Corporate and Professional Updates on 11th February 2019

Direct Tax Updates:

• The Income Tax department has come to know about the downstream investments with the US government sharing information on downstream companies that are incorporated there. Since 2012, Indian taxpayers are required to disclose additional information on overseas assets such as joint bank accounts with children who are studying abroad. However, the interpretation of ‘beneficial ownership’ is throwing up new challenges on disclosures. The view on the subject, it is understood, is not uniform across the tax department and many tax officials would prefer the CBDT to clarify certain queries related to beneficial ownership.

Indirect Tax Updates:

FAQ’s On GST:

QUES. Banks deploy various equipment such as Point of Sale machines or ATMs at various locations. At times, the equipment is required to be moved between locations for the purpose of repairs, encryption, etc. Will such movement constitute a supply for the purpose of the GST law?

ANS. Procedure prescribed under Section 143 of the CGST Act, 2017 and Rule 55 of the CGST Rules, 2017 may be followed in such cases. Movement of equipment for the purpose of repairs, etc. does not constitute a supply. The equipment may be moved by the Banks to the location of the third party service providers and after repairs, the equipment may be moved to a central / regional location for the purpose of programming, encryption, reconfiguration, etc. and thereafter to that place of business from where the equipment had been sent earlier. The equipment can be moved between such locations on the basis of a ‘delivery challan’.

QUES. Is a “Bill of Supply” to be issued by a bank for exempt services like interest on loans and advances, inter-se sale or purchase of foreign currency amongst banks?

ANS. As per clause (c) of sub-section (3) of section 31 of the CGST Act, 2017 read with Rule 49 of the CGST Rules, 2017, there is a requirement for issuance of bill of supply for supply of exempt services by Banks. It may be noted, however, that there is no need to issue a separate bill of supply in case any invoice or document has already been issued in accordance with the provisions of any other law. Further, in view of the provisions contained in sub-rule (5) of rule 54 of the CGST Rules, 2017, banks may issue any other document in lieu of bill of supply.

SEBI Updates:

• “SEBI will have to revisit regulations governing mutual fund investments.” The trigger for SEBI examination of the issue was a sharp drop in the shares of Zee Entertainment Enterprises Ltd and Dish TV Ltd after some lenders sold pledged shares in the market. With a large number of such pledges outstanding, there may well have been a cascading impact if other lenders too followed suit and sold shares.
• In Case the share value decreases the promoter entity is expected to add more shares, such that the value of the total number of underlying shares remains above the agreed upon threshold, or redeem some bonds. When funds are raised in such fashion, the underlying shares are not technically pledged. This was first reported by Bloomberg columnist Andy who said that these debt covenants are as fluffy as cotton candy.

Other Updates:

• India offers 23 Oil Blocks in OALP-III bid round.
• Mallya had Rs 7,500 Cr to clear all dues but still did nothing.
• Voda-Idea has a Rs 20K Cr plan to win Jio war.
• FinMin wants Rs 27,000 Cr more from RBI.
• Hiring, Production Outlook to improve in Manufacturing Sector in Q3.
• UK Recession risk in next year up to 30% from 25% a month ago.
• FPIs turn net buyers in Feb; infuse Rs 5,300 Cr in last 6 trading sessions.
• 3rd round of Oil, Gas Auction under OALP launched; 23 Blocks up for bidding.
• RBI MSME package to help recast Rs 1 Trn Loans for 700k Accounts.
• Two-wheeler Exports from India rise 19.5% in April-January.
• Engineers India bags Mongolian oil Refinery deal.
• Anil Ambani Group may sue NBFCs for selling Pledged Shares.
• Prabhat Dairy to merge subsidiary with itself.
• Tata Steel Soft Steel Prices slam earnings outlook in near term.
• Fiscal Powers will aid NITI Aayog to work better with states.
• IMF warns of Global Economic ‘Storm’ as Growth undershoots.
• Reliance, TCS leads top 8 valued companies to add Rs 53,741 Crore in Market Cap.
• National Stock Exchange to introduce Dynamic Price Band for Futures Contracts.
• Foreign investors restore faith in Indian economy invests Rs 5,300 Crore in last 6 Trading Sessions.
• Jaguar Land Rover Bonds Tata Motors arm to shun borrowing as China prompts shock write down.

Key Due Dates:

• Return of outward supplies for January month by regular and casual suppliers having turnover more than 1.5cr. Is 11th January 2019.
• ISD return for the January month is 13th February 2019.’

Quote of the Day:

“Courage is not the absence of fear, but rather the judgment that something else is more important than fear.”