Corporate and Professional update on 8th January 2019

Corporate and Professional update on 8th January 2019

Direct Tax Updates:

• CBDT clarifies that the circular issued by the Board on July 2018 prescribing Monetary Limits for Tax Appeals would also apply to matters relating to Wealth Tax.
• It is said by the Mr. Sushil Chandra the chairman of Central Board of Direct Taxes (CBDT). Officers will find out a solution on the basis of the suggestions they have received. We have to decide which startups are real startups and how they can be exempted from Section 56 (2) of the Income Tax Act. Various startups had raised concerns over the notices sent to them under this section to pay tax on angel investments.
• The CBDT chief said any startup recognised by the Department for Promotion of Industry and Internal Trade is exempt from Section 56 (2) and the tax notices sent to startups have been stayed. Last week, officials from the department, along with tax department officials, met startup industry representatives to hear their suggestions. Section 56 (2) provides that the amount raised by a startup in excess of its fair market value would be deemed income from other sources and taxed at 30%. It’s also been dubbed the angel tax.

Direct Tax Updates:

• In the case of congress “The withdrawal of the clarification would mean all those who have received tax demands will have to litigate and apply for a stay on the demand.” ET had on January 3 reported that several companies that had received tax notices and faced tax outgo over valuations would get relief thanks to the clarification issued on December 31. It was withdrawn through another circular issued on the night of January 4. Experts said the original clarification only dealt with unintended implications of income tax rules.
• IT is said by many Experts that the shift on the valuation issue was mainly due to the press conference by Congress. Party leader Ahmed Patel and Vivek Tankha, head of Congress’ legal cell, had said that the December 31 clarification had vindicated the party’s stand. Tax demands raised on party chief Rahul Gandhi and Sonia Gandhi for receiving shares of AJL’s National Herald were not justifiable, it said. “This vindicates our position that there never was an issue about issuance of such shares as a taxable event as it was being projected by way of harassment.

Indirect Tax Updates:

• The unveiling package is looking by India to aid small Business. It includes raising the exemption threshold for goods.
• The 32^nd GST council Meeting on January 10, 2019 would consider a numbert of steps some of them are cut in Tax Rate for construction sector and state authorised lottery.

RBI Updates:

• The latest Instruction of Reserve Bank of India is on Tokenisation service. This is for that card payment could open a new frontier for Digital Payment, expand its use and for making card payment safer, said industry observers. This is said by the central bank that card companies would be allowed to offer Tokenisation services to third-party service providers as well and customers can avail themselves of these services by registering through third party.
• By this order of RBI, consumers will be able to create a virtual number against their real card number. Through this they will not have to share their actual details of card on every transaction. This will make card transactions safer. That card companies would be allowed to offer Tokenisation services to third-party service providers as well and customers can avail themselves of these services by registering through a third-party application recommend by the TR Ramachandran. It would also prevent from the frauds in which card details are captured in the course of transaction by hackers
• To keep the security on higher level the regulator has inserted on second factor of authentication during such transactions, although tokenisation adds a new layer of security. The first step by the central bank in ensuring the safety of card payments.
• The Reserve Bank of India has recommended non-bank lenders to adjust to the current state of liquidity even as the sector lobbies for bank loans at easier terms for lending to the small and medium enterprises sector which is known for creating jobs. The Governor of RBI Shaktikanta Das held discussions with leaders from the NBFC sector on Wednesday and listened to the issues troubling the sector. The issue is raised by them on higher borrowings cost from banks as the liquidity situation is improved from last October and November.
• Where the industry representative Have asked regulatory intervention to ensure the cash availability for non-banking entities, the RBI assured them of the same “as and when required”. “It has ruled out possibility of any special liquidity window for now,” said a person present in the meeting. The RBI has Decided to have discussion on this once in every month.

LINKING PAN AND AADHAAR:

• The income-tax Department has so far issued 420 million permanent account numbers (PAN), of which 230 million have been linked with Aadhaar, the biometric data-based identity number. “By linking with Aadhaar, it can be identified whether there are duplicate PAN’s or not. If it is not linked, we may cancel the PAN. Once Aadhaar is linked with PAN and PAN is linked with bank accounts, the I-T department can find out the spending patterns and other details of assessees. Through this it would be easier to gauge whether the benefits of welfare schemes are reaching those who are eligible for them, said Chandra.
• Now the Income Tax Department is working on the policy of finding non-filers. We have got third party information and we are checking whether persons are filing returns or not, whether adequate income is being shown.

RBI Updates:

• The key interest rate is cutted by 25 basis points to 6.25% and shifted the policy stance to ‘neutral’ terming it a ‘decisive’ act to promote investment and consumption in an economy facing weak demand. This may results in lower interest rate cycle based on receding inflation after claiming success in tackling price pressures since inflation targeting was adopted about two years ago.
• The central bank also brought nonbanking finance companies (NBFCs) on a par with manufacturing companies with regard to capital requirements for banks that lend to them. The credit rating of an NBFC will now determine how much capital the bank has to set aside, making thousands of crore of rupees available for lending to a sector buffeted by concerns over liquidity.
• The Reserve Bank of India said it would intensify its scrutiny of nonbanking finance companies to ensure better compliance and financial strength, but did not indicate an asset-quality review like the one carried out on banks. NBFCs showed high growth taking advantage of the poor financial health of several public sector banks but the recent default by the group firms of non-bank lender IL&FS raised alarm and called for a reality check.
• RBI slaps penalty of Rs 1 Crore on State Bank of India, in exercise of powers conferred under Section 47 A of the Banking Regulation Act, 1949 for not monitoring the end use of funds in respect of one of its borrowers.
• RBI eases its guidelines for Maintaining Risk Weights on bank lending to systemically important NBFCs in a manner that will allow more funds to flow to stronger NBFCs.
• RBI decides to join the Govt in offering some relief to small and marginal farmers by raising the limit of Collateral-Free Agricultural Loans to Rs 1.6 lakh from Rs 1 lakh. The RBI also proposed to set up an Internal Working Group to review various issues plaguing farm credit, such as regional disparity, extent of coverage and limited capital formation from such credit.
• The central bank said retail loans of NBFCs grew 46% during 2017-18 — on top of a growth of 21.6% during 2016-17— reflecting upbeat consumer demand, especially in the vehicle loans segment. Credit to the services sector was driven mainly by commercial real estate and retail trade. “An asset quality review, particularly in certain types of exposures of NBFCs, may be apposite.

Steps of import and export

 

 

FAQ on Financial Sector:

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.

QUES.Where a Bank takes a separate registration for a separate business vertical, say for Bullion business, whether the requirement for reversal of 50 percent will also apply to bullion purchased by the Bank?

ANS.In terms of Section 2(94) read with Section 25(4)&(5) of the CGST Act, 2017, a person required to obtain more than one registration within a State or more than one State shall be treated as a distinct person for each such registration. Section 17(4) of the CGST Act, 2017 is applicable qua each registration and not for the Bank as a whole, provided each of the business verticals is separately registered. Therefore, a bank engaged in trading in bullion may not opt for 50 percent reversal in respect of its purchases of bullion, where it is separately registered as a business vertical.

QUES. Whether for the services received from a related person / distinct person outside India, the recipient of services would be eligible for full input tax credit?

ANS. In terms of the second proviso to section 17(4) of the CGST Act, 2017, the restriction of reversal of 50% credit would not apply to the tax paid on supplies made by one registered person to another registered person having the same PAN. The non-applicability of 50% reversal is only to the extent of inter-branch services between registered branches having the same PAN in India. Thus, tax paid on services received from a related person / distinct person located outside India would be liable to 50% reversal.

Other Updates:

• NSE puts 21 Companies under Short-Term Additional Surveillance Measure. The parameters for shortlisting securities under ASM include high-low variation, client concentration, and number of price band hits, close-to-close price variation and price – earnings ratio.
• The faster turnaround in the Resolution Process for Stressed Loans that are referred to the NCLT, RBI allows bidders to Raise Funds through External Commercial Borrowings (ECB) to repay the Rupee Loans of Domestic Banks. Under the existing regulations, ECB is not permitted to be utilised for repayment or for repayment of domestic rupee loans.
• BSE decides to suspend 7 Suspected Shell Companies from Friday i.e. today, after they failed to provide the Information Sought by Forensic Auditors in a Time-Bound Manner. The forensic audit was conducted by independent auditors appointed by the stock exchange on the direction of the SEBI.
• RBI rules out changes in one-day NPA recognition norms.
• India jumps 8 places to 36th on International IP Index.
• JLR global sales dip 11% in January.
• RBI for intense scrutiny on NBFCs, but no AQR likely.
• Adani Enterprises Q3 profit slumps 72% to Rs 80 crore.
• JLR bleeds Tata Motors with Rs 27K cr loss.
• 65,000-km highways worth Rs 5.35 trillion to be built by 2022, says Gadkari.
• Irdai asks insurance firms to mitigate risks to prevent IL&FS-type fiascoes.
• Exit of BoI, BoM, and OBC from PCA framework is credit positive: Moody’s.
• Cotton imports to surge by 80% as output hits 9-year low.
• BB&T to buy SunTrust for $28 bn in biggest US bank deal since 2009 crisis.
• Gems, jewellery exports decline 8.5% in Apr-Dec 2018.
• Bajaj Electricals Q3 net jumps 73% to 64 cr.
• Coal India to procure mining equipment worth 7,000 cr.
• CAI lowers cotton crop estimate further to 330 lakh bales.
• RBI cuts repo rate by 25 basis points, changes policy stance to neutral.
• Fortis denies violating order on sale of controlling stake to IHH Healthcare.
• Govt has the right to demand interim dividend.
• MRF Q3 profit skids 18% to 279 crore.
• RBI doubles limit, banks to treat 2 crore and more as bulk deposits.
• ICICI Bank-Videocon loan case.
• RBI permits cos participating in insolvency process to tap ECB route.
• Govt to set up unified authority for regulating financial services in IFSCs.
• Debt ETF may have G-Secs in portfolio.
• Dish TV declares Q3 results, reports operating revenues of Rs. 1,517 crore.

Key Due Dates:

• TDS return for the month of January 2019 is 10th February 2019.
• 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.
• Return of Outward supplies by Regular & Casual suppliers for the month of December 2018 Turnover Exceeds 1.5 crore i.e. (GSTR-1) is 11th January, 2019.
• Due Date of GSTR-3B is 20th January 2019.
• TCS return for December Quarter by all collector is 15th January 2019.
• Payment of PF for December is 15th January 2019.
• Due Date for Payment of ESI is 15th January 2019.

Quote of the Day:

“A coach is someone who tells you what you don’t want to hear, who has you see what you don’t want to see, so you can be who you have always known you could be.”

“Professionalism: It’s NOT the job you do it’s HOW you DO the job.”