Central Government Employees to enjoy a hike in Dearness Allowance from 17% to 28%

Tithi Shah
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Central Government Employees to enjoy a hike in Dearness Allowance from 17% to 28%

“The President is pleased to decide that the Dearness allowance payable to Central Government employees & dearness relief to pensioners shall be enhanced from the existing rate of 17% to 28% of the basic pay with effect from 1st July, 2021” said the recent Memorandum of  Ministry Of Finance, thereby increasing the rate by 11%.

The Ministry of Finance had put on hold an increment in dearness allowance (DA) till June 30, 2021, due to the COVID-19 pandemic in April last year. The rate of DA from January 1, 2020, to June 30, 2021, shall remain 17 per cent.

The decision is expected to cost the government approximately ₹ 34,400 crore and impact around 48,34,000 central government employees and 65,26,000 pensioners” said Anurag Thakur, the minister of sports, youth affairs and minister of information and broadcasting in a press briefing while making the announcement.

What is dearness allowance?

Dearness Allowance is paid by the government to its employees as well as a pensioner to offset the impact of inflation. The effective salary of government employees requires constant enhancement to help them cope up with the increasing prices. Dear Allowance/Dearness Relief is revised twice a year from January 1 and July 1.

Illustration on Dearness Allowance

The present rate at which the government employees are getting DA is 17%. For example, if a government employee’s basic salary is ₹20,000, the DA is ₹3400 (at 17%). With 28%, the dearness allowance will be 5,600 in a month. This calculation will be applicable from July 1.

Impact of hike in Dearness Allowance

The impact of increase in the dearness allowance on the economy will depend on whether and to what extent employees actually spend money. On a general front, an increase in dearness allowance essentially increases the money that employees bring home . If the employees choose to spend all this additional money they get, it will have a positive impact on the dropping consumption demand due to the pandemic . However, if they choose to save this money instead of spending the same and keep it in their bank accounts, it will help the economy by bolstering the flow of funds to the banking system.

Complete guidance to new e-form CSR-1

Priya kejriwal
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Complete guidance to new e-form CSR-1

Are you a social organisation and seeking CSR Funding? Then it is mandatory for you to get registered with MCA by filing Form CSR-1 as soon as possible.

Ministry of Corporate Affairs has launched CSR-1 form on their website w.e.f. 1st April 2021. E-form CSR-1 is required to be filed pursuant to Section 135 of the Companies Act, 2013 and Rule 4 (1) and (2) of the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Form CSR-1 is a registration form for getting CSR funding by implementing agencies from the corporates. The Form CSR-1 is termed as Form for “Registration of Entities for undertaking CSR Activities”.

The Form mainly consists of two parts, first part is relating to the information about the entity who intends to undertake CSR activities. Second part of Form CSR-1 is certification by practicing professional.

If any implementing agency fails to file CSR-1, they shall not be eligible to continue as the Implementing agency.

On successful submission of Form CSR-1, a unique CSR Registration Number shall be generated by system automatically to applying organization

Five types of entities covered for registration in Form CSR -1 :

1) Company established under Section 8 of the Companies Act, 2013 with Section 12A and Section 80G registrations under the Income Tax Act, 1961.

2) Registered Public Trust with Section 12A and Section 80G registrations under the Income Tax Act, 1961.

3) Company established under Section 8 of the Companies Act, 2013 or Registered Trust or Registered Society established by the Central Government or State Government.

4) Registered Society with Section 12A and Section 80G registrations under the Income Tax Act, 1961.

5) Entity established under an Act of Parliament or State Legislature.

These companies/entities are required to mandatorily register themselves with the central government for undertaking any CSR activity by filing the e-form CSR-1 with the Registrar.

Procedure to Download Form CSR-1

-The procedure to download Form CSR-1 from the MCA website is as follows:

-The applicant needs to access the official webpage of the Ministry of Corporate Office (MCA) and Click on Forms & Downloads on the top of the webpage.

-Scroll down the page till the topic ‘Incorporation services’ is reached. Click on the “Registration of Entities for undertaking CSR activities Form CSR-1” Download the e-Form with or without Instruction. This will be downloaded in zip file format. Unzip it and extract the relevant pdf files.

-Open the pdf file named ‘Form_CSR-1’. This is Form CSR-1 for the registration of entities for undertaking CSR activities.

Form CSR-1 need to be digitally signed by following persons:

a) Any one of the Directors of Section 8 Company

b) Any one of trustees of Registered Trust

c) By Chairperson/Secretary in case of Registered Society

d) Authorized Signatory in case of entity established under an Act of Parliament or State Legislature.

e) A Practising Professional like Chartered Accountant in Practice or a Cost Accountant in Practice or Company Secretary in Practice

Documents Required for CSR-1 Registration

The documents required to upload for CSR-1 Registration is as follows:

-Copy of the registration certificate

-Copy of the PAN of the NGO with Form CSR-1

-DIN/PAN of the Director, Trustee, Secretary, etc. of the organization

-Copy of the Resolution authorizing the person by the entity with Resolution number and date of the resolution

-DSC of the person

Mandatory Attachments:

Section-8: Certificate of Incorporation and PAN of Company

Trust- Certificate of Registration and PAN of Trust

Society- Certificate of Registration and PAN of Trust

Certification of E-form:

This from should be certified by following:

Section-8: To be digitally signed by one director.

Trust- To be digitally signed by one of the Trustee/ CEO

Society- To be digitally signed by Chairperson/ CEO/ Secretary

NOTE: After approval of this form, an acknowledgement shall be sent to the email id of entity on which OTP has received earlier. Further, a approval letter with unique registration number shall also be sent to the email of the entity

To conclude, the intention behind the Form CSR-1 seems to streamline, monitor and control the process of Corporate Social Responsibilities activates of corporate in a better and transparent manner thereby protecting society at large. The benefits of CSR (Corporate Social Responsibility) shall flow smoothly to larger section of society thereby achieving the very Objective of Corporate Social Responsibility of the Government.

All you need to know about Sovereign Gold Bonds Scheme – a substitute for investment in physical gold

Sourabh Agarwal
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All you need to know about Sovereign Gold Bonds Scheme – a substitute for investment in physical gold

What is Sovereign Gold Bonds? Is investing in Sovereign Gold Bonds better than investing gold? Is it a good investment options for Middle class Citizens?, and many other questions arise whenever any body talks about investing in new assets or specifically the Sovereign Gold Bonds. So here is this article answering  these questions.

What is Sovereign Gold Bonds (hereinafter SGBs)?

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.

Who are eligible for Investment in Sovereign Gold Bonds?

Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

Even the minors can make application for investment in Sovereign Gold Bonds i.e. SGBs but the application on behalf of the minor has to be made by his/her guardian.

Minimum Investment, Denomination and Pricing:-

The SGBs are issued in the denominations of one gram gold or multiples thereof and the minimum limit of subscription for bonds shall be one gram and maximum limit of subscription per fiscal year shall be of 4 kgs for Individuals and HUFs and 20Kgs for trusts and similar entities notified by the Government time to time

The nominal value of Gold Bomds shall be in Indian rupees fixed on the basis of simple average of closing price of gold of 999 purity, published by the Indian Bullion and Jewellers Assosciation Limited for the last three working days of the week preeceding the subscription period.

Note:- The issue price of the gold Bonds will be 50 per gram less than the nominal value for those investors applying online and payment against the application is made through digital mode.

Process of application

The application form will be provided by the issuing banks/SHCIL offices/designated Post Offices/agents. It can also be downloaded from the RBI’s website. Banks may also provide online application facility.

Any person desirous of subscribing to the Gold Bonds shall apply to any receiving office in Form ‘A’ or in any other form as near as thereto, stating clearly the grams of gold, full name and address of the applicants.

Every application shall be accompanied by the PAN number of the applicant issued by the ITD.

When to Invest in Sovereign Gold Bonds?

The Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds. The Sovereign Gold Bonds will be issued in six tranches from May 2021 to September 2021 as per the calendar specified below:

Sr. No. Tranche Date of Subscription Date of Issuance
1. 2021-22 Series I May 17–21, 2021 May 25, 2021
2. 2021-22 Series II May 24–28, 2021 June 01, 2021
3. 2021-22 Series III May 31-June 04, 2021 June 08, 2021
4. 2021-22 Series IV July 12-16, 2021 July 20, 2021
5. 2021-22 Series V August 09-13, 2021 August 17, 2021
6. 2021-22 Series VI August 30-September 03, 2021 September 07, 2021

Interest rate and how it will be paid?

The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.

On redemption:-

On maturity, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited. Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.

Procedures involved during redemption.

  • The investor will be advised one month before maturity regarding the ensuing maturity of the bond.
  • On the date of maturity, the maturity proceeds will be credited to the bank account as per the details on record.
  • In case there are changes in any details, such as, account number, email ids, then the investor must intimate the bank/SHCIL/PO promptly.

Can the bonds be issued in demat form?

Yes. The bonds can be held in demat account. A specific request for the same must be made in the application form itself. Till the process of dematerialization is completed, the bonds will be held in RBI’s books. The facility for conversion to demat will also be available subsequent to allotment of the bond.

Can we trade these bonds?

The bonds are tradable from a date to be notified by RBI. (It may be noted that only bonds held in de-mat form with depositories can be traded in stock exchanges). The bonds can also be sold and transferred as per provisions of Government Securities Act, 2006. Partial transfer of bonds is also possible.

Is premature redemption allowed?

Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. The bond will be tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.

How to exit the investment?

In case of premature redemption, investors can approach the concerned bank/SHCIL offices/Post Office/agent thirty days before the coupon payment date. Request for premature redemption can only be entertained if the investor approaches the concerned bank/post office at least one day before the coupon payment date. The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond.

Can these securities be used as collateral for loans?

Yes, these securities are eligible to be used as collateral for loans from banks, financial Institutions and Non-Banking Financial Companies (NBFC). The Loan to Value ratio will be the same as applicable to ordinary gold loan prescribed by RBI from time to time. Granting loan against SGBs would be subject to decision of the bank/financing agency, and cannot be inferred as a matter of right.

What are the tax implications on i) interest and ii) capital gain?

Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.

 Is tax deducted at source (TDS) applicable on the bond?

TDS is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws.

Why should SGB be considered rather than physical gold? What are the benefits?

The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.

Is giving a discount and having exclusive partnerships with dealers fair and legal practice in India?

Vishvas Nandwani
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Is giving a discount and having exclusive partnerships with dealers fair and legal practice in India?

Background

Recent judgment of Karnataka High Court to allow Competition Commission of India (CCI) to conduct an inquiry into practices of Amazon and Flipkart have been pronounced. The e-commerce giants had challenged the order of CCI passed under section 26(1) of the Competition Act in January, 2020.

The section states that the competition commission may inquire into any alleged contravention of the competition act if it receives any complaint from any person and if it deems to be necessary.

The commission had received a complaint from Delhi Vyapar Mahasangh (DVM) to enquire into the practices of the e-commerce giants as they alleged that the e-commerce companies are giving preferential treatment to various dealers.

The Karnataka High Court gave an interim stay on the order of CCI. The CCI then challenged the same in Supreme Court in which Supreme Court ordered the Karnataka High to decide on the CCI’s order. Then on 23rd July, 2021. Karnataka high court dismissed the appeal by Amazon and Flipkart by saying that if the e-commerce giants believe everything to be in law then they should don’t be afraid of the inquiry.

What does the law states?

According to section 3(4) of the Competition Act there shall be no agreement in which the dealer has an exclusive sale agreement or exclusive distribution agreement or refusal to deal.

What the petitioner had to say?

The petitioner has alleged that these e-commerce giants have exclusive deals and agreements with suppliers especially with smartphone companies and tech companies ( For eg. One Plus phones are only available on Amazon), these giants use their dominant position to abuse competition in the market.

Secondly, due to search bias the e-commerce giants favor certain seller on others. The idea of the competition act is to eliminate the ant-competitive elements by ensuring that visibility for all sellers should be the same.

Defense by E-Commerce Giants

Amazon and Flipkart before the court argued that these are all only allegations and that there is no agreement with the sellers for the same. CCI have not shown any written and tangible proof why the inquiry must be conducted. If the seller wants to picks any platform on which he wants to sell his product he should be allowed to so the same and it should be his choice if he opts to not sell it on any other platform.

Moreover as the searches are concerned these searches are based on our logarithm which includes the personal traits of the customers including their preferences like price, colour, estimated time to deliver etc. For eg if you will search masks and PPE kits you will get the ones which will deliver it to you the fastest. The online marketplace by design is an instrument to promote competition in the industry.

5 Startups which are helping small ventures grow

Vishvas Nandwani
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5 Startups which are helping small ventures grow

Unfortunately due to covid-19 pandemic there have been many startups which had to be shutdown but here is the list of startups which are helping other businesses grow:

  1. Shiprocket

Sector: Logistics

This Delhi based startup is known for its logistics services to its clients (Direct to Consumers (D2C). Founded in 2011 this startup is known for its user friendly platform which it provides to other small ventures and businesses who are involved in selling their goods all across the globe. It provides services of delivery of goods including pickup options & cash on delivery options for the end users and also provides online payment system.

Shiprocket has been a pioneer in logistics industries mainly for MSMES as it gives best in class experiences for many e-commerce brands. It also claims to offer same day delivery and next day delivery services to e-commerces very soon. Shiprocket has raised $41.3 million in its Series D1 round led by PayPal Ventures, the corporate VC arm of PayPal. With this round, Shiprocket’s total funding brings to $94.3 million. Gillette, Mamaearth, Bira 91, The Beer Cafe, Aakash Institute are some of the notable brands that use Shiprocket’s service. It has integrated with various top delivery partners like Fedex, Delhivery, Bluedart, DHL etc.

Sector: B2B intermediary

Headqurtered in Bangalore udaan provides a network centric B2B platform to traders, wholesalers, retailers, manufacturers, and brands in India onto a single platform. It caters to various industries like  Electronics & Appliances, Clothing & Accessories, Footwear, Food & FMCG, Pharmaceuticals/Medicines, Home & Kitchens, Electricals, Toys, Baby & Sports and more.

Founded by former Flipkart Executives Kumar, Gupta and Amod Malviya five years ago, has a network of 1.7 million retailers, chemists, corner stores and small businesses doing over 4.5 million transactions per month with over 30,000 sellers on its platform. It has added over 1 lakh new businesses in 2020.

Udaan has raised $ 280 million in its latest round of funding at a valuation of $ 3.1 billion and has now an overall funding of $ 1.15 billion.

Sector: Digital Payment

Founded on 2014 by IIT Roorkee alumni, Harshil Mathur and Shashank Kumar razorpay product suite comprises of verticals, along with Payment Gateway, like Payment Links, Payment Pages, Subscriptions, Smart Collect, Route, Razorpay Capital, RazorpayX, Payroll and Thirdwatch.

It has helped all small & large businesses in accepting online payments. Accepting online payment is one of the main feature of doing online businesses and razor pay has made life easier.

Sector: Accounting

Founded in October 2018, Khatabook is the world’s fastest-growing Saas company. Founded by four IIT-Bombay grads, Khatabook is led by Ravish Naresh, Co-founder, and COO at Housing.com, one of India’s most significant property listing websites.

Khatabook is an accounting based startup which allows small businesses do their accounting.

Khatabook enables micro, small and medium merchants to track business transactions safely and securely. It also offers features such as online payment collection through UPI and QR; sending periodic reminders to creditors via messages and report generation.

Backed by Y combinator, cricketer MS Dhoni , Cred Founder Kunal Shah and various other top investors so far, the company has raised $87 Mn across funding rounds.

Sector: Management Software

Headquartered in Surat, Mera office is a SAAS based organization which gives professional organizations top management, track of tasks and list of clients . With the promotion of work from home due to the covid-19 pandemic mera office is a really useful software for businesses and professions who have its employees working from home to track their work. The starup is in its early traction stage. It is an Online Cloud-based Office Management Software For CA, CS, CMA, Tax Consultants, Advocates and every professional to manage their office work, team, clients & invoicing.  

Rule 33A: MCA inserts New Rule for allotment of new name to Existing Company

Pratik Jain
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Rule 33A: MCA inserts New Rule for allotment of new name to Existing Company

First Notification

MCA vide notification dated 22nd July, 2021 has commenced the provisions of Section 4 of Companies (Amendment) Act, 2020 which shall come into force from 1st September, 2021.

Section 4 of Companies (Amendment) Act, 2020 states that:

In section 16 of the principal Act,—

(i) in sub-section (1), in clause (b), for the words “period of six months”, the words “period of three months” shall be substituted;

(ii) for sub-section (3), the following sub-section shall be substituted, namely:—

“(3) If a company is in default in complying with any direction given under sub-section (1), the Central Government shall allot a new name to the company in such manner as may be prescribed and the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name, which the company shall use thereafter:

Provided that nothing in this sub-section shall prevent a company from subsequently changing its name in accordance with the provisions of section 13.”

Second Notification

MCA vide notification dated 22nd July, 2021 has introduced rules further to amend the Companies (Incorporation) Rules, 2014 which shall be called Companies (Incorporation) Fifth Amendment Rules, 2021, it shall come into force from 1st September, 2021.

In the Companies (Incorporation) Rules, 2014, after rule 33, the following rule shall be inserted, namely:-

33A. Allotment of a new name to the existing company under section 16(3) of the Act.

(1) In case a company fails to change its name or new name, as the case may be, in accordance with the direction issued under sub-section (1) of section 16 of the Act within a period of three months from the date of issue of such direction, the letters “ORDNC” (which is an abbreviation of the words “Order of Regional Director Not Complied”), the year of passing of the direction, the serial number and the existing Corporate Identity Number (CIN) of the company shall become the new name of the company without any further act or deed by the company, and the Registrar shall accordingly make entry of the new name in the register of companies and issue a fresh certificate of incorporation in Form No.INC-11C:

Provided that nothing contained in sub-rule (1) shall apply in case e-form INC-24 filed by the company is pending for disposal at the expiry of three months from the date of issue of direction by Regional Director, unless the said e-form is subsequently rejected.

(2) A company whose name has been changed under sub-rule (1) shall at once make necessary compliance with the provisions of section 12 of the Act and the statement, “Order of Regional Director Not Complied (under section 16 of the Companies Act, 2013)” shall be mentioned in brackets below the name of company, wherever its name is printed, affixed or engraved:

Provided that no such statement shall be required to be mentioned in case the company subsequently changes its name in accordance with the provisions of section 13 of the Act.

Extract of Section 16 of Companies Act, 2013 is as follows:

(1) If, through inadvertence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which,—

(a) in the opinion of the Central Government, is identical with or too nearly resembles the name by which a company in existence had been previously registered, whether under this Act or any previous company law, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of three months from the issue of such direction, after adopting an ordinary resolution for the purpose;

(b) on an application by a registered proprietor of a trade mark that the name is identical with or too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999, made to the Central Government within three years of incorporation or registration or change of name of the company, whether under this Act or any previous company law, in the opinion of the Central Government, is identical with or too nearly resembles to an existing trade mark, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of three months from the issue of such direction, after adopting an ordinary resolution for the purpose.

(2) Where a company changes its name or obtains a new name under sub-section (1), it shall within a period of fifteen days from the date of such change, give notice of the change to the Registrar along with the order of the Central Government, who shall carry out necessary changes in the certificate of incorporation and the memorandum.

(3) If a company is in default in complying with any direction given under sub-section (1), the Central Government shall allot a new name to the company in such manner as may be prescribed and the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name, which the company shall use thereafter:

Provided that nothing in this sub-section shall prevent a company from subsequently changing its name in accordance with the provisions of section 13

A brief insight into G7 ‘s proposal for a Global Minimum Tax Rate for Corporations

Sourabh Agarwal
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A brief insight into G7 ‘s proposal for a Global Minimum Tax Rate for Corporations

What is G7 ?

The Group of 7 (G7) is an informal group of seven countries — the United States, Canada, France, Germany, Italy, Japan and the United Kingdom, the heads of which hold an annual summit with European Union and other invitees. Together the member countries represent 40% of global GDP and 10% of the world’s population. Unlike other bodies such as NATO, the G7 has no legal existence, permanent secretariat or official members. It also has no binding impact on policy and all decisions and commitments made at G7 meetings need to be ratified independently by governing bodies of member states. The presidency of G7 meetings is held by each of the seven countries in turn, each year. The country holding the presidency is responsible for organising and hosting the meeting. The UK holds the G7 presidency for 2021 and has organised the conference for this Saturday at the Carbis Bay Hotel in Cornwall.

Background

During the meeting on 05.06.2021 G7’s  Finance Ministers agreed the principles of an ambitious two Pillar global solution to tackle the tax challenges arising from an increasingly globalized and digital global economy. Under Pillar One of this historic agreement, the largest and most profitable multinationals will be required to pay tax in the countries where they operate – and not just where they have their headquarters. The rules would apply to global firms with at least a 10% profit margin – and would see 20% of any profit above the 10% margin reallocated and then subjected to tax in the countries they operate. The fairer system will mean the countries where the companies operate will raise more tax revenue from large multinationals and help pay for public services in those countries.

Under Pillar Two, the G7 also agreed to the principle of at least 15% global minimum corporation tax operated on a country by country basis, creating a more level playing field for firms and cracking down on tax avoidance.

Decision of G7 leaders on the Global Minimum Tax rate for MNCs.

We need a tax system that is fair across the world. We endorse the historic commitment made by the G7 on 5 June. We will now continue the discussion to reach consensus on a global agreement on an equitable solution on the allocation of taxing rights and an ambitious global minimum tax of at least 15 per cent on a country-by-country basis, through the G20/OECD inclusive framework and look forward to reaching an agreement at the July meeting of G20 Finance Ministers and Central Bank Governors. With this, we have taken a significant step towards creating a fairer tax system fit for the 21st century, and reversing a 40-year race to the bottom. Our collaboration will create a stronger level playing field, and it will help raise more tax revenue to support investment and it will crack down on tax avoidance.

Some Implications of the proposed policy:-

  • The adoption of proposed policy will mean that the largest multinational tech giants will pay their fair share of tax in the countries in which they operate.
  • The countries which are having lower or no tax system for companies to attract foreign investments and are considered as tax havens for MNCs would have to adhere to the policy, provided if they consent to the proposed policy, and increase their tax rates at least upto 15%.

Impact on India as per experts:

India stands to gain from the changes in the global tax system. International trade and transactions, in general, have been more tax favourable to developed countries. This is because, for most part of recent industrial history, the flow of valuable trade, services and technology has been largely from developed to developing countries and international tax rules have tended to restrict taxation rights in ‘source’ (developing) countries in favour of ‘resident’ (developed) countries being recipients of income.

Over the years, with increasing economic importance of countries such as China and India, there has been an attempt in course correction through modified rules of international taxation, but it has largely played ‘catch up’ with the traditional business models by seeking to levy flat tax rates on incomes such as royalties, technical service fees, dividends and interest typically paid out by companies in developing countries to providers of technology or owners of capital in developed countries. This pace of glacial progress has recently accelerated with the extraordinary growth of digital commerce.

After several decades, the time-tested rules of requiring a physical place of business to exist in a source country (where income is derived from customers located there) to have a legal right on taxation of such income are slowly giving way to ‘digital’ presence as a threshold for taxing such income. (This aspect has been one of the important pillars of the Base Erosion and Profit Shifting (BEPS) project of the OECD).

India is likely to gain in tax revenue on this account, given the size of its market and the growth opportunities it offers. In fact, the country has been on the forefront to legislate in her domestic tax laws the concept of ‘significant economic presence’ (SEP) to create the ability to levy tax on income generated in India (from Indian customers) by foreign digital commerce companies.

Further, a global minimum corporate tax rate of 15% is also expected to be beneficial to India. The Tax Justice Network estimates the country to gain at least $4bn (Rs 300 bn), equivalent to ~6 % of FY21 corporate tax collections. However, we will need to focus on capacity building and timely resolution of disputes. Besides, it would not hurt FDI to India or create any adverse or incremental tax liability in the hands of foreign investors given that the minimum tax rate for new manufacturing business has recently been legislated at 15% (plus surcharges).

At the same time, in respect of outbound investments, it will prevent base erosion of tax in the country as the government will be able to claw back any shortfall in tax paid below 15 % by an overseas business owned by an Indian resident, once the global threshold rule becomes operational.

Overall, countries with a moderate tax rate system stand to benefit at the cost of ‘tax havens’ with low or nil tax rates.

Just one important caveat — while the modalities are still far from over, given the complexities of the final legal framework and the number of countries involved, the process must not impinge upon predictability — the bedrock of investment decisions and flows.

Next step to be taken

Discussions on the two Pillars have been ongoing for many years – with the Chancellor making securing a global agreement a key priority of the UK’s G7 Presidency. The agreement will now be discussed in further detail at the G20 Financial Ministers & Central Bank Governors meeting in July.

*Source: EY and G7 Summit 2021 Communique.

43rd GST Council Meeting Updates and Relaxations

Palak Jhawar
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43rd GST Council Meeting Updates and Relaxations

Customs duty and GST exemptions on relief materials:

Indian Customs duties comprise of Basic Customs Duties (BCD) and Customs duties equivalent to Integrated Goods and Services Tax applicable on local supplies of similar products (hereinafter referred to as ‘Import IGST’).  Import of oxygen concentrators, oxygen storage tanks, COVID-19 vaccines, and other relief items made up to specified periods enjoy an unconditional exemption from BCD. However, import IGST has been exempted only where the said goods are imported free of cost by the state or its agency and for free distribution.

The Council has now extended this exemption to August 31, 2021, and expanded the coverage of the exemption. Import IGST would now be exempted even if imported on a payment basis as long as the imports are for donating to the state government.

Revised GST due dates for March , April and May along with relaxation in interest rates:

NOTES:

Depending upon the turnover of a taxpayer, a waiver of late fees ranging from 15 to 60 days has been provided for the tax period March-May 2021

For March 2021, interest rate relaxation was available for 15 days from the due date. The benefit has now been extended to 45 days

The late fee amount is total GST which can be equally distributed to CGST and SGST

Aggregate Turnover

Tax Period

 

 

 

Original

 due dates

 

No late fees if filed upto

Interest Rate Relaxation from due date

CAT- I STATES

CAT-II STATES

For 1st 15 days

For next few days

More than Rs 5 crore

March, April

and May, 2021

20th April

20th May

20th June

5TH May

4TH June

5TH July

9%

18%

Upto Rs 5 crore

March, 2021

22nd/24th April

21st June

23rd June

Nil

9% for 45 days and 18% thereafter

April, 2021

22nd/24th May

6th July

8th July

 

9% for 30 days and 18% thereafter

May, 2021

    22nd/24th June

22nd July

    24th July

9% for 15 days and 18% thereafter

Upto Rs 5 crore – Quarterly filers

Jan-March

                                                           

 

 

 

 

 

 

 

 

 

 

 

 

22nd/24th April

 

 

 

 

 

 

 

 

 

 

 

 

 

21st June

 

 

 

 

 

 

 

 

 

 

 

 

 

23rd June

9% for 45 days and 18% thereafter

9% for 30 days and 18% thereafter

9% for 15 days and 18% thereafter

Rationalisation of Late Fees

Earlier, the late fee for non-furnishing of return was Rs 25 per day and Rs 10 in case of nil return, subject to a maximum amount of Rs 10,000 (Rs 5,000 each for CGST and SGST). This has now rationalised, as follows:

Measure

Scenario

Relief – Capping/ Reduction(per return)

Amnesty Scheme for non-furnishing of consolidated summary return accompanied by payment of tax (GSTR 3B) for tax period July 2017 to April 2021

NIL tax liability

Rs 500

Others

Rs 1,000

Late fee Rationalisation

NIL tax liability in consolidated summary return containing details of sales invoices (GSTR-1) and Summary Return accompanied by payment of tax (GSTR 3B)

Rs 500

Aggregate turnover in a preceding year up to Rs 1.5 crore

Rs 2,000

Aggregate turnover in a preceding year between Rs 1.5 crore to Rs 5 crore

Rs 5,000

Aggregate turnover in a preceding year above Rs 5 crore

Rs 10,000

Delay in the furnishing of GSTR-4 – Composition Dealers

NIL liability

Rs 500

Others

Rs 2,000

Delay in the furnishing of GSTR 7 – Tax Deducted at source

  

Late fee reduced to Rs 50 per day and capped at Rs 2,000

Annual Return (GSTR 9) & GST reconciliation (GSTR 9C) for FY 2020-21

GST compliance framework required furnishing of a statement reconciling the GST Annual returns with the company Financial statement duly certified by a Chartered or Cost Accountant.  While the Finance Act 2021 proposed to mandate taxpayers to self-certify this reconciliation statement – this change can only be made effective after all States make corresponding amendments in their respective GST legislations. This takes several months. It has now been clarified that the self-certification mandate would apply to FY 2021 compliances.

Rate change/ clarification – MRO Service

GST rate on MRO (Maintenance, repair and operation service providers) services in respect of ships/ vessels is being reduced from 18 percent to 5 percent. Further MRO Services relating to ships/vessels provide to foreign customers would be treated as export and therefore zero-rated. This was a long-standing demand and Domestic MROs should now enjoy a level playing field vis a vis foreign competitor.

Compensation Cess

State GST revenue growth at an annual compounded rate of 14 percent has been underwritten for the first five years of GST—i.e. up to June 2022.  A compensation cess imposed on items such as automobiles tobacco and others are collected and utilized for compensating the states for any shortfall vis a vis the assured revenue. Given that the overall revenue growth is far lower than the promised 14 percent CAGR—the state compensation amounts have bloated—estimated to be Rs 2.69 lakh crore for FY22—and now far exceed the budgeted compensation cess revenue of Rs 1.1 lakh crore.  The gap of Rs 1.58 lakh crore is to be met through state’s borrowing which would then be repaid from Cess collected in the future.

The states are now concerned about the revenues beyond five years when the revenue assurance ends. A special session will be scheduled to discuss the Cess conundrum.

New MSME Udyam Registration Process and all you need to know

Priya kejriwal
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0
New MSME Udyam Registration Process and all you need to know

The government has organized a system to facilitate the registration of MSMEs. An enterprise for this process will be known as Udyam and its Registration Process will be known as ‘Udyam Registration’. A permanent registration number will be given after registration.

An enterprise shall be classified as a micro, small or medium enterprise based on the following criteria, namely:

  • a micro-enterprise, where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;
  • a small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and 
  • a medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.

After completion of the process of registration, a certificate will be issued online. This certificate will have a dynamic QR Code from which the webpage on the Portal and details about the enterprise can be accessed. There will be no need for renewal of registration. The Registration Process is totally free of cost.

Single window systems at Champions Control Rooms and DICs will help in the process.

Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates, or proof.

Basic Features of the New Udyam registration Process

  • MSME registration process is fully online, paperless, and based on self-declaration.
  • No documents or proof are required to be uploaded for registering an MSME, only an Aadhaar Number will be enough.
  • PAN & GST linked details on investment and turnover of enterprises will be taken automatically from Government databases.
  • The online system will be fully integrated with Income Tax and GSTN systems.
  • PAN & GSTIN would be mandatory from 01.04.2021.
  • Erstwhile EM-II or UAM registration or any other registration issued by any authority under the Ministry of MSME, will have to re-register under Udyam Registration.
  • No enterprise shall file more than one Udyam Registration. However, any number of activities including manufacturing or service, or both may be specified or added in one Registration.

Did you know about the new Income tax portal? If not, check out our blog New Income Tax Portal 2.0

Benefits of getting Udyam registration:-

  • Udyam registration helps in getting government tenders
  • Due to the Udyam, the bank loans become cheaper as the interest rate is very low (Upto 1.5% lower than interest on regular loans
  • There are various tax rebates available for Udyam
  • Becomes easy to get licenses, approvals, and registrations, irrespective of the field of business as a business registered under Udyam are given higher preference for government license and certification.
  • They get easy access to credit at lower interest rates
  • Registered Udyams gets tariff subsidies and tax and capital subsidies
  • Once registered the cost of getting a patent done, or the cost of setting up the industry reduces as many rebates and concessions are available.

New Registration Procedure:

  • The form for registration shall be as provided in the Udyam Registration portal.
  • There will be no fee for filing Udyam Registration.
  • Aadhaar number shall be required for Udyam Registration.
  • The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm, and a Karta in the case of a Hindu Undivided Family (HUF).
  • In the case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organization or its authorized signatory shall provide its GSTIN and PAN along with its Aadhaar number.
  • In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on a self-declaration basis.
  • No enterprise shall file more than one Udyam Registration:
  • Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.
  • Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or update process shall be liable to such penalty as specified under section 27 of the Act.

Udyam Registration Updates for existing MSMEs

  • All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after the 1st day of July 2020.
  • All enterprises registered till 30th June 2020, shall be re-classified by this notification.
  • The existing enterprises registered before 30th June 2020, shall continue to be valid only for a period up to the 31stday of March 2021.

MSME plays a significant role in the growth of India’s economy by its contribution to the production, exports, and employment sector. They promote the industrialization of rural and backward areas, thereby reducing regional imbalances. The various schemes and incentives given to the MSMEs by the government encourage the proprietors for establishing and expanding their business ideas. 

For further details, please refer to the website: https://udyamregistration.gov.in

Issues on the New Income Tax Portal 2.0

Priya kejriwal
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0
Issues on the New Income Tax Portal 2.0

The new Income Tax Website was launched on the 7th of June at 8:45 PM replacing the old income tax website. The new website was launched with the aim of providing its users and taxpayers with a user-friendly environment on the website and to make the e-filling experience simpler and smarter.

The Income Tax Department said, ‘The objective of this portal is to provide a single-window to income tax related services for taxpayers and other stakeholders.’ 

But unfortunately, within some hours of its launch, the site started showing certain serious issues like the taxpayers were unable to access the website, popping up of different types of error, and many more technical glitches.

Few issues in New Income tax Portal e-filing 2.0:

  1. DSC not getting registered or updated
  2. Unable to crack the DIN required by new portal for filing Form 35
  3. New Incorporated companies or Firms are not able to register themselves on ITD Portal
  4. Forget password option not working
  5. IT Returns in PDF can’t be downloaded
  6. IT acknowledgements in PDF can’t be downloaded
  7. DIN Number not getting auto populated in new ITD website
  8. Challan Numbers not getting validated
  9. No tab for VSV tab
  10. Unable to file TDS Returns
  11. Unable to file 15CA/15CB
  12. E proceedings tab not workings
  13. Grievances registered on ITD website are deleted without addressing – on dashboard it is shown but under search option is not reflected ……………….
  14. Old demands outstanding not reflected on Dashboard but when we navigate in the portal same is reflected
  15. Old Grievances registered not reflected
  16. Unable to file Income Tax Returns for FY 2021
  17. Accounts get locked, if we try to login and not able to login due to non-operability of site
  18. Unable to raise refund reissue request
  19. PAN Number is not shown as valid
  20. Mismatch in PAN Data is shown when technically there is no mismatch
  21. JSON Utility not available
  22. while filing Verification in ITR if we select ‘Self ‘in capacity then Name disappeared n Shown in validation errors.
  23. Unable to submit response to outstanding demand.
  24. Intimation for returns -Processed for AY20-21 not available for download.
  25. Too many login pages.
  26. Reporting Portal not able to connect.
  27. Very Slow Site working.
  28. No Captcha code for login
  29. Unable to register tan for filing TDS return
  30. Profile Updating is a tedious job. We have to match Aadhar as well as Pan data. It consumes lot of time. One peculiar mismatch is if the address word has one word missing, for e.g., apartment, still our income tax site shows error as Pan and Aadhar address is not matching. We do not have liberty to give our address. That means now we have to either update our Aadhaar or Pan.
  31. UDIN is also not able to update for last month audit and other certification.
  32. Rectification of return options not available.
  33. Return processed in March 2021 now shows under processing in view details.
  34. D MAT Linking is pending from 08/06/2021;
  35. Bank ac not getting linked- even though I have not faced such issue
  36. One issue in filing 15CA in new website. -It takes the currency as per country of remittance. irrespective of – currency of remittance being USD. -If country is UK. currency GBP comes as auto populated and can’t be changed to USD.
  37. 12AA application could not be uploaded.
  38. Forms not available for uploading.

Retweeting a tweet from a taxpayer, Sitharaman said “Hope @Infosys & @NandanNilekani will not let down our taxpayers in the quality of service being provided.”

This clearly shows that the government is blaming Infosys for all the technical glitches faced on the new income tax portal.

The taxpayers and the users are really awaiting that the income tax website shall be in a good condition as soon as possible and they can resume their work with ease. Hoping that the technical glitches are resolved and the taxpayers get to avail the benefits of the new website.

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