Notifications & Circulars
Press Information Bureau
04.03.2020
Direct Taxation
TDS Surveys by Income Tax Department unearths huge defaults in deduction and deposit
MANU/PIBU/0581/2020
In a major breakthrough, the Tax Deducted at Source (TDS) wing of the Income Tax Department has unearthed default of TDS of Rs. 324 crore in the case of a major Telecom Operator in Delhi. The company did not make the required TDS of 10% u/s 194J of the Income-tax Act, 1961 on technical contracts worth Rs. 4,000 crore. The amount is further liable to go up once the enquiry is completed.
Several hospitals of the city were found openly flouting the norms of TDS and tax collected at source (TCS) and were paying less tax to the Income Tax Department. During the survey, at two premier hospitals, one with more than 2,500 bed capacity and the other with 700 bed capacity, it was found that the former was not making any TDS on construction contracts as statutorily required u/s 194C/ 194J, while the latter was deducting tax at the rate of 10% only on salary paid to the doctors, instead of the present TDS rate of 30% applicable for salary payments.
Enquiries during the survey revealed that the terms of appointment between the hospital and the doctors indicated an employer-employee relationship on which the hospital was required to deduct tax at 30% instead of 10% as was being made by the hospital. TDS defaults of Rs 70 crore and Rs 20 crore respectively were detected in the said hospitals. Further enquiry revealed that the hospitals were also not making the required TDS at 10% from the maintenance charges paid for the hi-tech sophisticated operation theatre and diagnostic equipments.
Furthermore, it was seen that many hospitals were still not complying with the TCS norms which came into effect from June 1, 2016 under which, on any cash payment received in excess of Rs. 2 lakh, the hospital was required to collect TCS @1% and deposit it to the Government account.
In another TDS survey conducted on a prominent Real Estate Group in Delhi in the first week of the March, 2020, after credible data analysis of previous years, analysis of TDS compliance patterns by the various group companies, their ITR filings and tax auditor reports and real time data generated by CPC-TDS, it was seen that the deductor having already deducted tax in earlier years, had not deposited the deducted taxes in government account.
During the survey, verification and analysis indicated outstanding TDS liability and interest payable of Rs. 214 crore. Major TDS default related to the payment of interest on outstanding loans. The Real Estate Company had taken huge loans on which interest payments were credited from time to time, TDS was duly deducted during various financial years but was not deposited to Government account. Since it was a case of non-compliance, interest at the rate of 1.5% for every month or part of the month is to be paid from the date on which such tax is deducted to the date on which such tax is actually deposited to Government account.
In another action by the TDS Wing of the Department, TDS default of approximately Rs. 3,200 crore was detected in the case of a major oil company pursuant to survey u/s 133A of the Act. The defaults included short deduction of tax and non deduction of tax respectively. Short deduction of tax pertained to TDS u/s 194J for several years on payment of Fee for Technical Services for installation and maintenance of high tech oil refineries, payments for chemical process of re-gasification and transportation of LNG. Default of non deduction was detected on composite contracts involving service and purchase of products on which TDS @2% should have been deducted but which was not deducted resulting in the said default.
The Income Tax Department has, in recent times, stepped up enforcement action against TDS default cases as this category of revenue contributes to over 45% of the total direct tax collection in the country. As per Rules, the TDS has to be paid to the credit of the central government within seven days from the end of the month in which the deduction is made.
Tags : TDS Surveys Defaults Deduction Deposit
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Press Information Bureau
04.03.2020
Commercial
Benefits of Free Trade Agreements
MANU/PIBU/0577/2020
The Free Trade Agreements (FTAs) signed by India provide tariff concessions thereby giving opportunities for exports of products including those related to small and medium enterprises (SMEs). Some of the SME products on which tariff concessions have been provided by trading partners such as Japan, South Korea and some ASEAN countries fall into the category of readymade garments, leather goods, processed foods and engineering products like auto components. The specific export promotion schemes for micro, small and medium enterprises (MSMEs) include those for participation in international exhibitions and fairs, training programme on packaging for exports, Market Development Assistance (MDA) Scheme for MSME exporters and National Award for quality products. Some of the other measures taken by the Government which would promote trade and benefit exports from SMEs are specific schemes under the new Foreign Trade Policy (FTP) 2015-20 such as Interest Equalization Scheme on pre and post shipment rupee export credit, Merchandise Exports from India Scheme (MEIS), Services Exports from India Scheme (SEIS), double weightage for export entitlement to SMEs for grant of one star export house, electronic filing and issuance for specified FTP Schemes, online platform for preferential certificates of origin, etc. While a logistics division has been created in the Department of Commerce to coordinate integrated development of the logistics sector with a view to promoting trade, some of the new schemes and policies that have been launched to facilitate trade are Agriculture Export Policy, Trade Infrastructure for Export Scheme (TIES) and Transport and Marketing Assistance (TMA).
Tags : Benefits FTA Exports
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Ministry of Corporate Affairs
04.03.2020
Contract
LLP settlement Scheme, 2020
MANU/DCAF/0036/2020
1. It has been almost over a decade since LLP Act came into being. The Limited Liability Partnership (LLP) is viewed as an alternative corporate business vehicle that provides the benefits of Limited Liability but allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement. Owing to flexibility in its structure and operation, the LLP often become the preferred option for small enterprises.
2. It has come to the notice of Government that a large number of LLPs have defaulted in filing Form (3) viz. LLP Agreement and changes therein and statutory return viz. Form-8-Statement of Account & Solvency (Annual or Interim) and Form-11-Annual Return of LLP. In the event of requisite forms not being filed within prescribed time presently LLPs may file such documents on payment of additional fee for one hundred rupees for every day of such delay under Section 69 of the LLP Act in addition to any fee as is payable for filing of such document or return.
3. A large number of representations were received from various quarters for waiver of fee or condonation of delay and relaxations in additional fee on the ground of excessive financial burden.
4. It is also noted that a large number of LLPs are not filing their due statutory documents (i.e. Information with regard to LLP agreement and changes etc., Notice of Appointment of Partner/Designate Partner etc. and other Annual filing documents i.e. Statement of Account & Solvency and Annual Returns) in a timely manner with the Registrar. Form 3 is filed for filing Information with regard to LLP agreement and changes, if any made therein and Form-4 is for filing Notice of Appointment of Partner/Designated Partner, his consent etc. which are required to be filed with the prescribed fee.
5. Due to this, the records available in the electronic registry are not updated and they are not available to the stakeholders for inspection. Further, due to not filing the required documents on time the LLPs and their designated partners are liable for criminal prosecution and the said LLPs cannot be closed till all compliances are completed.
6. As part of Government's constant efforts to promote ease of doing business it has been decided to give a Onetime relaxation in additional fees to the defaulting LLPs to make good their default by filing pending documents and to serve as a compliant LLP in future.
7. The Central Government in exercise of its power u/s. 460 of the Companies Act, 2013 (extended to LLPs vide Gazette Notification No. G.S.R. 59(E) Dated 30th January, 2020 u/s. 67 (2) of the Limited Liability Partnership Act, 2008) has decided to introduce a scheme namely "LLP Settlement Scheme, 2020", by allowing a One-time condonation of delay in filing statutorily required documents with the Registrar.
8. On the conclusion of the Scheme, the Registrar shall take necessary action under the LLP Act, 2008 against the LLPs which have not availed this Scheme and are in default in filing of documents as required under the provisions of LLP Act, 2008 in a timely manner.
Tags : LLP Settlement Scheme
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Securities and Exchange Board of India
03.03.2020
Capital Market
Review of Norms regarding Regaining Matched Book for Commodity Derivatives Segment
MANU/SDER/0004/2020
1. SEBI vide Circular SEBI/HO/CDMRD/DRMP/CIR/P/2016/77 dated September 01, 2016, inter alia, prescribed norms to regain matched book vide Clause '5' of the Annexure - I to the said circular. The norms prescribed four alternative tools to regain a matched book based on market conditions.
2. Based on the experience gained with regard to the implementation of these norms and the feedback from Clearing Corporations (CCs) and other stakeholders, it has been decided to revise the Alternatives '3' and '4' in terms of compensation and penalty applicable on tear-up of positions as under:
Alternative 3: Voluntary tear-up at last mark-to-market price along with compensation equal to 10% of last mark-to-market price and penalty equal to 1% of last mark-to-market price (to be credited to SGF);
Alternative 4: Partial tear-up (pro-rata against members/clients having opposite positions) at last mark-to-market price along with compensation equal to 8% of last mark-to-market price and penalty equal to 1% of last mark-to-market price (to be credited to SGF).
3. The other provisions with regard to regaining of the matched book prescribed by the earlier circular dated September 01, 2016, shall continue to prevail.
4. Further to enable timely and error free execution, CCs shall have an automated system to implement all such tools. CCs shall put in place such system, and also conduct testing of the same, within six months from the date of issuance of this circular. The other provisions of this circular shall be effective immediately.
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, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Tags : Review Norms Matched book
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Ministry of Commerce and Industry
03.03.2020
Customs
Import of additional quota of Urad (2.5 Lakh MT) for the fiscal year 2019-2020
MANU/DGFT/0038/2020
1.Reference is invited to Trade Notice No. 43/2019-20 dated 19.12.2019 laying down the modalities for import of additional 2.5 Lakh MT of Urad for the fiscal year 2019-20 and Minutes of the meeting held on 20.01.2020 wherein importers were directed to complete imports by 31st March, 2020, i.e., import consignments of Urad should arrive at Indian Ports on or before 31.03.2020.
2. During last two months, this Directorate has received several representations for extension of the date of import of Urad beyond 31.03.2020. The matter has been examined and it has been decided by the Competent Authority to extend the deadline for import of additional 2.5 Lakh MT of Urad to 30th April, 2020, i.e. imports should arrive at Indian Ports on or before 30th April, 2020.
3. Accordingly, all license holders for Urad are requested to complete their import by 30.04.2020. No request for further extension will be entertained.
Tags : Import Additional quota Urad
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Press Information Bureau
03.03.2020
Civil
Discovery of Ink to Curb Fake Printing of Passports and Counterfeiting of Currency Notes
MANU/PIBU/0550/2020
CSIR-National Physical Laboratory has developed a bi-luminescent security ink which glows in red and green colours when illuminated by two different excitation sources at 254 nano meters (nm) and 365 nm, respectively. The ink was prepared in a batch of 1kg and given to Bank Note Press (BNP), Dewas, a unit of Security Printing Minting Corporation of India Ltd. (SPMCIL), New Delhi. The ink is found comparable to the standards that are in use. The formulation can be used to check the authenticity of passports, Government documents, tamper evident labels, identity cards, etc.
Tags : Discovery Fake Printing Currency Notes
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Ministry of Corporate Affairs
02.03.2020
Company
Clarification on prosecutions filed or internal adjudication proceedings initiated against Independent Directors, non-promoters and non-KMP non-executive directors
MANU/DCAF/0033/2020
1. Under several provisions of the Companies Act, 2013 [Act], proceedings are required to be initiated against an officer in default for violations committed under the Act. The term "officer who is in default" is defined under section 2(60) of the Act, wherein various officers of the company have been identified.
2. Ordinarily, a whole-time director [WTD] and a key managerial personnel [KMP] are associated with the day-to-day functioning of the company and accordingly such WTDs and KMPs would be liable for defaults committed by a company. In absence of a KMP, such director or directors who have expressly given their consent for incurring liability in terms of the e-form GNL-3 filed with the Registrar would be liable. Where the consent for incurring liability for any of the provisions dealing with maintenance, filing or distribution of accounts or records is submitted in e-form GNL-3 by a person under the immediate authority of the Board or any KMP, the liability of such person will arise. However, in certain cases, the penal provisions in the Act hold a specific director, or officer, or any other person accountable for the default, in such cases, action should be initiated only against such director, or officer, or person, as the case may be, such as disclosure of interest by directors under section 184 of the Act.
3. Section 149 (12) is a non obstante clause which provides that the liability of an independent director (ID) or a non-executive director (NED) not being promoter or key managerial personnel would be only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently. In view of the express provisions of section 149(12), IDs and NEDs (non-promoter and non-KMP), should not be arrayed in any criminal or civil proceedings under the Act, unless the above mentioned criteria is met. Typically, apart from IDs, non-promoter and non-KMP, NEDs, would exist in the following cases:
a) Directors nominated by the Government on the public sector undertakings;
b) Directors nominated by Public Sector Financial Institutions, Financial Institutions or Banks having participation in equity of a company, or otherwise;
c) Directors appointed in pursuance to any statutory or regulatory requirement such as directors appointed by the NCLT.
4. The nature of default is also crucial for arraigning officers of the company for defaults committed under the Act. All instances of filing of information/records with the registry, maintenance of statutory registers or minutes of the meetings, or compliance with the orders issued by the statutory authorities, including the NCLT under the Act are not the responsibility of the IDs or the NEDs, unless any specific requirement is provided in the Act or in such orders, as the case may be. The responsibility of the NEDs, ordinarily arise in such cases, where there are no WTDs and KMPs.
5. At the time of serving notices to the company, during inquiry, inspection, investigation, or adjudication proceedings, necessary documents may be sought so as to ascertain the involvement of the concerned officers of the company. In case, lapses are attributable to the decisions taken by the Board or its Committees, all care must be taken to ensure that civil or criminal proceedings are not unnecessarily initiated against the IDs or the NEDs, unless sufficient evidence exists to the contrary.
6. The records available in the office of the Registrar, including e-forms DIR-11 or DIR-12, along with copies of the annual returns or financial statements should also be examined so as to ascertain whether a particular director or the KMP was serving in the company as on the date of default.
7. In case of any doubts, with regard to the liability of any person, for any proceedings required to be initiated by the Registrar, guidance may be sought from the Ministry of Corporate Affairs through the office of Director General of Corporate Affairs. Consequently any such proceedings must be initiated after receiving due sanction from the Ministry.
8. All Registrars are directed to immediately and scrupulously follow the above mentioned Standard Operating Procedure with respect to all ongoing cases. Further, with respect to cases where prosecution may have been already filed but the above mentioned cases criteria is not satisfied, the same may be submitted to this Ministry for necessary examination and further direction thereon.
9. This issues with the approval of the competent authority.
Tags : Clarification Internal adjudication Proceedings
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