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279 / 2022



Quote of the day

"May we think of freedom not as the right to do as we please, but as the opportunity to do what is right."

- Peter Marshall

“Sare jahan se accha

hindostan hamara

Hum bulbulain hai iss ki

yeh gulsitan hamara

Sare jahan se accha”

Which Indian doesn’t know this patriotic song by Muhammad Iqbal, written more than a century ago in 1908 when our country was yet to be liberated ? Which Indian doesn’t get goose bumps listening to this song even now ? In the 1980s, I recall there was a beautiful programme aired on AIR where every Sunday, songs from different languages of India were taught. As children we had learnt so many songs including this inspiring one in the praise of our motherland. So, after hoisting the flag on the 76th Independence Day celebrations at a local NGO that I mentor (https://www.vonishafoundation.org), I just broke into this song instantly with the 150+ ‘bulbuls’ (children) singing after me. The chorus reverberated in the modest open ground of a school in a slum area where children from the lowest rungs of society study, dreaming of a better life. The small school decorated lovingly with hand-made festoons and crafts by the enthusiastic children and committed teachers suddenly sprung to life and transported me back to my own school days. Therefore, when I was asked to say a few words as the chief guest, I kept it simple and closed in 5 minutes – dreading the long, boring ID day sermons (or it so appeared to us back then) our strict Principal would deliver 😊. Our eagerness was only to receive the sweets and namkeen that would be distributed thereafter followed by a holiday.

Well, the bulbuls of Vonisha were better behaved and disciplined than us. Representing a cross section of the impoverished families living in the slums, their cheerful faces, high pitched ‘good morning ma’am’ and eager ‘happy Independence Day handshakes’ belied their living conditions. There was no impoverishment in their joy, their sharing and the display of their talents. It was amazing abundance everywhere. The school provides free of cost education to about 250 children across ages from 5 to 15, thanks to the initiative of a teacher-doctor couple, dedicated teachers, individual philanthropic donations and some committed CSR contributions & volunteering. Right from individual short speeches to fancy dress competition typical of a national day celebration to full spirited dance moves choreographed to popular patriotic film songs to medleys to complex yoga postures to tough quiz rounds……..everything was in fully display by the young children who had shown up in their best. I was touched to see how parents (mostly labourers, daily wage earners, garment workers, maids, auto drivers, single parents, abused mothers) had willingly spent their earnings on the special costumes for the day to see their ‘bulbuls’ in their best ‘plummage’ if I may say so ! Why not ? Are they children of a lesser God ?

The guests that day including me were dumbstruck to see the quality of performance and the levels of knowledge the children had, about our freedom struggle. They were no different from their entitled counterparts in other schools. Perhaps even better and proud of the stories taught to them by their teachers. I could see it in their eyes and demeanour. Filled my heart with joy looking at the progress we have made as a country over the last 75 years. Agreed that there are miles to go before we sleep but we must celebrate the miles we have crossed so far especially with respect to the ‘bulbuls of Bharat’ ! A huge gap still exists in several areas including basic education and each one of us has a responsibility to fill it, in whatever best way we can.

Before I close on the best ID day celebrations I have ever had, let me call out one young girl – Ms. Manasa – all of 14, appearing for the 10th standard exam this year through NIOS (National Institute of Open School). Daughter of a single mother, she compered the 2 hour long programme on 15th August seamlessly. Speaking in flawless English and managing many surprises within the event, she was Confidence at its Best ! She could put any top communicator to shame with her skills and attitude. Wishing more CSR contributions pour in and more ‘Manasas’ rise as we progress into the Azaadi ka Amrit Varsh !!

Speaking of communication, in this 279th issue of Samhita, our Cambridge Certified English Language Trainer, Balaji has traversed beyond the language and shared a tip or two about Business Communication. Accordingly you will see the column titled as BBC = Better Business Communication. Hope the readers find this useful. As always there are plenty of regulatory updates issued during August, 2022 that we have attempted to compile and highlight. Watch out for an FAQ type article by Sreenivasan Narasimhan, Senior Associate on ‘Social Stock Exchanges’ and a capsule of important changes made by RBI in the newly issued ODI regulations, rules & directions. We will come back with a detailed analysis in the upcoming issues.

For any previous issues of Samhita and the readers’ feedback, please visit http://www.sharadasc.com/resource-center/.

Here’s wishing all the readers a Happy Ganesh Chaturthi ! Seeking His blessings for the well-being of all !!

Happy Reading,

S.C. Sharada

Tip 1:

Effective communication - Creating the feel good factor:

'Effective communication' could be defined in a number of ways. When you communicate with someone, can you make them feel that at that particular moment the most important thing for you is communicating with that person. Could you make people feel better than how they felt before interacting with you even if they were feeling low.

When I boarded a cab, the cab driver asked me "Sir, shall I switch on the AC. Is it ok if I play music?" Our expectation when we board a cab is just to be picked up and dropped at the right place safely. This gentleman made me feel important just by asking two simple questions. He could have played music and I could have asked him to switch it off if I didn't fancy it but he chose to ask.

Small things make a big difference, particularly in communication.

Tip 2:

How to say 'Thank you'

The only type of Email that can be long is a 'Thank you note'.

Whenever you write thank you notes, do mention about every effort someone has taken and to what extent it helped you, your team, your career, whatever it may be.

A gentleman who is not with us anymore now used to express his gratitude so beautifully. He always had simple yet beautiful words in a great combination that expressed a lot of admiration and gratitude to others. He is Fred Rogers who was a television show host of 'Mr. Rogers's neighborhood' which is a programme for children.

Here's a link where you can observe his effective communication and how expresses his admiration and heartfelt gratitude.

Tip 3:

About listening as a skill

Listen to understand and not to respond - You have heard this a hundred times by now. What does it mean? Are we supposed to avoid answering but just listen? Well, it is a little difficult to live our lives that way. When you listen, try to avoid processing your reply. Listen carefully. Pay attention to the tone, intonation and the choice of words - Not only to work on your language but also to understand the requirements and the emotional state of the person. It is always ok to take a few seconds to reply to someone and we can ask for that time too. If needed, ask for clarifications as well.

As some Mathematicians say, the answer to the problem is usually in the problem itself.

Balaji Ramaswamy N
Mobile: 9741393539

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Reminders for Payments & Returns

News Summary

FAQs on Social Stock Exchange

As mentioned in our previous issue of newsletter, a new chapter on Social Stock Exchange (“SSEs”) has been included in the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. Therefore, the concept of Social Stock Exchange is all set to gain momentum in the country with the securities market regulator having given its nod for laying down a robust framework for the same.

Sreenivasan Narasimhan, Senior Associate has compiled a note on SSEs in the form of FAQs. Give it a read to understand everything about the emerging concept of SSEs.

11 minutes is all it takes to read the note!

Open Article

MCA Updates

Books of Accounts in Electronic Mode

MCA vide Notification dtd August 05, 2022 has notified the Companies (Accounts) Fourth Amendment Rules, 2022. The following changes regarding the manner of maintaining books of accounts in electronic mode have been notified: -

  1. Accessibility- The amended rules requires that the Books of Accounts and other relevant books and papers maintained in electronic mode shall be accessible in India at all times. The words ‘at all times’ have been added which signifies that the companies which are maintaining their books of accounts in electronic mode will have to ensure a robust system is in place.

  2. Periodicity of Back-up- The back-up of Books of Accounts and other relevant books and papers maintained in electronic mode including at a place outside India into the servers located in India should be done on daily basis instead of periodic basis.

  3. Additional Intimation to ROC- Where the service provider is located outside India, the name and address of the person in control of the books of account and other books and papers in India shall be intimated to the Registrar at the time of annual filing in addition to other particulars provided in Rule 3(6) of Companies (Accounts) Rules, 2014.

Open Notification No. G.S.R. 624(E) dtd. August 05,2022

Physical verification of Registered Office by ROC

MCA vide Notification dtd August 18, 2022 has notified the Companies (Incorporation) Third Amendment Rules, 2022. Rule 25B w.r.t physical verification of the Registered Office of the company in terms of the provisions of Section 12(9) of the Companies Act, 2013 has been inserted vide the amendment. The following aspects are covered in the Rules:-

  • manner of conducting the verification by the Registrar of Companies

  • format of verification report

  • the manner for initiating removal of name of the company if the registered office is found to be incapable of receiving and acknowledging all communications and notices.

Open Notification No. G.S.R. 643(E) dtd. August 18,2022

Notice for Strike off of Companies

MCA vide Notification dtd August 24, 2022 has notified the Companies (Removal of Names of Companies from the Register of Companies) Second Amendment Rules, 2022. The notice for strike off issued by ROC in STK-1 and public notices in STK-5 and STK-5A have been amended to include the provisions of Section 12(9) as one of the grounds for strike off of companies by the ROC.

Open Notification No. G.S.R. 658(E) dtd. August 24,2022

RBI Updates

Overseas Investment Regulations and Rules

The Foreign Exchange Management (Overseas Investment) Rules, 2022 and Foreign Exchange (Overseas Investment) Regulations,2022 have been notified on August 22, 2022 along with the RBI Foreign Exchange Management (Overseas Investment) Directions, 2022 which contains the significant provisions in the new overseas investment regime. Highlights are as below:-

  • The terms Overseas Direct Investment (“ODI”), Overseas Investment and Overseas Portfolio Investment(“OPI”) have been defined in the rules.

  • Concept of Joint Venture and Wholly Owned Subsidiary substituted with the concept of “foreign entity”

  • Definition of strategic sector introduced to enable overseas investments in certain sectors above the specified limits. Strategic sector includes energy and natural resources sectors such as oil, gas, coal, mineral ores, submarine cable system and start-ups or such other sector as may be notified.

  • The concept of Indian Party where all the investors from India in a foreign entity were together considered as Indian Party has been substituted with the concept of Indian Entity where each investor entity will be considered separately.

  • Approval from RBI done away with for following cases:-

    1. deferred payment of consideration;

    2. investment/disinvestment by persons resident in India under investigation by any investigative agency/regulatory body;

However, a No Objection Certificate from the concerned investigating agency or regulatory body is required to be obtained.

    1. issuance of corporate guarantees to or on behalf of second or subsequent level step down subsidiary (SDS);

    2. write-off on account of disinvestment;

  • Acquisition of foreign securities by way of gift without any limit can be made only from those persons resident outside India who are relatives of resident individual. The provisions of Foreign Contribution (Regulation) Act, 2010 shall apply in other cases of acquisition of foreign securities by way of gift from other persons outside India.

  • ODI in start-ups recognized as per laws of host country can be made only from internal accruals of Indian entity or its group or associate companies in India and from own funds in case of individuals.

  • Scope of definition of Financial Commitment widened and specific provisions for financial commitment by Indian entities other than by way of equity capital.

  • Prohibition on making financial commitment in a foreign entity that has directly or indirectly invested or would invest in India which will result in a structure with more than two layers of subsidiaries. Exemption available to those companies for which the restriction of layers does not apply as per Rule 2(2) of Companies (Restriction on Number of Layers) Rules, 2017.

  • Concept of Late Submission Fee introduced for delay in reporting.

Open RBI Notification No. FEMA 400/2022-RB dtd. August 22,2022
Open Notification No. G.S R 646(E). dtd August 22, 2022
Open RBI Master Direction- RBI/2022-2023/110 dtd August 22, 2022

SEBI Updates

Enhanced Guidelines for Debenture Trustees and Listed Issuer Companies on Security Creation and Initial Due Diligence

SEBI vide Circular dtd August 04, 2022 has revised the requirements relating to encumbrance, creation of security and related due diligence undertaken by Debenture Trustees(“DTs”). Highlights of the enhanced guidelines are covered in the attachment to newsletter.

Open Highlights to Circular
Open SEBI Circular No. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2022/106 dtd August 04, 2022

Framework for restricting trade by Designated Persons

SEBI vide its Circular dtd August 05, 2022 has mandated the implementation of a system-driven framework for restricting trade by Designated Persons (“DPs”) in terms of SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”). As per the circular, the Stock Exchanges and Depositories of listed companies are required to develop and implement a system-driven restriction on trading by DPs by freezing their PAN at security level. The process for implementation of such system is explained in the annexure to the said circular. The provisions of the circular are effective from the quarter ending September 30, 2022 and shall be implemented in a phase wise manner.

In the initial phase, the provisions of the circular will be applicable to :-

  • the declaration of financial results of the listed company that is or was part of benchmark indices i.e., NIFTY 50 and SENSEX from the date of implementation of this circular

  • the restriction on trading shall be for on-market transactions, off-market transfers and creation of pledge in equity shares and equity derivatives contracts (i.e., Futures and Options) of such listed companies.

Open SEBI Circular no. SEBI/HO/ISD/ISD-SEC-4/P/CIR/2022/107 dt August 05, 2022

Guidelines for overseas investment by Alternative Investment Funds (AIFs)/Venture Capital Funds (VCFs)

SEBI vide its Circular dtd August 17, 2022 has released guidelines for overseas investment by AIFs and VCFs. The investment by AIFs/VCFs in securities of companies incorporated outside India will be subject to conditions prescribed by RBI and SEBI from time to time. The requirement of overseas investee company to have an ‘Indian connection’ as specified by SEBI in guidelines issued earlier has been done away with. Other provisions are as follows:-

  1. Application to SEBI for allocation of overseas investment limit in the format specified in annexure to the circular.

  2. Overseas investee company must be incorporated in a country whose securities market regulator is a signatory to the International Organization of Securities Commission’s Multilateral Memorandum of Understanding or has signed bilateral MOU with SEBI.

  3. Prohibition to invest in Overseas investee company which is incorporated in a country identified by Financial Action Task Force as

  • a jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply

  • a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with FATF to address the deficiencies.

  1. Trustee/Board/Designated Partners of AIFs/VCFs should submit an undertaking to SEBI with respect to the proposed overseas investment in the format specified in annexure to the circular.

  2. Sale proceeds from the liquidation of investment made in overseas investee company previously will be available for reinvestment.

  3. Transfer or sale of investment in overseas investee company shall be subject to provisions under Foreign Exchange Management Act, 1999.

  4. Details of sale/disinvestment of overseas investment to be furnished to SEBI within 3 working days of disinvestment in specified format to email address specified in the circular.

  5. Detail of overseas investment sold/disinvested by AIFs/VCFs till date shall be reported to SEBI in specified format by September 15, 2022.

Open SEBI Circular no. SEBI/HO/AFD-1/PoD/CIR/P/2022/108 dt August 17,2022

Income Tax Updates

Revision in threshold limits for issuing e-invoice under GST

The threshold limit for issuing e-invoice has been revised from Rs. 20 Crores to 10 Crores.The Central Board of Indirect Taxes and Customs (CBIC) vide Notification dtd August 01,2022 has notified that w.e.f from 1st October, 2022, every registered taxable person whose aggregate annual turnover exceeds Rs. 10 Crores in any financial year since 2017-18 shall issue E-Invoice as specified under the Goods and Services Tax (GST) laws.

The registered person who is required to issue E-Invoice shall upload tax invoice in JSON file on Invoice Registration Portal (IRP) in accordance with e-invoice schema in INV-01 and shall receive digitally signed JSON from IRP with IRN and QR Code.

Open CBIC Notification no. 17/2022-Central Tax dtd August 01,2022

Applicability of GST on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law

The Department of Revenue under Ministry of Finance has issued a circular clarifying the applicability of GST on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law as follows:-

Applicability of GST on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law

Based on the representations received from stakeholders, the CBIC has issued a circular on August 03, 2022 to clarify regarding the rates of GST applicable and exemptions from GST on various transactions. A brief summary of the same is enclosed to the newsletter.

Open Summary
Open CBIC Circular no. 177/09/2022-TRU dtd August 03, 2022

Note: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. S. C. Sharada & Associates disclaims all liability on action taken without professional advice.