS"
SEBI has received representations from the clients undertaking sale transactions, wherein the clients give Early Pay-In (EPI) for sale trades which are yet to be executed. If the sale trade is executed, then the securities get adjusted against EPI, however, if securities remain unsold, then the securities are required to be returned back to client's demat account, which take time and involve cost.
A facility of block mechanism in the demat account of clients has been made available by the depositories. The securities lying in client's demat account may be blocked in favour of Clearing Corporation either by client himself using depository's online system or eDIS mandate or through depository participant based on physical DIS given by client or Power of Attorney (POA) holder. Clearing Corporation shall match the client obligations with the block details provided by depositories and will provide EPI benefit to client if the obligation exists for that client. If the order is not executed by the end of the T day, the block shall be released. The proposed facility of block mechanism is on optional basis and EPI mechanism shall continue.
If securities for sale are blocked in the depository system in favour of clearing corporation, all margin would deemed to have been collected and penalty for short/non collection of margin including other margins shall not arise.
The facility of block mechanism shall be available to the clients from August 1, 2021.
Goods & Service Tax
1. CBIC issues Clarification on applicability of IGST on Repair Cost, Insurance and Freight, on Goods Re-imported after being Exported for Repairs
Notification Nos. 45/2017-Customs and 46/2017-Customs, both dated 30th June, 2017, issued at the time of implementation of GST, prescribe certain concessions from duty/taxes on re- import of goods exported for repair outside India. These notifications, specifically serial No. 2 ibid, clearly specify that goods exported (other than those exported under claim of benefits listed), when re-imported into India, are exempt from so much of the duty of customs leviable thereon which is specified in the said First Schedule of the Customs Act, 1962, and the integrated tax, compensation cess leviable there on respectively under sub-section (7) and (9) of section 3 of the said Customs Tariff Act, 1975 as is in excess of the duty of customs which would be leviable if the value of re-imported goods after repairs were made up of the fair cost of repairs carried out including cost of materials used in repairs (whether such costs are actually incurred for not), insurance and freight charges, both ways.
“Notification prescribes that duties or taxes (including BCD, IGST, etc) at the applicable rates will be payable on such imports, calculated on the value of repairs, insurance and freight, instead of the value of the goods itself. Similar concession existed in pre-GST period too, vide notification No. 94/96-Customs, whereby, the customs duty (BCD, additional duty of customs under section 3 of Customs Tariff Act, 1975, etc.) were payable on the value of repairs instead of the entire value of goods in such imports,” the CBIC clarified. The Board further said, GST rate and exemptions are prescribed on the recommendation of the GST Council. The Council, at the time of roll out of GST decided to continue the concession as were available under the said notification No. 94/96-Cus, with only consequential amendment, i.e, replacing additional duties of customs with IGST and Compensation cess, as discussed in the 14th Meeting of the GST Council. Accordingly, under GST, IGST and Compensation cess were made applicable on the value of repairs, insurance and freight on re-import of goods sent abroad for repair.
Again, during the 37th GST Council Meeting, while examining the request to make available the credit of ITC paid on aircraft engines and parts exported for repairs and later re- imported, the leviability of IGST on such imports, on the cost of repairs, insurance and freight charges, was affirmed. In fact, this was never disputed in first place and the request was to allow credit of the IGST so paid. Similarly, while examining the question of GST rate on maintenance, repair and overhauling (MRO) services in respect of aircraft, aircraft engines and other components and parts, the leviability of IGST on such re-imports was again affirmed by the GST Council in its 39th meeting, making it explicitly clear that such goods reimported after repair from outside India attract IGST on the repair, freight and insurance value. In the said discussion, the IGST levied on such goods re-imported after being exported abroad for repairs was a significant factor considered by the GST Council while deciding the rate on MRO services. The above deliberations of the GST Council leave no doubt that the Council had consciously recommended for levy of IGST and cess, albeit at the repair, insurance and freight cost instead of the entire value of goods imports, on the basis of which the said notifications No. 45/2017-Cus and 46/2017-Cus were issued, the Board added. Recently, in the matter of M/s Interglobe Aviation Limited versus Commissioner of Customs, in its Final Order dated the 2nd November, 2020, the CESTAT Principal Bench, New Delhi on analysis of notification No. 45/2017-Customs, has interpreted that intention of legislation was only to impose basic customs duty on the fair cost of repair charges, freight and insurance charges on such imports of goods after repair. The CESTAT has thus concluded that integrated tax and compensation cess on such goods would be wholly exempt. An appeal has been preferred by the Department before the Supreme Court against the said Order.
The matter was placed before the GST Council in its 43rd Meeting held on the 28th May, 2021. The GST Council deliberated on the issue and recommended that a suitable clarification, including any clarificatory amendment, if required, may be issued for removal of any doubt, to clarify the decision of the GST Council that re-import of goods sent abroad for repair attracts IGST and cess (as applicable) on a value equal to the repair value, insurance and freight. “Accordingly, as recommended by the GST Council, it is clarified that notification Nos. 45/2017-Customs and 46/2017-Customs, both dated the 30th of June, 2017 were issued to implement the decision of the GST Council taken earlier, that re-import of goods sent abroad for repair attracts IGST on a value equal to the repair value, insurance and freight. Further, in the light of the recommendations of the GST Council in its 43rd Meeting, a clarificatory amendment has been made in the said notifications, vide notification Nos. 36/2021-Customs and 37/2021- Customs, both dated 19th July, 2021, without prejudice to the leviability of IGST, as above, on such imports as it stood before the amendment,” the Deputy Secretary to the Government of India, Gaurav Singh said.
2. Extension of IEC updation
Period of modification of IEC is extended for the year 2021-22 only till 31-7-2021, and no fee shall be charged on modifications carried out in IEC during the period upto 31st July, 2021.
FEMA
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, also known as the Crypto Bill, was expected to be tabled in the Lok Sabha during the Monsoon Session of the Indian Parliament. But it wasn’t listed among the 23 bills in the tentative list of government legislative and financial business that was tabled because The Ministry of Finance, the Reserve Bank of India (RBI), Indian banks, and stakeholders are further holding deliberations to take a holistic decision on cryptocurrency before introducing the bill in Parliament. The Crypto bill has been getting delayed due to COVID-19 pandemic.
The Crypto Bill, was a new bill on cryptocurrencies that suggested a ban on “private cryptocurrencies” in India and facilitate the creation of an official digital currency that will be regulated by the Central Bank of India.
The term was first heard of when it appeared in the agenda for the Parliament’s Budget session back in February-March, and hence everyone is waiting to know what the government is trying to define the term “private cryptocurrencies” as. A high-level Inter-Ministerial Committee (IMC) was constituted under the Chairmanship of Secretary (Economic Affairs) to study the issues related to virtual currencies and propose specific actions to be taken in the matter recommended in its report that all private cryptocurrencies, except any virtual currencies issued by the state, will be prohibited in India.
There have been fears that India will ban trading and use of crypto currencies like Bitcoin, Ethereum etc altogether, by coming out with its own digital crypto currency which will be regulated by RBI.
RBI initially banned banks from processing any crypto currency transactions in 2018. However, the Supreme Court, vide judgment dated March 4 th 2020, lifted the ban. The Reserve Bank of India (RBI) on May 31, 2021, had announced that banks to allow cryptocurrency trades with routine due diligence measures on the same. The central bank had also nulled the circular issued in 2018 that asked banks to not facilitate cryptocurrencies exchanges. The Government is looking at treat cryptocurrencies as a tradeable asset class with a market that can be traded and invested.
Purposes of Cryptocurrency Bill, 2021
The key purposes of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 are:
(i) to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.
(ii) to prohibit all private cryptocurrencies in India,
(iii) allow for certain exceptions to promote the underlying technology of cryptocurrency and its uses.
The RBI Deputy Governor has said that potential damaging socio economic consequences that could arise on account of lack of regulation and huge volatility of the crypto market, were one of the main drivers for the bank’s consideration of a central bank digital currency, which the RBI could control.
Cryptocurrencies market in India
As per the blockchain data company Chainalysis, India has witnessed a 600 per cent jump in total investment in cryptocurrencies from $923 million in April 2020 to $6.6 billion in May 2021.The company in June 2021 stated that India ranks 18th with total Bitcoin investment gains at $241 million.
One of the leading global crypto exchanges Coinbase has announced its intent to expand Indian operations.
CONCLUSION:
The Finance Minister’s comments when she said the Government was looking at ways in which experiments can happen in the digital world and cryptocurrency, has given some hope to investors that the Government has not completely closed its minds with respect to crypto currencies, and is open to explore what is possible. success of the legislation will be mostly dependent on the extant of policies that the Government would bring in, and what is government’s definition and stance on Private Cryptocurrencies.
El Salvador recently announced that it was making Bitcoin a legal tender, the only country in the world to do so. The tiny Central American country of about 6.5 million people does not have a currency of its own and has been using the US dollar for domestic transactions since 2001. However, experts have noted that it may not be realistic for India to emulate El Salvador’s example.
Companies Act 2013
RECTIFICATION OF NAME OF COMPANY
Section 16 of the Companies Act, 2013 deals with rectification of the name of the Company in cases where a company is registered inadvertently or otherwise, with a name which is similar to an already registered company or a registered trademark, the central government may direct the company to change the name of the company within a period of 3 months from the date of issue of such direction. And originally, Section 16(3) stated penalties for non-compliance if the company fails to change the name according to the direction issued by the Central government.
Sec 16(3) was amended in Companies (Amendment) Act, 2020 dated 28th Sep 2020, by removing the penalty clause and by adding a clause which stated the Central government shall allot a new name in case the Company fails to comply with the directions within the period allowed. Further, this amendment is made effective only from 1st of September,2021 by way of notification issued on 22nd July, 2021. Also, the MCA issued a notification amending the Incorporation rules by adding Rule 33A, also to be effective only from 1st of September, 2021 for allotment of new name by the central government in case of non compliance by the company on the directions issued by the Central Government.
Let us understand Section 16 along with the new rule 33A of the Companies Incorporation rules further.
Section 16(1):
Clause a: If a company is registered inadvertently or otherwise with a name which according to the opinion of the central government is identical with or too nearly resembles a company which has previously been registered, the central government may direct the company to change its name within a period of three months from the issue of such direction by passing an ordinary resolution for this purpose.
Clause b: If an application is made by a registered proprietor of a trademark to Central Government within three years of incorporation or registration or change of the name of the company, that the name of the company is identical or too nearly resembles the registered trademark, the Central government may in this case, direct the company to change the name of the Company within a period of three months from the date of issue of such direction by passing an ordinary resolution for this purpose.
Section 16(3):
Effective from 1st September, 2021, if a company defaults in complying with the direction issued by Central Government for changing the name of the company, the Central Government shall allot a new name to the Company in such manner as may be prescribed 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. Further these provisions shall not prevent the company from subsequently changing its name in accordance with the provisions of the Act.
Rule 33A:
In case of non compliance by the Company for change of the name as directed by the Central Government according to Section 16(3), within a period of three months from the date of direction issued, the following shall become the new name of the Company without any further act or deed by the Company and the registrar shall accordingly make entry of the new name of the Company and issue fresh certificate of incorporation in form INC-11C.
The new name of the Company will become as a combination of the following:
1. The letters, “ORDNC” (which is an abbreviation of the words “Order of Regional Director Not Complied”),
2. The year of passing the resolution,
3. The serial number and,
4. The existing Corporate Identity Number (CIN) of the Company
In cases, where the Company has already filed INC-24 for change of the name of the Company, which is pending for disposal as at the expiry of three months from the date of issue of direction by the Regional Director, the name shall not be changed as above unless, the said e-form is subsequently rejected, in which case, the name will be modified as above.
A company whose name has been changed as abovementioned, it shall at once make necessary compliance with the provisions of section 12 of the Act which mandates to paint and affix the name of the Company at the registered office, have the name engraved in legible characters in seal, etc., i.e, wherever the name of the company is painted, affixed or engraved, it shall be changed to the new name issued as above and the statement, “Order of Regional Director Not Complied (under section 16 of the Companies Act, 2013)” shall be mentioned in brackets below the name of company, wherever its name is printed, affixed or engraved. In case the company subsequently changes its name in accordance with the provisions of the Act, no such statement shall be required.
Taxation
GST on contribution by members to RWA/Housing societies
A Resident Welfare Association is a collective body of persons, who stay in a residential co-operative society. The object of Housing Society is to provide its members with open plots for housing, dwelling houses or flats; or if open plots, the dwelling houses or flats are already acquired, to provide its member's common certain amenities and services to its members, be it collecting statutory dues from its members and remitting to statutory authorities such as property tax, electricity charges, water tax, etc.
This is exempt from charge vide Entry No. 77 in the CGST Notification No. 12/2017- CT (Rate) dated 28-6-2017, Heading Number 9995:
"Service by an unincorporated body or a non-profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution
(c) up to an amount of Seven Thousand Five Hundred rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex."
This entry was later amended vide notification No. 2/2018 - Central Tax (Rate) dt 25-1-2018 by which the limit for exemption was increased.
It may be mentioned that supply of service by RWA (unincorporated body or a registered non-profit entity) to its own members by way of reimbursement of charges or share of contribution upto an amount of Rs. 7,500/-* per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST.
*Prior to 25th January 2018, the exemption was available if the charges or share of contribution did not exceed Rs. 5000/- per month per member. The limit was increased to Rs. 7500/- per month per member with effect from 25th January 2018. [Refer clause (c) of Sl. No. 77 to the notification No. 12/2018- Central Tax (Rate) dated 28-6-2019]
Further, if the aggregate turnover of such RWA is up to Rs. 20 Lakh in a financial year, then such supplies would be exempted from GST even if charges per member are more than Rs. seven thousand five hundred.
Press Release by CBIC dated 13-Jul-2017
RWA shall be required to pay GST on monthly subscription/contribution charged from its members if such subscription is more than Rs. 5,000 per member (7,500/- after 25-Jan-2018) and the annual turnover of RWA by way of supplying of services and goods is also Rs. 20 lakhs or more.
Circular No. 109/28/2019-GST dated 22-Jul-2019
The exemption from GST on maintenance charges charged by a RWA from residents is available only if such charges do not exceed Rs. 7500/- per month per member. In case the charges exceed Rs. 7500/- per month per member, the entire amount is taxable. For example, if the maintenance charges are Rs. 9000/- per month per member, GST @18% shall be payable on the entire amount of Rs. 9000/- and not on [Rs. 9000 - Rs. 7500] = Rs. 1500/- . After this Circular what we can see that Department reversed its own position. As per Press Release of 2017 the amount chargeable to GST was amount more than exemption limit whereas in 2019 Department stated to tax the entire amount without any exemption.
Greenwood Owners Association Vs Union of India (Madras High Court)
In the case of Dilip Kumar (supra), the Supreme Court reiterates the settled proposition that an Exemption Notification must be interpreted strictly. The plain words employed in Entry 77 being, ‘upto’ an amount of 7,500/- can thus only be interpreted to state that any contribution in excess of the same would be liable to tax.
The term ‘upto’ hardly needs to be defined and connotes an upper limit. It is interchangeable with the term ‘till’ and means that any amount till the ceiling of Rs.7,500/- would exempt for the purposes of GST.
"Where petitioner who was Resident Welfare Associations (RWA) in apartment complexes challenged an order of Authority for Advance Ruling (AAR) levying tax on entirety of contribution by him to a RWA on ground that grant of exemption was conditional upon contribution being an amount of Rs. 7,500 or less and if contribution exceeded sum of Rs. 7,500, then very entitlement of that RWA to exemption would stand defeated and entirety of amount collected would have to be brought to tax, it was held that plain words employed in Entry No. 77 of Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 being 'upto' an amount of Rs. 7,500 could only be interpreted to state that any contribution in excess of same would be liable to tax and, therefore, conclusion of AAR as well as Circular to effect that any contribution above Rs. 7,500 would disentitle RWA to exemption, was contrary to express language of Entry No. 77 and both were to be quashed and, thus, only contributions to RAW in excess of Rs. 7,500 would be taxable under GST Act"
Conclusion
The above judgment would surely be a breather for RWA's across the country as it has correctly laid down the position of law which had been interpreted by the authorities in a different context to deny the exemption from the basic limit also. The benefit of this judgment however may not be allowed by the departmental officers of other states except Tamil Nadu as the decisions of the High Court are binding on the subordinate courts and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises jurisdiction.
Since the judgement has countrywide impact, there are possibilities of department challenging the decision at Higher forums.
TRENDING TOPIC
Testing Times are Temporary – Persevere
Sometimes as a business owner, we find ourselves in challenging circumstances or situations where it is not about how to handle it, but makes us question the fundamentals. It shouldn’t surprise you when you have these feelings or experience these moments because it’s part and parcel of an entrepreneurial journey. People who made it to the Top, did not make it easy.
Yet, it is in that striving to be successful, we keep it going even when the going isn’t easy. This is called perseverance and many successful entrepreneurs – and even many personal development leaders and prominent psychologists – will tell you that it just might be the secret of business (and personal!) success.
As Steve Jobs, founder of Apple said, “Exceptional founders all have the ability to ‘keep going on.’ I’m convinced that half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.”
It’s easy for nearly any business owner to find that initial passion or desire for success for success. And when things are going smoothly, it’s easy to keep that passion ignited.
It would be ideal for an entrepreneur if things stayed smooth and rosy all the time—if every plan went well, according to plan. Or it would be amazing if when you did everything you thought of, or even know you are supposed to do and you were able to achieve spectacular results. But unfortunately, that is just not the case. All too often, you can do everything right, and still come up short. Unfortunately, that is just life and especially, the life of an entrepreneur sometimes.
Some entrepreneurs have the “perseverance gene” built in naturally. If that is the case for you, great. But what if it’s not? How do you build or grow perseverance?
Here are 3 simple tips for entrepreneurs to develop the attribute of perseverance, so they can get past what is holding them back and get back on the road to success:
1. Set small goals to moving past your challenges or obstacles.
One reason entrepreneurs often feel like they are falling down or failing, is because the goals set are too ambitious but not within the achievable timeframes. Setting smaller, thought through and attainable goals within a practical timeframe needed for such goal, increases the likelihood of success and gives the motivation to keep moving forward.
2. Plan to fail.
Planning for failure may seem contrary to what should or would work but it’s actually a very good way to build perseverance. Whenever you are setting goals, making plans, or developing solutions for problems, try to anticipate where you might fail. Then, create contingencies or alternate pathways to success. In doing so, you naturally increase optimism in your chances for overall success and optimism is an important ingredient for perseverance.
3. Build a network of support.
Sometimes, no matter what you do — set the right goals, develop the right contingencies, etc. — things still might not go your way. Studies show that having a strong support network for the challenging times that might happen, help to build and enforce hope that you still can succeed in the future. And hope is yet another magic ingredient in perseverance.
As you’ve likely noticed from all the points made above, the main key to perseverance is a belief that not only can it get better, but that it likely will. Keep that in mind and challenges and problems, big or small, fall into perspective just a little more.
The most famous example in this regard can be the billionaire and philanthropist Elon Musk himself.
While the world has witnessed some of the genius inventors and industrialists who have gone on to change the world, there are very few of them of the caliber of Elon Musk. His brainchild company SpaceX became the first privately-funded company to launch a rocket into the orbit, bagging a $1.6 Billion investment from NASA and another $1 Billion in funding from Google and Fidelity.
But to get there wasn’t an easy task. In the words of his billionaire peers Sir Richard Branson (Owner of the Virgin Group of Companies) “Whatever skeptics have said can’t be done, Elon has gone out and made real. Remember in the 1990s, when we would call strangers and give them our credit-card numbers? Elon dreamed up a little thing called PayPal. His Tesla Motors and SolarCity companies are making a clean, renewable-energy future a reality. His SpaceX’s reopening space for exploration- it’s a paradox that Elon is working to improve our planet at the same time he’s building spacecraft to help us leave it”
He has had low points multiple times with his companies, Tesla and SpaceX during the economic meltdown of 2008 in the United States. He had invested millions of his personal funds into the company. And things weren’t so smooth during the times. Yet he kept trying and persevered to continue even though his funds were running dry. All this goes to show the insurmountable power of the “human will”. The feeling of ‘if not me then who’.
There are other great examples of entrepreneurs who simply persevered because they just refused to give up. We don’t always have to look up to the “billionaires” we can look up to our very own family, our neighbors, our peers and our competitors.
Times now are rocky due to the unexpected Pandemic, we are facing challenges that’s new, yet, we will still keep it going, we will continue to persevere, because ‘if we don’t, then who else will?’