RBI INTRODUCED MANDATORY FDI REPORTING THROUGH SINGLE MASTER FORM (SMF)

Mauritius India's largest source of FDI: RBIIn a partial manner notification is applicable to the existing FDI. It is expected from the company that company provide all the details of existing FDI in the prescribed format and prescribed manner as available with this notification.

SMF gives the facility related to reporting of total foreign investment in an Indian entity and also provide facility related to investment in investment vehicle to the person outside India.

Before any implementation of this process, Reserve Bank of India will provide specific format from 28.06.2018 to 12.07.2018 to Indian entities for input the data of foreign investment.

Before the implementation of Single Master Form (SMF), RBI would provide an interface of specified format called Entity Master File (EMF) to Indian entities for input the data of total foreign investment. From 28.06.2018 to 12.07.2018 RBI will made available this interface of EMF in their website.

The Indian entities who will not qualify the pre-requisite requirement will not able to receive any foreign investment in India and those Indian entities will be considered as non-compliant of Foreign Exchange Management Act (FEMA), 1999 and regulations.

WHAT IS SMF:-

  • RBI will introduced a SMF for fulfill the objective of integration of various reporting structure of foreign investment in India. The SMF is required to be filed online and also provide a facility to Indian entity for reporting total foreign investment. Single Master File is a substitute of individual reporting currently done through “Form FC-GPR, FC-TRS, LLP-I, LLP-II, ESOP, CN&DRR”. However the requirement of submitting the annual statement of “foreign liabilities and assets” to RBI is continue same 15 July every year.
  • The Single Master Form will be integrated reporting forms which will event-based form helping the person residing outside India in reporting the total foreign investment.
  • Entity Master Data (EMD) Annex-I : It is required to all Indian entities to provide all the details of foreign investment received by them till the current date called as Entity Master Data and the format of is given in Annex-I of said notification.
  • SMF will also provide the facility of reporting of total foreign investment in an Indian entity via company, LLP & other investment vehicles(REITs)/Infrastructure Investment Trusts(Invlts)/Alternative Investment Funds(AIFs).
  • SMF is the substitute of existing forms such as:
    • For issue & transfer of shares – FC-GPR & FC-TRS.
    • For foreign direct investment & foreign disinvestment/transfer of capital contribution in LLP – FORM LLP-I & II.
    • For issue of employee stock option plan – FORM ESOP
    • For issue or transfer of convertible notes – FORM CN
    • For issue or transfer of depository receipts – FORM DR
    • Single Master Form will also compulsory in following:-
    • Reporting the Downstream Investment (Indirect Foreign Investment) in a company or LLP via FORM DI.
    • vehicle (including REITs, Invlts &AIFs) via FORM InVi

SUBSEQUENT INVESTMENTS IN ANNEX-2:-

For any subsequent foreign investments, an integrated reporting structure of various types of foreign investment introduced which will be called SMF. The format of SMF is given in Annex 2 of said notification. While the format of the form has been provided as Annex 2 to the circular, RBI is yet to notify the form. Once notified, the form will be available in the master direction on reporting as well as on the website for the entities to file it as and when required.

CONSEQUENCES OF NON-COMPLAINT BY INDIAN COMPANIES CANNOT RECEIVE FDI

The Indian entities who will not qualify the pre-requisite requirement will not able to receive any foreign investment in India and those Indian entities will be considered as non-compliant in Foreign Exchange Management Act (FEMA), 1999 and regulations. FEMA requires observation of its provisions in letter and spirit and if any contravention may land in penalties on the erring company and individuals. There are some conditions and stipulations in case of FDI, ODI, investment by individuals in foreign shares, purchase of assets in foreign countries, extending guarantees, availing ECBs, supplier’s credit.

WHAT IS ENTITY MASTER DATA:-

ENTITY INCLUDES

  • Company registered u/s 1(4) of the companies act, 2013.
  • LLP registered under limited liability partnership act, 2008.
  • Startup companies which complies all the condition listed in Notification No. G.S.R 180(E) dated February 17, 2016 issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India.

For filing registration form valid entity user is required by every entity. So now question arise

WHO IS VALID ENTITY USER

Entity user is that person who is authorized by entity for register an entity in entity master of firm application. An entity user is the only person who can update the detail of foreign investment of an entity. Every company have only one entity user and if entity want to change the entity user then entity have to contact to the RBI helpdesk. A person can be entity user of more than one entity but entity user requires separate registration for every entity.

STEPS FOR REGISTERING A PERSON AS AN ENTITY USER

  1. Entity issue an authority letter in the format given by RBI in annexure to that person who is authorize for registering as an entity user. Entity user keep all the foreign investments details ready.
  2. URL https://firms.rbi.org.in is open to access the login page.
  3. Click on registration form for registering new entity user.
  4. Fill all the details of registration form then click the submit button.
  5. After that a message “Record Saved Successfully” is received.
  6. Authority Letter submitted by the entity user will be verified by RBI and after RBI’s approval, the user will receive the password on their registered email ID from RBI.
  7. Entity Master
  8. Enter your user name and new password. On successful login the home page (dashboard) is displayed.
  9. Click on the top – left option button to open Menu. Click on the Master Setup under Menu. Then click Entity Master.
  10. Then fill entity details by following steps
  11. Click ADD button.
  12. Click Entity Details tab
  13. Click Particulars Tab
  14. Click Foreign Investment in Company / LLP Tab and enter all the details of foreign investment received by the entity from the date of incorporation.
  15. After adding of all the details of foreign investment click the declaration check after checking declaration entity user can submit the details.

The entity should also require reporting indirect foreign investment received by the entity. The entity shall provide the details of all foreign investment received till the current date. This will also be inclusive of all foreign investment, irrespective of the fact that the regulatory reporting to RBI for the same has been made or not or whether the same has been acknowledged or not. In case if entity has received foreign investment and is willing to make the filing in the SMF, being made available from August 01, 2018, the same shall not be included in the foreign investment details.

FOR COMPANY

Total Paid-up capital of company on fully diluted shares.

Fully diluted shares mean the total number of shares that would be outstanding if all possible sources of conversion are exercised. It includes:

  • Equity shares
  • CCDS/ CCPS: Equivalent Equity shares (maximum)
  • Share warrants: Equivalent Equity shares considering 100% exercise upfront
  • ESOPs: Equivalent Equity shares considering 100% exercise upfront

FOR LLP – Total capital contribution in LLP.

Points to be kept in mind for working on Entity Master:-

  1. All details must be provided in one time.
  2. When all the mandatory fields have been filled then only submit button is enabled.
  3. The reset button can reset the complete form.
  4. Once the details have been submitted the Entity user can modify the details.

RJA comments

The integration of the extant reporting structures is a positive move made by RBI to simplify and rationalize reporting for foreign investment in India. This crucial amendment is in line with the SEBI circular which was issued for the listed companies for monitoring FDI limits.

There may be certain practical difficulties before implementation of the new form for the Indian entities to collate details on foreign investment, especially as the window for uploading such data on the RBI interface is open for only 15 days. Now severe consequences attached to non-filing, Indian entities having foreign investment must prepare to submit the information timely. 

For any query you can write to info@carajput.com. Hope the information will assist you in your Professional endeavors. For query or help, contact:   info@carajput.com or call at 09811322785/4 9555 5555 480)

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REPORTING OF FORM FC-TRS TO RBI

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RBI Circular No. 40 dated 1st February, 2016; RBI has made it mandatory to report any transactions and filing of forms online in respect of issue and transfer of shares from an Indian Entity to outside India.

FORM-FC-TRS

Foreign investors can invest in Indian companies by purchasing / acquiring existing shares from Indian shareholders or from other non-resident shareholders. General permission has been granted to non-residents / NRIs for acquisition of shares by way of transfer.

Any transfer of shares takes place between a resident and a non-resident, the resident individual or the entity has to report the transaction to RBI by filing of Form FC-TRS online at https://www.ebiz.gov.in. The reporting of Form FC-TRS should be submitted to the AD category bank within a period of 60 days from the date of receiving the money.

Process 

a) Download form from Pre-filled Form FC-TRS from https://www.ebiz.gov.in

b)Fill the required details of the Investee Company

(i) Name of the Company

(ii) PAN of the Company

(iii) Address of the Company

(iv)Telephone Number of the Company

(v) Fax Number of the Company

(vi) Email ID of the Company

(vii) Main Business Activity of the Company as per the NIC Code  2008 series

c)Enter the Details of the Buyer

(i) Name of the Buyer

(ii) Address of the Buyer

(iii) Telephone Number of the Buyer

(iv) Email ID of the Buyer

(v) Nature of the Investing Entity

(vi) Date and Place of Incorporation of the Investing Entity

d)Details of the Seller

(i) Address of the Seller

(ii) Telephone Number of the Seller

(iii) Email of the Seller

(iv) Name of the Disinvesting Entity

e)Enter the details of the Foreign Investment in the Company.

f)Mandatory Attachments

(i) Declaration by the Non-resident Buyer

(ii) KYC Form in respect of Non-resident Investor

(iii) Copy of FIRC (To be procured from Bank receiving the remittance)

(iv) Valuation Report by a Chartered Accountant or SEBI registered Merchant Banker

g)Once the form is completed in all respects without any error; the Name, Designation, Place, and Digital Signature of the Declarant is to be attached

After following all the above steps the form is now ready to be uploaded on the Ebiz portal. Upon uploading the Form an “Application Number” is generated instantly and it can be used to keep a track of the status of the Form.

It has to be well kept in mind that merely uploading the Form does not mean that all the compliances have been fulfilled, the compliance shall deem to be complete only after approval by the Reserve Bank of India (RBI).

General Instructions

  • The electronic form (Form) can be accessed from service landing page and can be filled offline
  • If you choose “Load prefill data” option while opening the form, then some fields may get prefilled with data you have filled previously while applying for this service. You may change this data if you wish.
  • The saved draft can be accessed later from “My Saved Drafts” section in Menu options. This draft is available for 3 months or until the form is submitted.
  • Field marked with * are mandatory and needs to be filled in before a form can be submitted on e-Biz portal. You may not be able to leave some of the field’s blank in the e-Form. In case you wish not to enter data in a field, please input “NA” if it is a text/description field or a 0, if it is a numeric field.
  • The e-form needs to be digitally signed using a digital signature by the applicant. If applicant wishes to make any modifications to an already signed e-Form, right-clicking on the signature field and choosing “Clear signature” will enable editing of form and any modifications can be made to the form


Electronic Attachments:

Upload the file using the attach link and if you wish to remove any file, use the remove link.

  1. Reason for delay in submission: this attachment is required if the form is submitted after 30 days from the date of receipt of funds
  2. CS Certificate

III. Certificate from SEBI registered Merchant Banker / Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.

  1. Disclaimer certificate
  2. Statutory Auditor Certificate
  3. Board resolution

VII. LRN(Loan Registration Number) allotted

VIII. Copy of FIPB approval (if required)

  1. Transfer of shares details, if applicable

 

If the investor and remitter are separate entities, please provide the following documents:

  1. No objection certificate from the remitter for  the shares being allotted to the third party mentioning their relationship
  2. Letter from the foreign investor explaining the reason for making subscription to shares by the remitter on his behalf

XII. Copy of agreement/Board resolution from the investee company for issue and allotment of shares to the foreign investor, other than the remitter

XIII. KYC report for the beneficiary

 

Any other attachments: Add any other document if required.

 

Verification:

Enter the following details in this section:

  1. Name of the Person
  2. Name of the Place
  3. Date of signing the electronic form
  4. Designation.
  5. Digital Signature of Authorized signatory of the investee company.

Disclaimer:  The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associates , a leading Tax & Investment Planning Advisory Service Provider. His blog can be found at http://carajput.com/blog/ For any query you can write to info@carajput.com. Hope the information will assist you in your Professional endeavors. For query or help, contact:   info@carajput.com or call at 09811322785/4 9555 5555 480)

 

 

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CORPORATE AND PROFESSIONAL UPDATE March 16, 2017

Professional Update For the Day:

12742418_685376608232570_407065997594926807_nDirect Tax

Non-refundable deposits received by Club for providing facilities to its members taxable as revenue receipt. [2017] 78 338 (Mumbai – Trib.)

The tax demand raised by the authorities under the proposed GST regime can be paid in monthly installments for up to two years, in case of financial hardship

Income Tax Department in its latest drive has started de-activating PAN of all Income Tax assesses who were allotted more than one PAN at anytime in the past.

CBDT clarified that Place of Effective Management (POEM) guidelines shall not apply to company other than an Indian company having turnover or gross receipts of Rs 50 crores or less in a financial year. CIR NO.8 OF 2017 [F.NO.142/11/2015-TPL]

CBEC has launched a mobile application for Goods and Services Tax. The mobile application enables taxpayers to be well informed of the latest updates on GST.

Indirect Tax

Delhi VAT: Denial of Input Tax Credit on the ground that the transactions were reflected in retail invoices and not tax invoices and therefore did not qualify for credit is not valid as the strict interpretation of Section 50(2) was unwarranted. Credit allowed. Revenue’s appeal dismissed. (J C Decaux Advertising I P Ltd. – Delhi High Court. January 9, 2017).

Limitation period of one year is not applicable for claiming refund of Excise taxes paid under protest. High Court of Punjab and Haryana in the case of CCEC Chandigarh-1 Vs. Ind. Swift Lands Ltd.

Extension to 08.03.17 of last date to file DVAT-16, DVAT-17 & DVAT-48 for Q3 of 2016-17.CIRCULAR NO. 25 of 2016-17.

Retired VAT Officer can be appointed as member of VAT Tribunal: Case Name: Bihar Value Added Tax Act Vs Commercial Taxes Bar Association (Patna High Court)

GST Update:

GST to be implemented from 1st July! As informed by Economic Affairs Secretary Shaktikanta Das, all the states have agreed for the GST implementation from the said date.

GST Late Returns would attract fee @ Rs.100 per day subject to maximum of Rs.5000. This fee is separate for each return i.e. GSTR-1, 2, 3 etc.

UGST law proposed for implementation of GST in Union Territories like Andaman & Nicobar Islands, Chandigarh etc. as SGST not applicable to them

Under GST Composition Scheme in 17-18 for most Manufacturers & Restaurants @ 5% & Traders at 2% if turnover upto 50 lacs in 16-17. NA for Service sector.

MCA UPDATE:

MCA has amended the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. They shall come into force from the 28th February, 2017.

SEBI UPDATE:

SEBI has made various amendments to the existing norms for settlement of administrative and civil proceedings, to streamline and strengthen the settlement process.

OTHER UPDATE

India´s revised tax treaty with Singapore, aimed at checking round tripping of funds, has come into force. The principal clause allowing levy of capital gains tax on investments routed through Singapore will come into force from April 1.

E-Filling New TM Govt Fees Rs.4500 for individual/ startup/ Small Business. For Others Rs.9000. Physical filing Fees Rs.5000 for individual/ startup/ Small Business and for Others Rs.10000.

The head quarters of all PSU banks subject to audit, are expected to get a comprehensive list of firms for allotment from RBI from 06-03-2017. In turn banks are supposed to complete the allotment procedure by 16th March, 2017.

ICAI has submitted Post-Budget Memorandum to the Government and suggested certain amendments to the proposals contained in the Finance Bill, 2017 which would help the government to achieve the desired objectives.

ICAI ARF hereby invites proposals from eligible Chartered Accountants to be associated for handling its upcoming project of Indian Railways for conversion of its books of accounts from hybrid to accrual accounting. The firms satisfying the eligibility criteria may fill their particulars latest by 20th March, 2017.

The government will consider the demands made by foreign retailers for allowing nonfood items such as home care products under the foreign direct investment (FDI) policy, Union minister.

Govt. notifies new rules on Trade Marks to be applicable w.e.f. 06.03.2017. The govt brought down the number of forms required for filing an application from 74 to eight and almost halved the application fees.

Key Dates:  Due dates for the month of March 2017:

6 March : Service tax monthly deposit other than Ind,HUF & P.Firm

7 March  : TDS/ TCS deposit

15 March : Deposit of PF

15 March :Payment of Advance Tax

20 March : Monthly UP VAT return & tax

21 March : Deposit of ESI

31 March : E-payment of service Tax by all assesses Monthly/ Quarterly

31 March :Filing of Belated Income.Tax returns for the A/Y 15-16 & A/Y 16-17

Payment of Advance Income Tax by all assesses (100%): 15.03.2017

E-payment of PF for Feb: 15.03.2017

Love doesn’t mean to win someone, but it means to lose yourself for someone. It is not done by the excellence of mind, but done by the purity of heart.

Only two types of persons are happy in this world. First is Mad and second is Child. Be Mad to achieve what you desire & be a Child to enjoy what you have achieved.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-23343333 / 9555555480

We look forward for your valuable comments. www.carajput.com

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