The Companies (Amendment) Act, 2019: key takeaways

The Companies (Amendment) Bill received the President’s assent on 31 July 2019 and was published in the official gazette on the same date as the Companies (Amendment) Act, 2019 (Amendment Act).  The Amendment Act further amends the Companies Act, 2013 (Act). Majority of the provisions of the Amendment Act are deemed to have come into effect on 2 November 2018.  The remaining provisions, barring the amendment relating to corporate social responsibility, were made effective from 15 August 2019.

The key takeaways of the Amendment Act are: 

·         Dematerialized securities

·         Penalty for certain offences

·         Enhanced penalty for repeated defaults

·         Corporate social responsibility (CSR)

·         Commencement of business

·         Registration of charges

·         Beneficial ownership

·         Power of central government and National Company Law Tribunal (NCLT) in case of oppression and mismanagement 

The Amendment Act seeks to strengthen the existing governance norms and compliance management in the corporate sector by making a provision for imposition of enhanced penalties in case of repeated defaults. The central government now has a greater say in cases of oppression and mismanagement, and the individuals responsible for the same can now be directly held accountable. 

The Amendment Act has made it mandatory for all companies (required under the Act) to set aside monetary contributions for corporate social responsibility, even if such contribution is not earmarked for a specific purpose. 

HC rules provision prescribing due date to claim transitional credit under GST is not mandatory

This Tax Alert summarizes a recent ruling  ^[1] of Gujarat High Court (HC). The issues in the Writ Petition was to allow filing of declaration for transitional credit beyond the due date and whether rule 117 of Central Goods and Services Tax Rules, 2017 providing the due date to claim transitional credit is procedural in nature, and thus merely directory and not a mandatory provision.

PUBLIC CONSULTATION ON ELECTRONIC INVOICE STANDARDS TO BE USED UNDER GST SYSTEM

1.    Background

The GST Council has decided to introduce electronic-invoice (hereinafter called as e-invoice) on voluntary basis from January 2020. The new system will lead to one-time reporting on B2B invoice data in the form it is generated to reduce reporting in multiple formats (one for GSTR-1 and the other for e-way bill) and to generate Sales and Purchase Registers (ANX-1 and ANX-2) and from this data to keep the Return (RET-1 etc.) ready for filing. The other aim is to make reporting of invoices as an integral part of the business process to eliminate the process of compilation of invoices at the end of the month. Lastly, it will lead to substantial reduction in input credit verification issues as same data will get reported to tax department as well as to the buyer in his inward supply (purchase) register on receipt of info thru GST System – as buyer can reconcile with his Purchase Order and accept/reject well in time.

CBIC issues further clarifications on Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

This Tax Alert summarizes a recent circular ^[1] issued by Central Board of Indirect Taxes and Customs (CBIC) on Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Apart from reiterating the importance and benefits, the circular clarifies on few more issues arising out of the provisions of the scheme. Circular also provides instructions to the officers to make the scheme a success and ensure its smooth implementation.

The key clarifications are as follows:

•  If a person has been issued a show cause notice (SCN) for erroneous refund, they will still be eligible to file declaration for other disputed cases under the scheme.

•  The dispute relating to only penalty or late fee pending before appellate forum shall also be eligible under the scheme.

•  Ineligibility under the scheme for finally heard matters in appeal shall not apply in cases where the hearings are rescheduled after the final hearing due to new bench, change in officer or any other reason.

•  Cases where proceedings before the Settlement Commission are abated, shall be covered under the scheme, provided the eligibility is otherwise established. Further, any pending appeals, reference or writ petition filed against or any arrears emerging out of the orders of the Commission are also eligible under the scheme.

Clarification issued by the government on eligibility of cases of penalty/ late fee pending before the appellate authority is likely to benefit the taxpayers, considering the quantum of such litigation.

More such clarification may be expected from the CBIC basis practical and technical difficulties faced by the taxpayers in the process of filing the declarations.
 

Imp Case laws

All India Federation of Tax Practitioners (AIFTP) vs. UOI (Bombay High Court)

The work of important Tribunal like Income Tax Appellate Tribunal (ITAT) should not be allowed to suffer on account of shortage of administrative staff. There is no lethargy on the part of the Dept in filing up said posts. The Dept is expected to follow up the proposals to fill up the posts of Assistant Registrars in such quota as well as for issuing promotions for the posts of Deputy Registrars so that all these pots to the extent possible can be filled up at the earliest

The petitioner’s grievance that the work of important Tribunal like Income Tax Appellate Tribunal should not be allowed to suffer on account of shortage of administrative staff is perfectly legitimate, however, we do not find any lethargy on the part of the Department in not filing up said posts. Under these circumstances, we would expect the Department to follow up the proposals to fill up the posts of Assistant Registrars in such quota as well as for issuing promotions for the posts of Deputy Registrars so that all these pots to the extent possible can be filled up at the earliest

CBDT forms dedicated cell for start-ups to redress tax grievances

This Flash News explains a recent Order dated 30 August 2019 issued by the Central Board of Direct Taxes (CBDT) for setting-up of a dedicated cell for start-ups (“Start-up Cell”) to redress the grievances and address the various issues under Indian Tax Laws (ITL), including angel tax. The CBDT Order is issued in light of the announcement made by the Finance Minister in Budget Speech as also at the press meeting held on 23 August 2019.

The Start-up Cell comprises of the officials from different hierarchy at CBDT and can be contacted over telephone number (011-23095479/23093070 (F)) and email id (startupcell.cbdt@gov.in).

The CBDT Order is issued to implement the announcement made by the Finance Minister in Budget Speech on 5 July 2019 as also at the press meeting held on 23 August 2019 and is the latest in a series of proactive steps undertaken by CBDT to provide impetus to Start-up industry and clarify the ambiguities under the ITL.

Tax Due Date- September 2019

S. No	Due Date	Related to	Compliance to be made
1	11.09.2019	GST	Filing of GSTR-1 for August 2019.
2	20.09.2019	GST	- Payment & filing of GST return for the Month of August 2019- Form GSTR 3B
3	07.09.2019	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of August 2019. · Deposit TDS from Salaries deducted during the month of August 2019 • Deposit TCS for collections made under section 206C including sale of scrap during the month of August 2019, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of August 2019, if any
4	30.09.2019	Income tax	Filing of income  tax return for the Corporate assesses (or) Non Corporate assesses (Whose books of accounts are required to be audited U/s 44AB of IT act 1964 (or) working partner (of a firm whose books of accounts required to be audit ( in case of Assesses not having international or specified domestic transaction). (All Sasken Trusts Return have to be filed.)
5	15.09.2019	Income Tax	Payment of Advance tax for the Corporate and Non Corporate assesses –Amount not less than 45% of advance tax respectively.

CBDT further clarifies reporting requirement for foreign directorship and foreign assets for filing income tax return for tax year 2018-19

CBDT further clarifies reporting requirement for foreign directorship and foreign assets for filing income tax return for tax year 2018-19

This Tax Alert summarizes recent clarifications issued by the Central Board of Direct Taxes^[1]  (CBDT), vide Circular No. 21/2019 dated 27 August 2019 (Second Circular), in relation to compliance of reporting requirements in the income tax return forms (ITR forms) for tax year 2018-19.

The ITR forms applicable for tax year 2018-19 were notified in April 2019^[2] and they introduced substantive additional disclosures. In relation to additional reporting requirements, various queries were raised by stakeholders to the CBDT^[3] , seeking clarification on the manner and scope of reporting requirements. These included reporting in relation to details of directorship in a foreign company, equity shares listed outside India etc., which were clarified by the CBDT, in the form of frequently asked questions (FAQs), vide Circular No. 18/2019 dated 8 August 2019 (First Circular) ^[4].

Now, the CBDT, vide the Second Circular, has further clarified that individual taxpayers, being non-resident, are not required to provide details of directorship in a foreign company which does not have any income received or accruing or arising in India. Furthermore, details of foreign assets are required to be reported by resident taxpayers only if such foreign assets are held during the tax year in India, as also in the accounting period as per the foreign tax jurisdiction, as defined in the instructions to the ITR Forms.

Shareholder liable to capital gains tax on receipt of partnership interest against shares on conversion of a company into an LLP under the LLP Act

Shareholder liable to capital gains tax on receipt of partnership interest against shares on conversion of a company into an LLP under the LLP Act

This Tax Alert summarizes a recent ruling  of the Authority for Advance Rulings, New Delhi (AAR), dated 23 August 2019, in the case of Domino Printing Science Plc. (Taxpayer). The AAR, in this case, held that conversion of a company into a limited liability partnership (LLP) in accordance with the provisions of The Limited Liability Partnership Act, 2008 (LLP Act) results in transfer of shares by the shareholders of the converting company. The AAR further held that the value of interest in the LLP is to be considered as the “full value of consideration” received on the transfer of shares for the purpose of computation of capital gains under the Indian Tax Laws (ITL).

GST on Realty Sector

AS all  are well aware, the GST law, insofar as it concerns the Realty Sector, has been virtually re-written with effect from 1-4-2019 and that, the levy of GST at the lower rates without the benefit of ITC is compulsory for projects which commence on or after 1-4-2019 and that, in respect of 'ongoing projects', the Developer has the option to continue with the old scheme wherein, ITC is allowed. Hence, the new scheme would, by and large, boil down to the interpretation of the definitions of an 'ongoing project' and 'a project which commences on or after 1-4-2019'.  

Finance Minister Honourable Smt. Nirmala Sitaraman Address to Media and Press Release On 23rd August 2019

q The whole presentation was structured in 32 slides with 6 compartments of Specific areas of concern for economic slowdown.

q Global GDP is at 3.2% and likely to be revised downwards, being global demand is very weak.

q Advanced economies also facing slow down largely due to trade war between US and China and China continuously devaluing its currency.

q India bubble positioned very high in terms of Growth rate, probably the highest in world.

TDS ON PAYMENT EXCEEDING 50 LAKHS

 new section 194M is proposed to be inserted in the Income Tax Act by the Budget 2019 that provides levy of TDS @ 5% on the sum or aggregate of sums, paid or credited in a year on account of contractual work or professional fees by an Individual or Hindu undivided family, not required to deduct tax at source under sec 194C and 194J of the Act if such sum or aggregate of such sums exceed Rs 50 lacs in a year. However, in order to reduce the compliance burden, it is proposed that such individuals or HUFs shall be able to deposit the tax deducted using their Permanent Account Number (PAN) and shall not be required to obtain Tax Deduction Account Number (TAN). So, no need to file regular TDS return in such cases.   

TURNING 8 TODAY

Eight years ago, on the same day i.e 11^th August 2011, I decided to share tax knowledge by way of blogging and TAXBYMANISH came into existence   That time I never presumed that this will be a life changing game for me.  With TAXBYMANISH I able to connect tax professionals across the world. Lets have a look into the following blog statistics which shows the success of blog.

Ø  Number of post                              6768

Ø  Total number of hits                      27.81 Lakhs

The above milestone  has been made possible because of your love and support only.  Thanks for all your support and  happy reading.

https://taxbymanish.blogspot.com/

Govt releases FAQs on NMC Bill 2019

THE Parliament has passed the National Medical Commission Bill 2019. The Govt has today released a detailed FAQs on this Bill and detailed the impact of various clauses. Some of them are as follows:   

FAO urges balancing more food production with sustainable agriculture

THE Food and Agricultural Organization today stated that the Green Revolution that transformed agricultural production in the Asia-Pacific region is alive and well but must retool to embrace climate-sensitive innovations and technologies to sustainably meet the increasingly complex demands of a nutrient-deficient world. Such observations were made at a function organized to commemorate 30 years of development achievement of the M.S. Swaminathan Research Foundation under the outstanding leadership of its mentor and visionary, Mr M.S. Swaminathan, a trail-blazing scientist who spent decades applying scientific research to tackle hunger, malnutrition and poverty.  

GST Update

GST Council Recommendations

•                    Recommendation of 36th GST Council Meeting

•                    Reduction in the GST rate on supply of goods and services :

•                    The GST rate on all electric vehicles be reduced from 12% to 5%.

•                    The GST rate on charger or charging stations for Electric vehicles be reduced from 18% to 5%.

Treatment of Write Back Amount in GST Era

Background: 

The taxpayers may have long outstanding the creditors whose dues are not paid. The non-payment of dues may be on account of many business decisions.

As per prudent accounting policies, the long outstanding dues are reviewed periodically and written back (credited to profit & loss account) in the books of accounts.

Does the Transactional Profit Split Method Apply to Centralized Business Models?

1. Purpose of the blog

The purpose of this blog is to address whether the transactional profit split method (TPSM) applies to centralized business models operated by multinational enterprises (MNEs). The assessment will be made in light of the post BEPS transfer pricing guidance, that is, the 2017 OECD Transfer Pricing Guidelines (TPG) and the revised guidance on the TPSM (revised PSM report). Kindly note that the blog will not discuss the impact of the international corporate tax debate triggered by digitalization.

Value Of Uncertified Foreign Bank Records Under DTAA For Prosecution Under The (Indian) Income Tax Act And Black Money (Undisclosed Foreign Income And Assets) And Imposition Of Tax Act

The intention of the legislature is pretty clear from recent development in the field of law dealing with white-collar crimes. The legislature focuses on setting out legal provisions which will help the government in curbing out the issue of Black Money. One of the major developments in this aspect is the enactment of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. This Act was enacted specifically to deal with the problem of Undisclosed Foreign Assets held outside India by Indian residents. The Income Tax Act, 1961 makes it mandatory for an ordinary resident to declare all of his/her foreign assets and income. When a person being a resident does not disclose a foreign asset, such person is considered to be evading tax and can be penalized under The (Indian) Income Tax Act,1961 and other relevant legislation dealing with the offences pertaining to evasion of tax.

GST on Employee Recoveries

In GST law, there are few activities which would be treated as supply liable for GST even in the absence of consideration. These activities are listed in Schedule I to CGST Act 2017 with few entries finding place in Schedule II as well. One such activity listed in Schedule I is supply of goods or services between employee and employer when such supply is made in course or furtherance of business. There would be various payment transactions between employee and employer having impact in GST law. In this article, we have analysed few types of payments having GST impact.

Tax due Date - August 2019

11.08.2019	GST	Filing of GSTR – 1 for the month of July 2019
20.08.2019	GST	- Payment & filing of GST return for the Month of July 2019- Form GSTR 3B
07.08.2019	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of July 2019. · Deposit TDS from Salaries deducted during the month of July 2019 • Deposit TCS for collections made under section 206C including sale of scrap during the month of July 2019, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of July 2019, if any

Four Imp Verdicts

PCIT vs. Maruti Suzuki India Limited (Supreme Court)

S. 170/ 292BB: A notice issued in the name of the amalgamating entity after amalgamation is void because the amalgamating entity ceases to exist. Participation in the proceedings by the assessee cannot operate as an estoppel against law. This is a substantive illegality and not a procedural violation of the nature adverted to in s. 292B. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable

PIB on last date to claim ITC to be the due date of GSTR-3B held illegal by the HC

We wish to update you in respect of the recent ruling by the Hon’ble High Court of Gujarat, which relates to legality and validity of Para 3 of the Press Release dated 18 October 2018, which clarified that the last date to avail Input Tax Credit (ITC) in relation to invoices issued during the period July 2017 to March 2018.   

Proposed TDS provisions in Budget 2019

1. Individuals and HUFs (not liable for tax audit) shall deduct tax from sum payable to resident contractor or professionals

[Applicable from September 1, 2019]

As per current provisions of Section 194C and Section 194J, an individual or HUF, who are not liable to tax audit under Section 44AB, shall not be required to deduct tax under these provisions. Thus, no tax is required to be deducted by an individual or HUF from payment made to contractor or professional in the following cases:

Decoding Budget 2019

Are Proposed Amendments in Finance (No. 2) Bill 2019 identify with a Satiated Elephant satisfied with few mounds of rice or an Insatiate Elephant trampling fields?

IND AS 115 and Real Estate.

The Ministry of Corporate Affairs (MCA) had notified Ind AS 115, "Revenue from Contracts with Customers," on 28 March, 2018, with effect from reporting periods beginning on or after 01 April, 2018. The new accounting standard has replaced the existing revenue recognition requirements.  

Time Limit for 264 revision.

Return filing has now become a technical exercise and knowledge of the legal provisions does not suffice to survive in tax practice. This is for the reason that the returns which are processed in CPC sometimes either bully the taxpayers or puzzle the tax counsels. There are numerous instances where the returns are stated as defective in one communication from CPC and after a week or so we get yet another communication saying that the defect was rectified perhaps suo motu by the CPC. All this is done in-house in CPC without any response from the taxpayer. This has become a perennial irritant for the tax counsels in the recent years.   

PE in India - Proposed Amendments in Rules

Introduction

1. With the view to bring greater clarity and predictability in the matter of profit attribution to Permanent Establishment ("PE") in India, the Central Board of Direct Taxes ("CBDT") has formed a Committee to examine the existing scheme of profit attribution and to recommend the amendments. The Committee has issued a report on 18^th April 2019 proposing the amendments to the rules for profit attribution open for public consultation.This Article discusses in details the various amendments proposed by the Committee, the objective behind the amendments and the critical analyses of the same.   

Possibility of TDS on E Commerce

Introduction

In the last few years, the online marketplaces are on the ascent and the organizations like Amazon, Flipkart, Zomato, Swiggy etc are the banner bearers of online business in India. E-commerce has brought a fundamental change in the way of doing business and the customer engagement across various sectors.   

Taxation of Derivatives

1. This article analyses the recent landmark decision of the Supreme Court in the case of Snowtex Investment Ltd. v. Pr. CIT [2019] 105 taxmann.com 282 (SC) – referred to as "taxpayer".

The actual issue before the Supreme Court was whether the profits earned by the taxpayer from F&O activities (derivatives business) can be set off against the loss on sale of shares? The issue¹ posed before the Supreme Court was "can the profits earned from derivative business be treated as "speculative business" within the meaning of Explanation to section 73 of the Act"?

We have analysed the aforesaid decision without going into a discussion or debate as to whether or not the provisions of the Explanation to section 73 of the Act are ultra-vires the provisions of section 43(5) of the Act?   

June Legal Update

• CCI imposes penalty on chemists and druggist associations in Madhya Pradesh and two pharmaceutical companies
• CCI approves amalgamation of GlaxoSmithKline into Hindustan Unilever Limited
• EC rejects merger between Tata Steel and ThyssenKrupp
• Supreme Court allows CCI appeal against JCB - permits material seized during dawn raid to be used as evidence
• Delhi High Court settles constitutional challenges to the Competition Act, 2002

Key Decisions of 35th GST Council Meeting

• Due date for filing form GSTR 9/ GSTR-9C has been extended from 30 June 2019 to 31 August 2019 for all assesses;
• E-invoicing – it has been decided by council to implement e-invoicing mechanism in a phased manner starting from January 2020 on voluntary basis;
• New-return mechanism – as proposed earlier, new return mechanism to be implemented from October 2019 onwards with filing of GST-ANX-1 form (for outward supplies) and from January 2020 returns in form RET-1 to be made compulsory;
• National anti-profiteering authority tenure has been proposed to be extended for 2 more years;
• Blocking of generation of e-way bills on non-filing of returns to be made effective from 21 August 2019.           

GST Council decision relating to changes in law and procedure

 

The 35th GST Council Meeting was held here today under the chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. This was the first meeting of the Council after the swearing in of the new Government. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Revenue Secretary Shri Ajay Bhushan Pandey and other senior officials of the Ministry of Finance. The GST Council recommended the following changes related to law and procedure:

Income Tax Notice - What steps to be taken ?

After receiving the tax returns, the tax authorities examines the returns filed and if due to any reason they believe that information submitted by an assesee is wrong or incomplete then the assesee is served with a notice demanding justifications/ penalty or any action as stated by the department in the notice so served.

Issues reported in filing Form GSTR 9/9C by the taxpayers: Steps to be taken

This mail is in reference to filing of Form GSTR 9/9C, by a normal taxpayer for financial year 2017-18, which is required to be filed by them on GST Portal latest by 30th June, 2019.  Taxpayers have reported some issues in filing their Form GSTR 9/9C, which are clarified below: