Securities and Exchange Board of India

22.05.2019

Capital Market

Participation of Portfolio Managers in Commodity Derivatives Market in India

MANU/SIPM/0003/2019

1. In order to promote institutional participation in the Exchange Traded Commodity Derivatives, SEBI has permitted Category III Alternative Investment Funds to participate in Exchange Traded Commodity Derivatives vide Circular dated June 21, 2017. In furtherance to this objective, and in supersession to Circular SEBI/HO/CDMRD/DMP/P/CIR/2016/100 dated September 27, 2016 Portfolio Managers are now permitted to participate in Exchange Traded Commodity Derivatives on behalf of their clients.

2. It would be mandatory for Portfolio Managers to appoint SEBI registered Custodian before dealing in Exchange traded Commodity Derivatives. Further, a copy of the Gazette Notification No. SEBI/LAD-NRO/GN/2019/17 dated May 10, 2019 on Amendments to SEBI (Portfolio Managers) Regulations, 1993 is enclosed.

3. The participation of Portfolio Managers in the exchange traded commodity derivatives would be subject to the following:

3.1. Portfolio Managers may participate in Exchange Traded Commodity Derivatives on behalf of their clients and such participation shall be in compliance with all the rules, regulations including SEBI (Portfolio Managers) Regulations, 1993 and circulars/guidelines and position limit norms as may be applicable to 'clients', issued by SEBI and Exchanges from time to time.

3.2. Portfolio Managers may participate in Exchange Traded Commodity Derivatives after entering into an agreement with the clients. Portfolio Managers may execute addendums to the agreement with their existing clients, permitting the Portfolio Managers to participate in the Exchange Traded Commodity Derivatives on their behalf.

3.3. Portfolio Managers shall provide adequate disclosures in the Disclosure Document as well as the agreement with the client pertaining to their participation in the Exchange Traded Commodity Derivatives, including but not limited to the risk factors, margin requirements, position limits, prior experience of the Portfolio Manager in Exchange Traded Commodity Derivatives, valuation of goods etc.

3.4. In case dealing in Commodity derivatives lead to delivery of physical goods, there is a possibility that, the Portfolio Manager remains in possession of the physical commodity. In such cases, the goods need to be disposed off at the earliest, within the timelines as agreed upon between the client and the Portfolio Manager. The responsibility of liquidating the physical goods shall be with the Portfolio Manager.

3.5. Since Foreign Portfolio Investors are not allowed to participate in the Exchange Traded Commodity Derivatives market, Portfolio Managers shall not onboard Foreign Portfolio Investors until such time as they are permitted to participate in Exchange Traded Commodity Derivatives market.

3.6. Portfolio Managers shall also provide periodic reports to the clients as per Regulation 21 of SEBI (Portfolio Managers) Regulations, 1993 regarding their exposure in Exchange Traded Commodity Derivatives.

3.7. Portfolio Managers shall report the exposure in Exchange Traded Commodity Derivatives under the heading of 'Commodity Derivatives' in the monthly reports submitted to SEBI.

4. The provisions of this circular shall come into effect from the date of the circular.

5. This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

6. The Exchanges are advised to:

i. make necessary amendments to the relevant bye-laws, rules and regulations.

ii. bring the provisions of this circular to the notice of the members of the Exchange and also to disseminate the same on their website.

iii. communicate to SEBI, the status of the implementation of the provisions of this circular.

7. This circular is available on SEBI website. under the category "Circulars", "Info for Commodity Derivatives" and "Info for Portfolio Managers".

Tags : Participation Portfolio Managers Derivatives Market

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Press Information Bureau

21.05.2019

MRTP/ Competition Laws

Competition Commission of India (CCI) celebrates its 10th Annual Day on 20th May 2019

MANU/PIBU/0550/2019

The Competition Commission of India (CCI) celebrated its 10th Annual Day yesterday, i.e. on 20th May, 2019 which marks the notification of the substantive enforcement provisions of the Competition Act, 2002.

On this occasion, Shri N. K. Singh, Chairman, Fifteenth Finance Commission, Govt. of India, delivered the Annual Day Lecture on "Should Competitive Federalism Complement Cooperative Federalism?"

Shri N.K. Singh in his Introductory Remarks dwelt upon the scope, jurisdiction, mandate and duties of the Finance Commission in view of the Article 280 of the Constitution of India. He pointed that it is challenging to provide ideal distribution of tax revenues between Union and the States considering the peculiar issues involved with the States in terms of economic structure, demographic management and administrative mechanism. However, the Finance Commission will endeavour to reward efficiency while recognising equity, he said.

While appreciating the role of Competition Commission of India as a Market Regulator ensuring level playing field, he stated that in increased globalized and inter-dependent world, the role of the Competition Commission of India is required to be dynamic. He further underscored the fact that the globalized and inter-dependent world will draw more private investments and the State Governments can take advantage of that in their all-round progress. Public-Private Partnership (PPP) can also bring positive changes in the developments of the Sates in India and the Competition Commission of India can play a vital role in ensuring level playing field.

Shri Singh further underlined the necessity of having a Market Regulator as competition in markets ensures optimum utilization of resources and bring forth innovation at forefront. In view of rapid change in technology day by day, disruption in services and products have become a new norm in the markets and dynamic role of the Competition Commission of India is required for its regulation. He also highlighted the fact that the economic reforms in India so far, have largely focussed on the products market and it is now imperative to take it to the factor markets which includes reforms in labour and land laws and ensuring access to capitals.

Earlier, Shri Ashok Kumar Gupta, Chairman, Competition Commission of India, in his Welcome Address, stated that CCI is a young but perceptive regulator and has strived to nurture a culture of competition in markets through credible antitrust enforcement and regular engagement with the stakeholders. The Commission frequently solicits and takes cognizance of the stakeholders' insights. Since 2009, the CCI has reviewed 1010 antitrust cases, 660 merger filings and has held more than 700 advocacy events.

Tags : Annual Day Celebration CCI

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Press Information Bureau

21.05.2019

Direct Taxation

CBDT issues Draft Notification for Amendment of Form No 10B of the Income-tax Rules, 1962

MANU/PIBU/0551/2019

Section 12A of the Income-tax Act, 1961 (the Act) provides for conditions for applicability of Sections 11 and 12 of the Act. One such condition under clause (b) of sub-section (1) thereof is that where the total income of the trust or institution computed without giving effect to Section 11 and 12 exceeds the maximum amount not chargeable to Income-Tax in any previous year, its accounts for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of Section 288.

It further provides that the person in receipt of the said income, furnishes along with the Return of Income for the relevant Assessment Year, the Report of such Audit in the Prescribed Form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.

Accordingly, vide Income-tax (2nd Amendment) Rules, 1973 w.e.f. April 1, 1973 Rule 17B and Form 10B were inserted in the Income-tax Rules, 1962 (the Rules) for this purpose. Rule 17B of the Rules provide that said Report of Audit of the accounts of a trust or institution shall be in Form No. 10B. The Form No 10B besides providing the Audit Report, also provides for filing of "Statement of particulars" as Annexure.

As the Rule and Form were notified long ago, there is a need to rationalise them to align with the requirements of the present times.

In view of the above, the Rule and Form are proposed to be amended by way of substituting-

(a) Rule 17B with a new Rule 17B; and

(b) Form No 10B with a new Form No 10B.

The Draft Notification proposing the above amendments has been formulated and uploaded on www.incometaxindia.gov.in for inputs from stakeholders and general public. The inputs on the Draft Rules may be sent electronically at the email address, niraj.kumar82@nic.in, latest by June 5, 2019.

Tags : Notification Amendment Form No 10B Income-tax Rules

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Securities and Exchange Board of India

21.05.2019

Capital Market

Participation of Mutual Funds in Commodity Derivatives Market in India

MANU/SMFD/0011/2019

1. A copy of the Gazette Notification No. SEBI/LAD-NRO/GN/2019/011 dated April 26, 2019 on Amendments to SEBI (Mutual Funds) Regulations, 1996 is enclosed for implementation.

2. In order to promote institutional participation in Exchange Traded Commodity Derivatives (ETCDs), SEBI has permitted Category III Alternative Investment Funds to participate in exchange traded commodity derivatives vide circular no. SEBI/HO/CDMRD/DMP/CIR/P/2017/61 dated June 21, 2017 and also vide circular no. SEBI/HO/CDMRD/DMP/CIR/P/2018/134 dated October 09, 2018 permitted Eligible Foreign Entities (EFE) having actual exposure to Indian commodity markets, to participate in the commodity derivative segment of recognized stock exchanges for hedging their exposure. In furtherance to this objective, it has been decided to permit mutual funds to participate in ETCDs.

3. The participation of mutual funds in ETCDs would be subject to the following:

i. Mutual funds are permitted to participate in ETCDs in India, except in commodity derivatives on 'Sensitive Commodities' as defined vide SEBI circular no. SEBI/HO/CDMRD/DMP/CIR/P/2017/84 dated July 25, 2017.

ii. In partial modification to paragraph 3 of SEBI Circular No.CIR/IMD/DF/11/2015 dated December 31, 2015, it has been decided that ETCDs having gold as the underlying, shall also be considered as 'gold related instrument' for Gold Exchange Traded Funds (Gold ETFs).

iii. No Mutual fund schemes shall invest in physical goods except in 'gold' through Gold ETFs. Further, as mutual fund schemes participating in ETCDs may hold the underlying goods in case of physical settlement of contracts, in that case mutual funds shall dispose of such goods from the books of the scheme, at the earliest, not exceeding 30 days from the date of holding of the physical goods.

iv. No mutual fund scheme shall have net short positions in ETCDs on any particular good, considering its positions in physical goods as well as ETCDs, at any point of time.

v. Mutual funds are permitted to participate in ETCDs through the following schemes:

a) Hybrid schemes in terms of paragraph C of the Annexure to SEBI Circular No.SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 06, 2017, which includes multi asset scheme and

b) Gold ETFs.

vi. In case of existing schemes, as mentioned in paragraph 3(v) above, prior to commencement of participation in ETCDs, the scheme shall comply with the provisions of Regulation 18(15A) of SEBI (Mutual Funds) Regulations, 1996, as this will lead to change in fundamental attributes of the scheme and all unit holders shall be given a time-period of at least 30 days to exercise the option to exit at prevailing NAV without charging of exit load, if any.

vii. Prior to participation in ETCDs, the AMCs shall adhere to the following:

a) Appoint a dedicated fund manager with requisite skill and experience in commodities market (including commodity derivatives market).

b) Appoint a custodian registered with the Board for custody of the underlying goods, arising due to physical settlement of contracts.

c) Have written down investment policy for participation in ETCDs approved by the Board of the Asset Management Company and the Board of Trustees.

d) Have written down valuation policies approved by the Board of the AMC and the Board of Trustees for valuation of commodity derivatives and the underlying goods, arising due to physical settlement of contracts. The approved valuation policies should be subject to the principles of fair valuation of the assets of mutual funds schemes.

viii. In partial modification to paragraph 2(b) of SEBI Circular No. CIR/IMD/DF/04/2013 dated February 15, 2013 read with paragraph 3(b) of SEBI Circular No. CIR/IMD/DF/11/2015 dated December 31, 2015, it has been decided that before investing in GDS of Banks, GMS and ETCDs having gold as the underlying, mutual funds shall put in place written policy with regard to such investments with due approval from the Board of the Asset Management Company and Board of Trustees. The policy should have provisions to make it necessary for the mutual fund to obtain approval of trustees for investment proposal in GDS of any Bank and GMS. The policy shall be reviewed by mutual funds, at least once in a year.

ix. Mutual fund schemes may participate in the ETCDs as 'clients' and shall be subject to all the rules, regulations and instructions, position limit norms, etc. as may be applicable to clients, issued by SEBI and Exchanges from time to time. The position limits at mutual fund level be as applicable to 'Trading Members'.

x. Schemes investing in ETCDs shall be benchmarked against an appropriate benchmark.

xi. AMCs shall not onboard Foreign Portfolio Investors (FPIs) in schemes investing in ETCDs untill FPIs are permitted to participate in ETCDs.

Investment Limits:

4. Participation of mutual funds in ETCDs shall be subject to the following investment limits:

i. Mutual fund schemes shall participate in ETCDs of a particular goods (single), not exceeding 10% of net asset value of the scheme. However, the limit of 10% is not applicable for investments through Gold ETFs in ETCDs having gold as underlying.

ii. In case of multi assets allocation schemes, the exposure to ETCDs shall not be more than 30% of the net asset value of the scheme.

iii. In case of other hybrid schemes excluding multi assets allocation scheme, the participation in ETCDs shall not exceed 10% of net asset value of the scheme.

iv. In partial modification to paragraph 3 of SEBI Circular No.CIR/IMD/DF/11/2015 dated December 31, 2015, it is proposed that in case of Gold ETFs, the cumulative exposure to gold related instruments i.e. Gold Deposit Scheme (GDS) of banks, Gold Monetization Scheme (GMS) and ETCD having gold as the underlying shall not exceed 50% of net asset value of the scheme. However, within the 50% limit, the investment limit for GDS and GMS as part of gold related instrument shall not exceed 20% of net asset value of the scheme. The unutilized portion of the limit for GDS of banks and GMS can be utilized for ETCD having gold as the underlying.

v. The cumulative gross exposure through equity, debt and derivative positions (including commodity derivatives) shall not exceed 100% of net asset value of the scheme.

Disclosures:

5. In case of mutual fund schemes investing in ETCDs, the AMC shall adhere to the following:

i. The NAVs of those schemes shall be updated on daily basis by the AMCs on their website and on the website of AMFI by 09:00 a.m. of the following calendar day.

ii. The format of monthly and half yearly portfolio may be modified to reflect the investment in ETCDs

iii. The total exposure to ETCDs shall be disclosed as a line item in the Monthly Cumulative Report (MCR) submitted by mutual funds.

6. The Recognized Stock Exchanges are advised to:

i. make necessary amendments to the relevant bye-laws, rules and regulations.

ii. bring the provisions of this circular to the notice of the members of the Exchange and also to disseminate the same on their website.

iii. communicate to SEBI, the status of the implementation of the provisions of the circular.

7. All the provisions of the circular will be applicable from the date of the circular.

8. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Tags : Participation Mutual Funds Commodity Derivatives Market

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Ministry of Finance 

21.05.2019

Service Tax

Taxability of the service of access to a road or bridge in the period 8-11-2016 to 1-12-2016

MANU/DSTX/0003/2019

I am directed to draw your attention to a representation from the Construction Federation of India wherein they have stated that due to the demonetisation of Rs. 500 and Rs. 1000 notes with effect from 8-11-2016, the Ministry of Road Transport and Highways (MoRTH) and the National Highways Authority of India (NHAI) issued directions to the concessionaires operating tolls, to allow free access to users upto 1-12-2016 and that the toll charges for this period would be paid by the project authority (NHAI).

2. Certain authorities have commenced investigations that service tax is payable in this period on the ground that ii is a "declared service" under section 66E(e) of the Finance Act, 1994. The logic of the invest gating authorities apparently is that even though in terms of section 66D(h) of the Finance Act, 1994, "service by way of access to a road or a bridge on payment of toll charges" is in the Negative List of services and is not taxable, since the toll operator chose to forgo payment by the user and accepted payment by NHAI, it comes under the category of "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act.".

3.0 The matter has been examined. The correct legal position in this regard is as follows:

3.1 "Service by way of access to a road or bridge on payment of toll charges" is included in the Negative List. That means that no service tax can be levied on this service. The service that is provided by toll operators before 8-11-2016, during the period 8-11-2016 to 1-12-2016 and after 1-12-2016 is that of access to a road or bridge. When the service remained the same throughout and it continued to be in the Negative List, there can be no legal reason to treat it differently for the period 8-11-2016 to 1-12-2016.

3.2 Section 66E of the Finance Act, 1994 has to be read along with the other provisions of that Act. A "declared service" cannot therefore, be assumed to have an overriding or omnibus character over other provisions. Thus, one cannot apply the concept of "declared service" to remove a service from the Negative List and make it a taxable service.

3.3 The service that is provided by toll operators is that of access to a road or bridge, toll charges being merely a consideration for that service. On MoRTH/NHAI" s instructions, for the period 8-11-2016 to 1-12-2016 this service of access to a road/bridge was continued to be provided without collection of consideration from the actual user of service. Consideration came from the project authority. The fact that for this period, for the same service, consideration came from a person other than the actual user of service, does not mean that the service has changed.

Tags : Taxability Service Access to a road or bridge

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Telecom Regulatory Authority of India

20.05.2019

Media and Communication

TRAI releases Report on Activities for the period 1st January 2018 to 31st December 2018

MANU/TRAI/0044/2019

Telecom Regulatory Authority of India (TRAI) has today released the Report on Activities for the period 1st January 2018 to 31st December 2018. The Report presents an abstract of the activities of the Authority, during the calendar year 2018. All the Recommendations, Regulations, Orders and Directions referred to in the report are available on the TRAI's website. and can be referred to for detailed information. It is hoped that this report gives the stakeholders a broader view and better understanding of the initiatives taken by the Authority to enhance the growth of telecom and broadcasting sectors.

The Report on Activities has been placed on TRAI's website for information of the stakeholders. For any clarification on the above Report, contact Shri Sanjeev Kumar Sharma Advisor (Administration), Telecom Regulatory Authority of India, Mahanagar Doorsanchar Bhawan, Jawahar Lal Nehru Marg, New Delhi-110 002, Tel.No.23236119, email id: advadmn@trai.gov.in

Tags : Report release Activities

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Reserve Bank of India

20.05.2019

Banking

Issue of Rs. 10 Denomination Banknotes in Mahatma Gandhi (New) Series bearing the signature of Shri Shaktikanta Das, Governor

MANU/RPRL/0095/2019

The Reserve Bank of India will shortly issue Rs. 10 denomination Banknotes in Mahatma Gandhi (New) Series bearing the signature of Shri Shaktikanta Das, Governor. The design of these notes is similar in all respects to Rs. 10 banknotes in Mahatma Gandhi (New) Series. All banknotes in the denomination of Rs. 10 issued by the Reserve Bank in the past will continue to be legal tender.

Tags : Issue Rs. 10 Denomination Banknotes

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Press Information Bureau

20.05.2019

Civil

World gets the redefined units of measurement of kilogram, Kelvin, mole and ampere

MANU/PIBU/0549/2019

After decades of ground-breaking laboratory works, the world's scientific and technical community, in a landmark and historic decision taken in the recent open session of the General Conference on Weights and Measures (CGPM) at BIPM on 16 November 2018, has unanimously adopted the resolution to redefine four of the seven base units, the kilogram (SI unit of weight), Kelvin (SI unit of temperature), mole (SI unit of amount of substance), and ampere (SI unit of current). This decision has now enabled scientists and researchers to base the SI units entirely on fundamental properties of nature, which will ensure their ongoing refinement and improvement for years to come. The fundamental constants are invariants of time and space and successfully replaced the artifact based units, and aptly opened up the new era for quantum world by linking all seven base units to fundamental constants/quantum standards.

The new SI is being implemented worldwide from 20th May 2019 i.e. the World Metrology Day. The World Metrology Day (WMD) is celebrated annually on this very day as the Metre Convention was signed by representatives of seventeen nations on May 20, 1875. The Convention set the framework for global collaboration in the science of measurement and in its industrial, commercial and societal applications.

DG CSIR, Shri Shkehar C. Mande present on the occasion congratulated the NPL in bringing out the new units and said that quantum computing, artificial intelligence (AI), Industry 4.0, space enabled communications, are some of the international challenges of the near future and it is necessary for India, the fastest growing economy to make the triumphs to meet the above challenges with the support of quantum metrology based quality infrastructure.

The whole metrology world, especially the National Metrology Institutes (NMIs) are celebrating this year's WMD as mark for the new beginning of metrology, based on constant of nature on a large scale. CSIR-NPL, the NMI of India have kept the strides going in these fields and started the R&D efforts in establishing the new SI, alongside the international implementations from 20th May 2019.

On this historic day, CSIR-NPL introduced redefined SI Units to nation in terms of constant of nature through a series of events, delivering lectures, releasing theme (The International System of Units - Fundamentally Better) based poster of BIPM; release of NPL's designed posters introducing redefined SI to nation highlighting fundamental constant of nature and impact of metrology on all walks of human life; release of poster on technologies transferred, commercialized, patents filed / granted, number of customer served through testing and calibrations by CSIR-NPL during 2018-2019, release of poser on Bhartiya Nirdeshak Dravya (BND) and release of new NPL certified BNDs.

As a national responsibility and keeping in view of the importance and recognition of new revision of SI, the CSIR-NPL has also prepared documents on i) NPL Policy on Metrological Traceability, ii) recommendations on the proposed changes to be incorporated in the National Council of Educational Research and Training (NCERT), New Delhi textbooks and implement the new changes to impart cotemporary education to its students and iii) recommendations on the proposed changes to be incorporated in syllabi of metrology courses in graduate engineering and academic courses being taught in All India Council for Technical Education (AICTE), Indian Institutes of Technology (IITs), National Institutes of Technology (NITs), and other academic institutes.

On this occasion CSIR-NPL also published a book entitled, "Redefined SI Units and Glimpses of NPL Metrological Activities" of almost 100 pages to percolate and disseminate the information accommodating details on new changes, posters and documents mentioned above and role of NPL in strengthening the Indian metrological infrastructure for the govt. representatives, policy makers, regulator, certification bodies, academic institutions, industries and public as a whole.

Tags : Redefined units Measurement kilogram Kelvin mole and ampere

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