INCOME TAX
Tax on Cryptocurrency
The government of India in its 73rd union Budget imposed 1% TDS on the consideration of crypto trading Along with this a flat 30% tax rate is charged on income generated through cryptocurrency trading. Further it is also mentioned that losses on these crypto assets cannot be set off against any other income but can be carry forward to subsequent years.
SEBI
The SEBI, in its earlier Circular no. SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021 prescribed an option to investors to apply in public issues of debt securities with the facility to block funds through Unified Payments Interface mechanism for application value up to Rs. 2 lakh which is now being revised to Rs. 5 lakhs for UPI based Application Supported by Blocked Amount Initial Public Offer (IPO).Companies Act
Where director of company accepted deposits from its promoters/shareholders thereby attracting exemption under Companies (Acceptance of Deposits) Rules, 1975, more specifically rule 2(b)(ix) and (xi) of same, on failure to repay same no liability within contemplation of sections 164 and 167 could have been imposed on such directorGST
Composition taxable persons and those interested to opt into the scheme for FY 2022-23 must submit declaration on the GST portal in Form CMP-02 by 31st March 2022. A taxpayer whose turnover is below Rs 1.5 crore can opt for Composition Scheme. This scheme is designed to reduce compliance cost for the small taxpayers, under this scheme, supplier of goods has the option to pay tax at the concessional rate.Under Rule 86(B) of CGST act a registered person having taxable value of supply other than exempt and zero rated in a month more than 50 lakhs, cannot use input tax credit in excess of 99% of output tax liability, available in the electronic credit ledger. That means 1% of output tax can be discharged by cash only.
Input tax credit can be claimed with respect to supply of works contract service only if registered person who is in same line of business is using such services for further supply of works contract service; such credit cannot be used for providing other services
FEMA
Reserve Bank of India has rolled out UPI interface for feature phones. There is no need for a Smart Phone or Internet Connectivity for undertaking digital transactions. UPI will be accessible to a much more people who were not smart phone users, hence improving India’s digital payment adoption to a whole new level.
About UPI:
1. UPI is a platform developed by the National Payments Corporation of India (NPCI) together with the Reserve Bank of India and the Indian Banks Association (IBA).
2. It is a platform that brings together various banking services and features in a single app.
3. Users have a unique UPI ID that can be used to send and receive payments using a secure PIN.
4. These payments can be made using a mobile number associated with the UPI ID as well.
5. Digital payment fastens and simplifies the way we send and receive money.
6. Currently UPI system is limited to smartphones with internet connections only.
New Payment Mode:
1. RBI on March 8th 2022 has launched a new digital payment mode called UPI123PAY for feature phones.
2. The UPI123Pay will allow users to make transactions through UPI with their feature phones which are not smart phones. All features of UPI except the UPI scan and pay will be available for feature phone users. There is no need for Internet Connectivity too.
Modes of Payments from Feature Phones:
| IVR SYSTEM | MOBILE APPLICATION | MISSED CALL MECHANISM | SOUND-BASED PAYMENTS |
|---|---|---|---|
| It is a voice-based system where users can call the number provided by NPCI, initiate a secured call and make a transaction | An app would be installed on the feature phone through which several UPI functions, available on smartphones, will also be available on feature phones. | An option of One Missed Call is provided whereby users can access their bank account and perform transactions such as receiving, transferring funds, bill payments, purchases etc by giving a missed call on the number displayed at the merchant outlet. Customers will receive an incoming call to authenticate the transaction by an UPI PIN. | In this, transactions will be made using technology based on sound waves to enable contact, networking and making contactless payments |
RBI has also launched a 24*7 helpline called DigiSaathi to assist users on their queries on digital payments, available languages being English and Hindi. UPI123Pay is expected to boost digital payments and deepen digital payments access in rural areas.
Companies Act 2013
ACCEPTANCE OF DEPOSITS BY COMPANIES
73. Prohibition on acceptance of deposits from public.
(1) On and after the commencement of this Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under this Chapter: Provided that nothing in this sub-section shall apply to a banking company and nonbanking financial company as defined in the Reserve Bank of India Act, 1934 and to such other company as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf.
(2) A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions, namely:—
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(a) issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed;
(b)filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular;
(c) depositing such sum which shall not be less than fifteen per cent of the amount of its deposits maturing during a financial year and the financial year next following, and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve account;
(d)providing such deposit insurance in such manner and to such extent as may be prescribed;
(e) certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits; and
(f) providing security, if any for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company: Provided that in case where a company does not secure the deposits or secures such deposits partially, then, the deposits shall be termed as ‗‗unsecured deposits‘‘ and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits. 59
3. Every deposit accepted by a company under sub-section (2) shall be repaid with interest in accordance with the terms and conditions of the agreement referred to in that sub-section.
(4) Where a company fails to repay the deposit or part thereof or any interest thereon under subsection (3), the depositor concerned may apply to the Tribunal for an order directing the company to pay the sum due or for any loss or damage incurred by him as a result of such non-payment and for such other orders as the Tribunal may deem fit.
(5) The deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used by the company for any purpose other than repayment of deposits.
Under Companies Act, 1956 the Private companies were allowed to accept loan from the Shareholders and such loan considered as non-deposit. Under Companies Act, 2013 since 01st April, 2014 it was not allowed to accept deposit from shareholder
MCA issued Exemption notification for Private Limited Companies on 05th June, 2015 states that: “Chapter V, clauses (a) to (e) of sub-section (2) of section 73, Shall not apply to a private company which accepts from its members monies not exceeding one hundred per cent, of aggregate of the paid up share capital and free reserves, and such company shall file the details of monies so accepted to the Registrar in such manner as may be specified.”
MCA issue Exemption notification for Private Limited Companies on 13th June, 2017 states that: “Chapter V, clauses (a) to (e) of sub-section (2) of section 73, Shall not apply to a private company which fulfils all of the following conditions ; namely- (a) which is not an associate or a subsidiary company of any other company
(b) if the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid up share capital or fifty crore rupees, whichever is lower; and
(c) such a company has no default in repayment of such borrowings subsisting at the time of accepting deposits under this section.”
Every year while filing e-form DPT-3 Company has to show such loan in category of Deposit;
However, one can opine that,
| S.No | Date From | Date To | Provisions |
|---|---|---|---|
| 1 | 01-04-2014 | 05-06-2015 | Not allowed to accept loan from shareholders |
| 2 | 05-06-2015 | 13-06-2017 | Allowed to accept loan from shareholders upto 100% of paid up share capital and free reserve (subject to exemption of some compliances) |
| 3 | 13-06-2017 | Present | Allowed to accept loan from shareholders any limit if fulfill three conditions mentioned above. |
CONSEQUENCES:
(a) Fine on Contravention on Section 73: The company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees or twice the amount of deposit accepted by the company, whichever is lower rupees but which may extend to ten crore rupees; and every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years and with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees,(b) Punishment for non filing of DPT-3: Rule 21 The Company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first day during which the contravention continues.
Taxation
Year End Activities in GST for Financial Year 2021-22
We are fast approaching the end of financial year 2021-22. It mandates for some activities to be carried out under GST laws for smooth transition to Financial Year 2022-23. We have listed down certain important activities for the said smooth transition/ closure of Financial Year 2021-22 –
1. Important Activities to be undertaken for FY 2022-23 (April 2022)
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1. Letter of Undertaking (LUT) – Apply/Renew for Letter of Undertaking (LUT) for 2022-23 on GSTN Portal (required for Exports and SEZ Supplies without payment of GST)
2. Selection of frequency of Return Filing (Only for taxpayers having Turnover below Rs 5 Crores) – Time limit for opting OUT of the QRMP Scheme for Quarter 1 ending June 2022 by 30th April, 2022 (if opted IN for Jan – Mar 2022)
3. Availing ITC in GST – Avail missing ITC for FY 2021-22 before the time stipulated in GST Laws (earlier of filing return for September 2022 or furnishing of Annual Return for FY 2021-22).*
4. Credit Notes – Issue credit notes pertaining to FY 2020-21 before the time stipulated in GST Laws (earlier of filing return for September 2022 or furnishing of Annual Return for FY 2021-22).*
Note – It has been proposed to extend the time limit for availing ITC and issuance of Credit Notes to 30th November of the subsequent FY.
2. Input tax credit for FY 2021-22
1. Reconcile ITC as per Books of Accounts and avail any ITC not claimed earlier in GSTR 3B (Specially when ITC is being availed on the basis of Form GSTR 2A or Form GSTR 2B)2. Check the missed ITC to be claimed is populated in GSTR 2A or 2B
3. Follow up with suppliers to report transactions in their Form GTSR 1 so that same may get populated in your GSTR 2A/2B
4. Any missing ITC for FY 2021-22 to be claimed on or before filing of GSTR 3B for September 2022 – It has been proposed to extend the time limit for availing ITC and issuance of Credit Notes to 30th November of the subsequent FY
5. Review if any ineligible ITC (Blocked Input Tax credit/ ITC on exempt supplies) is not availed. If such ITC is availed, reverse such ITC along with interest.
6. Review payment to suppliers are not pending beyond 180 days from the date of supplier invoice. If such ITC is availed without payment within 180 days from date of invoice, then said ITC is to be reversed along with 18% interest. Re-credit of such ITC can be done on subsequent payment to supplier (even post-filing of Return for September 2022).
7. Check if any supplier is registered under Composition scheme and collected GST. Reverse such ITC along with interest.
8. In case registration of supplier is cancelled for non-payment of taxes or non-filing of returns, send communication to such supplier to that effect
9. Avail any missing ITC on RCM paid (Reconcile RCM paid and ITC availed on such payment)
Outward Supplies for FY 2021-22
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1. Reconcile turnover (Taxable, Exempt and Non-GST supply) with books of Accounts, GSTR 1 and GSTR 3B filed.
2. Reconcile Taxes paid with books and Accounts, GSTR 1 and GSTR 3B filed.
3. Verify the invoices and e-way bill compliance (cases where e-way is required but not generated)
4. Check if IRN is generated for all B2B, Export Invoices and Debit/Credit Notes, if E-Invoice provisions are applicable
5. Reconcile Invoices issued to customer with GSTR 1 filed. Remember post filing of GSTR 1 for September 2022, no amendment can be made (Amendment to GSTIN, Invoice Number, Invoice Date, Taxable Value, taxes, etc can be made till filing of GSTR 1 for September 2022). – It has been proposed to extend the time limit for amendment to 30th November of the subsequent FY
6. Identify and report any Credit or Debit notes to be reported 7. Pay tax if not paid or short paid along with applicable interest
7. Adjust GST paid on advance with subsequent liability and report same in GSTR 1 and 3B (Applicable on Services)
8. Check if GST is paid on other Income and sale of motor car, sale of assets, etc
9. Reconcile and pay RCM liability
10. Check and reconcile materials sent for Job work (Time limit for return – Inputs – 1 year and Capital goods – 3 years)
11. Remember to file Quarterly ITC 04 returns for Job Work (half-yearly from Dec 21 quarter)
12. Ensure to prepare Self Invoice for payment made for RCM
TRENDING TOPIC
Impact of Russia- Ukraine war on Indian economy
Russia’s invasion of Ukraine has rattled markets around the world. Russia and Ukraine constitute less than 2% of global trade, but in many commodities, they have a sizable share — 37% of global palladium supply, 17% of natural gas, 13% of wheat, 12% of oil, and 9% of nickel is from the region. The barrage of sanctions imposed on Russia along with the supply chain interlinkages is bound to impact global trade and finance.
From the standpoint of the Indian economy, the impact on commodities especially energy is the cause of primary concern. Rising crude prices invariably result in a depreciating rupee, increasing inflation and fiscal deficit, and a reduction in GDP growth. It is estimated that a 10% rise in crude prices reduces our GDP growth by around 20 basis points, increases inflation by around 40 bps.
Rajeev S, adjunct faculty, Corporate Strategy and Policy Area at Indian Institute of Management-Bangalore, also agreed. “Our energy bill will go up — there’s no doubt about it,” he added.
India imports only two per cent of its crude oil from Russia, making it less vulnerable to supply disruption. However, the country is susceptible to the global price rise.
Further, the United States and its allies have imposed sanctions on Russia after assembling troops in Ukraine. This will hit the global supply of crude oil, pushing the prices up.
Within India, industries will take the biggest hit, Consumer demand will also suffer, he added.
The debt market will keep a watch on the inflation trajectory, foreign fund outflows, the U.S. Federal Reserve’s next actions, and the borrowing program of the Indian government. Aside from the geopolitical risks, equity investors are monitoring fund flows, along with state election results and the trend line in corporate profitability. The results for the quarter ended December 2021 have indicated that the top companies are on course to achieve 725-750 Nifty 50 EPS for FY22 and 825-875 EPS for FY23
Disruptions in the supply of commodities like palladium will impact the semiconductor chip supply, in turn impacting the automobile industry which is struggling to get back on growth.
Indian agriculture exports can sustain growth momentum as supply from Ukraine and Russia gets disrupted. Our granaries are filled with three times more stock than mandatorily required. With some work done on the quality and reliability of India’s food grains, this is a timely opportunity. Grain prices rising elsewhere in the world will hopefully not impact inflation as Indian domestic prices are above global prices.