Volume
15
Issue
287 / 2023
April
2023
Quote of the day
"If you're betrayed, release disappointment at once. By that way, the bitterness has no time to take root."
- Toba Beta
The lush green garden laden with a variety of plants and shrubs, fruit bearing trees and flowering plants of various hues seems history now. As I sit in my drawing room overlooking the stretch that was once a soft Mexican grass lawn, I feel sad. There is rubble, brick and mortar, soil and sand, logs of wood, electrical wires, tiles and many such inanimate things spawn all around. While many pots and holders were shifted out to safer places, many others couldn’t be saved. The guava tree, chikoo tree, coconut tree and several other older and stronger ones have survived the onslaught of the ongoing construction and continue to stand tall. Braving their lives are the rexora flowers, colourful hibiscus, the wilting rose creepers and the cheerful crotons. All crying out – WE ARE DOWN BUT NOT UNDER !
In light of this, it was nothing short of a miracle when the banana plant gave us dozens of ripe fruits. Everyday we watched the helpless banana plant that was growing alongside the half-broken compound wall – neither could we bring ourselves to chop it off nor could we nourish it sufficiently. I was disturbed to see the ‘heavily pregnant’ banana plant wilt under the weight of her own fruits. But lo and behold, the plant continued to grow to its best and ‘deliver’ on time. Not to mention the large leaves that we periodically continued to pluck from her for auspicious occasions. Despite the uncooperative conditions, ‘SHE’ never gave up. She gave us what she had to.
On this side of the wall is the short, shy jasmine shrub that blooms only during the summer season. She survived the harsh, unpardoning conditions. Yet she spread her fragrance around as a bunch of 7 white jasmine flowers bloomed one fine morning amidst the construction site. Our joy was doubled as we were blessed with the flowers and fruits on the same day. The lone jasmine shrub seemed to call out – HEY, COME WHAT MAY, I AM UP AND ABOUT !
As we celebrated Earth Day in April with the theme ‘Invest in our planet’, these two humble ‘green lives’ have taught us the lessons of perseverance, patience, purpose and never to give up. Live with a sense of duty, giving and detachment.
Contrast this green, sustainable world with the harsh corporate jungle. There may be slow down in the economy and job slashes all around. But there is no abatement in the compliance requirements and action by regulators. Do refer to the Compliance Calendar drawn up by our team for section 8 companies, for-profit companies and LLPs for the FY23-24. Click here to download the same.
Expectations set, whether explicitly or otherwise must always be met. Else there is a feeling of being let down. Apologies for the delay in this issue which ideally should have reached you on 30 th April. While it was a good feeling to receive messages from certain readers reminding me that the due date has passed, it also reminded me of lowering the self-set standards.
For any previous issues of Samhita and the readers’ feedback, please visit our website.
Happy Reading,
S.C. Sharada
Regulatory Updates
Foreign Trade Policy 2023
Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Mr.Piyush Goyal launched the Foreign Trade Policy 2023 (“FTP 2023”) on March 31, 2023. During the Press Release Hon’ble Union Minister stated that FTP seeks to take India's exports to 2 trillion dollars by 2030. The 4 pillars of FTP 2023 are incentive to remission, export promotion through collaboration, ease of doing business and emerging areas. It contains 11 chapters. Highlights of the FTP 2023 are as follows:
Aims at process re-engineering and automation to facilitate ease of doing business for exporters.
It also focuses on emerging areas like dual use high end technology items under SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies), facilitating e-commerce export, collaborating with States and Districts for export promotion.
It is introducing a one-time Amnesty Scheme for exporters to close the old pending authorizations and start afresh.
It encourages recognition of new towns through “Towns of Export Excellence Scheme” and exporters through “Status Holder Scheme”.
Facilitating exports by streamlining the popular Advance Authorization and Export Promotion of Capital Goods schemes and enabling merchanting trade from India.
Please refer to the FTP 2023 for details.
MCA Updates
Rules on strike-off of Companies – Amended
With the intention to streamline and facilitate a quick exit process for Companies, MCA vide notification dated April 17, 2023, has notified the Companies (Removal of Names of Companies from Register of Companies) Amendment Rules, 2023 (“Amendment Rules”). The Amendment Rules shall come into force on May 1, 2023. Following changes were brought about by the Amendment Rules:
Introduction of the Registrar, Centre for Processing Accelerated Corporate Exit (CPACE): All applications for strike off in Form STK-2 shall be filed with the CPACE. CPACE shall be the Registrar for the purpose of exercising functional jurisdiction for processing and disposal of all applications for strike off made in Form STK-2.
Revised Forms STK-2, STK-6 and STK-7 have been notified.
Requirement to attach a copy of the special resolution by directors / members to Form STK-2 has been done away with.
IND AS Amendment Rules
MCA vide notification dated March 31, 2023 has notified the Companies (Indian Accounting Standards) Amendment Rules, 2023 (“IND AS Amendment Rules”). The IND AS Amendment Rules are effective from April 01, 2023.
SEBI Updates
Formulation of price bands for the first day of trading pursuant to IPO, re-listing etc. in normal trading session
SEBI vide circular dated January 20, 2012, has prescribed the parameters to be considered for price discovery through Call Auctions and the related price bands for first day of trading post IPO and relisting.
As the Call Auction prices may vary from one Stock Exchange (SE) to another which may lead to significant variation in price bands, SEBI vide circular dated April 11, 2023 (which shall come into force within 60 days of notification), has notified the manner for determining the Common Equilibrium Price (CEP) to calculate the price band.
CEP shall be the volume weighted average price of the equilibrium prices of individual stock exchanges determined by the Call Auction. The SE shall apply the CEP to determine the price band.
Guidelines for RAs and IAs
SEBI has issued various guidelines for Research Analysts (RA) and Investment Advisors (IA) vide Circulars dated April 05, 2023 and April 06, 2023. Highlights of the same are as below:
Circular dated April 05, 2023 – Advertisement code for RAs and IAs – Applicable from May 1, 2023
To strengthen the conduct of RAs and IAs while issuing advertisements, an Advertisement Code (“the Code”) has been released. The Code includes any and all forms of communications that may influence an investment decision as an advertisement and mandates compliance of all the requirements of the Circular. The Circular contains details under the headings:
Information/disclosures in the advertisement
Prohibitions in the advertisement
Other compliances/requirements:
Prior approval from SEBI recognised supervisory body
Copy of the advertisement is required to be retained for 5 years
Circular dated April 06, 2023 – Usage of Brand Name / Trade Name by IAs or RAs – Applicable from May 1, 2023
Considering that the names of RAs and IAs registered with SEBI may be different from the name depicted in their logo or their brand / trade name, SEBI has prescribed certain guidelines to ensure transparency in usage of such logo, brand / trade name.
These norms shall also be applicable to any other investment/research/consultancy agency associated with the IA/RA concerned and issuing advertisement wherein the IA/RA has been named in the advertisement.
IT Updates
Consequences of not linking Aadhaar with PAN
The due date for linking Aadhaar with PAN stands extended to June 30, 2023. The PAN of a Person who fails to do the same shall become inoperative due to which the person shall face the following consequences:
no refund shall be made against such PANs;
interest shall not be payable on such refund for the period during which PAN remains inoperative; and
TDS and TCS shall be deducted /collected at higher rate, as provided in the Act.
Central Board of Direct Taxes (“CBDT”) has notified that such consequences shall take effect from July 1, 2023 and continue till the PAN becomes operative.
Clarification on selection of new regime / old regime
CBDT vide Circular No. 04/2023 dated April 5, 2023 has clarified that employer shall seek information from each of its employees regarding their intended Tax Regime (Old or New under section 115BAC) for each year and deduct TDS accordingly. If intimation is not made by an employee, the default tax regime will be new Income Tax regime u/s 115BAC. CBDT further clarified that this intimation would not amount to exercising of option by employee u/s 115BAC (6). It means a person can select any regime at the time of filing ITR u/s 139(1).
Cost Inflation Index for FY 2023-24
CBDT vide Notification No. 21/2023 dated April 10, 2023 has notified Cost Inflation Index for Financial Year (“FY”) 2023-24 as “348”. This indicates Cost Inflation of 5.14 % being considered over that of previous year since the index was “331” in FY 2022-23. The notification is effective from April 1, 2024 and shall apply in relation to assessment year 2024-25 and subsequent assessment years.
GST Update
Time limit for reporting Invoices on the IRP Portal
Through an advisory dated April 13, 2023 it was informed by GSTN that the Government has proposed to impose a time limit for reporting old invoices on the e-invoice IRP portal for taxpayers with AATO greater than or equal to 100 crores. Taxpayers in this category will not be allowed to report invoices older than 7 days on the date of reporting. It is proposed to implement the same from May 1, 2023 onwards.
DGFT Update
Amnesty Scheme for one time settlement of default in export obligation
The Central Government has notified further amendments to implement the Amnesty Scheme for one time settlement of default in export obligation by Advance and EPCG authorisation holders.
RBI Update
PMLA (Maintenance of Records) Amendment Rules, 2023 and amendments to KYC Directions, 2016
The Ministry of Finance notified the Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2023 (“the Rules”) vide notification dated March 7, 2023. The Master Directions - Know Your Customer (KYC) Direction, 2016 was amended on April 28, 2023, to align it with the Rules. Highlights of the amendments are as follows:
Insertions in definitions: Words ‘group’ and ‘Politically Exposed Persons’ have been defined.
Definition of NPO: The definition of Non-Profit Organisations (NPO) has been revised to include religious or charitable purposes referred to in clause (15) of section 2 of the Income-tax Act, 1961.
Information for Due Diligence: In addition to the basic details and documents, Banks are now required to obtain information such as names of top management positions, partners, beneficial owners, address of registered office, principal place of business etc.
Beneficial Owner: Definition aligned with Companies Act, 2013 by reducing the threshold from 25% to 10%.
Registration on Darpan: Banks to ensure NPOs are registered on Darpan Portal of Niti Ayog.
Please read the Rules and Master Directions for details.
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