Corporate and Professional Updates on 12th July 2019

Indirect Tax Updates:

• The amendment to Section 17 (5) of the Central Goods and Services Tax (CGST) Act deals with blocked credit. “Section 17 (5) of the CGST Act and the respective state Acts have led to a paradoxical situation by denying credits as the objective of the GST is free flow of credits when the output is in the course or furtherance of business,” said Abhishek A Rastogi, partner at law firm Khaitan & Co, who filed the writ petition on behalf of real estate companies.
• “The impugned provisions are against the objectives of GST and have accordingly been challenged on the grounds of arbitrariness and vagueness.” Tax experts said the phrase ‘on his own account’ in the GST law will need to be interpreted differently if one were to take input tax credit. Input tax credit refers to a mechanism under the GST framework wherein the tax a company pays when it purchases raw materials or other services can be passed on to the buyer when the goods or services are sold.

RBI Updates

• The Reserve Bank (RBI) slashed by half its US dollar purchases in May from the month before to just about dollar 2.5 billion as the inflows slowed amid uncertainty over US interest rates and elections The central bank bought dollar 5.1 billion and sold dollar 2.6 billion in May, taking net spot dollar purchases to dollar 2.5 billion, according to the latest figures released by the RBI. This is almost half the level of net dollar purchases in April this year when the central bank bought a net of dollar 4.9 billion from the spot market. The central bank was a net seller in May 2018, during which it sold dollar 5.8 billion.
• The central bank has remained a very passive participant in the forward markets as well. It bought dollar 224 million in the forward markets in May, RBI data showed. Foreign portfolio investors were cautious during the month bringing in a little less than dollar 1 billion during the month. Also, foreign direct investments slowed during the month. The rupee weakened by about 0.1% during the month to end at dollar 69.65 by the end of May. But after the general elections, there has been an improvement in foreign portfolio investments. The rupee has also gained against the dollar indicating strong inflows through a variety of sources.
• After the union budget, there has been some slowdown in portfolio flows in the secondary markets. But the proposal to raise dollar funds by the government to part-finance its expenses is expected to increase dollar flows, which would require the central bank to purchase these dollars to release rupee funds. The government is working on a sovereign benchmark for external borrowing that will be finalized in September this year, after which there could be some pickup in dollar flows.

• The Reserve Bank of India will take a relook at its supervision structure for banks, finance companies and other entities regulated by the central bank. It will initiate a discussion with its board of directors on a proposal to overhaul the crucial job of supervision so that the regulator is better equipped in picking up early warning signs. This may involve consolidating the different supervisory activities under a separate division or head, creating a pool of officials for better analysis of the continuous flow of data from banks and finance companies, and involving specialists.

SEBI Updates:

• The Securities and Exchange Board of India on Monday came out with a discussion paper highlighting proposals for allowing a start-up listed on the Innovators Growth Platform (IGP) to trade under the regular category of the main board. According to the proposals, the company should have listed on the IGP for a year and have a minimum of 200 shareholders for making the shift. The company, or any of its promoters, promoter group or directors, should not have been debarred from accessing the capital market or been a willful defaulter.
• Minimum promoters’ contribution should be 20 per cent of the total capital. In case of a shortfall, alternative investment funds, foreign venture capital investors, scheduled commercial banks, public financial institutions or insurance companies can step in, subject to a maximum of 10 per cent of the total capital. This capital shall be locked in for three years from the date on which trading approval on the main board is granted, and any excess over and above the 20 per cent of promoter’s holding shall be locked-in for one year. The lock-in would not apply for companies listed on the IGP for three years or more.

• The government has sought information from the Securities and Exchange Board of India about the origins of those foreign portfolio investors that use the trust structure and the assets that they manage, said a person familiar with the development. It also asked for data on the tax liability of each of the structures employed by FPIs — trusts, companies, and limited liability partnerships.
• A large number of FPIs in India will be impacted as they are structured either as trusts or AoPs. In the meantime, the Asia Securities Industry and Financial Markets Association, an FPI lobby group, met senior Sebi officials to share their concerns on the budget proposal to increase the tax surcharge on the super-rich. As per data provided to the government, 40% of the FPIs use the trust structure, while 60% of them prefer to use the corporate structure.

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Other Updates:

• India’s trade deficit widened with 25 nations in 3 yrs
• Cabinet approves award of 3 out of 6 airports to Adani
• Indian cos supplying to Huawei may face US sanctions
• Cabinet approves Code on Wages bill
• BSNL FY19 loss at over Rs 14,000 crore: Govt
• Icra cuts McLeod Russel’s rating to ‘default’ grade
• RBI to regulate housing finance firms, review assets
• Larsen and Toubro receives promoter’s tag in Mindtree with 60% stake
• CLP inks deal to buy 3 power assets from Kalpataru for Rs 3,275 cr
• Multiple triggers could boost Axis Bank’s return ratios, say analysts
• NCLAT reserves order on contempt plea filed against Reliance Infratel
• Indiabulls Fin to buyback NCDs, masala bonds worth Rs 2,705 cr in Sept
• Eris Lifesciences board approves buyback plan of up to Rs 100 cr
• Oil India to exit Russian oil block
• USFDA issues warning letter to Aurobindo Pharma
• Vedanta to spend $245 m to explore 10 OALP blocks
• Lupin gets USFDA nod for Cinacalcet tablets and intraocular solution
• Blackstone buys stake in L&T Business Park for around ₹700 crore
• RBI forms working group to review regulatory framework for core investment cos
• Drug regulator warns of hacking risk in Medtronic insulin pumps
• India urges Russia to consider energy consuming nations’ interest
• Service providers may now opt for GST composition scheme till July 31
• Jet suppliers go on merger spree trying to keep up with Boeing and Airbus output
• RBI forms working group to review regulatory framework for core investment companies
• Rupee edges 6 paise higher at 68.89 against US dollar
• Sensex, Nifty end marginally higher
• Govt neither divesting nor privatising ONGC: Pradhan
• MSP of kharif crops raised

Key Due Dates::

• 07-07-2019 – Deposit of TDS/TCS for the month of June 2019.
• 07-07-2019 -Equalisation levy deposit which is withheld at the time of payment by the service recipient where the annual payment made to one service provider exceeds Rs.1,00,000 in one financial year for the specified and notified services.
• 10-07-2019 – GSTR 8 for E-Commerce Companies for the m/o June 2019.
• 10-07-2019 – Filing GSTR-7 (for the assessee who is required to deduct TDS under GST) for the m/o June 2019.
• 10-07-2019 – Issue of TDS Certificate for salary for the financial year 2018-19.
• 11-07-2019 – GSTR-1 for the month of June 2019 for taxpayers with Annual Aggregate turnover more than 1.50 Crore.
• 13-07-2019 – GSTR-6 for Input Service Distributor.
• 14-07-2019 – Issue of TDS Certificate for tax deducted under section 194-IA/194-IB in m/o           May’19.
• 15-07- 2019 – Quarterly statement of TCS for the quarter ending 30 June 2019.
• 15-07-2019- ESI/PF Payment for m/o June 2019.
• 15-07-2019- FLA Report it is required to be submitted directly by all Indian Companies which have received  FDI or made FDI abroad for m/o June 2019.
• 18-07-2019- GSTR-4 Quarterly return for taxpayers opting for composition scheme.
• 20-07-2019 – GSTR-3B for the m/o June 2019.
• 20-07-2019 – GSTR-5 for the m/o June 2019.
• 20-07-2019 – GSTR-5A for the m/o June 2019.
• 25-07-2019-  EPF returns filing for the month of June 2019.
• 30 -07-2019 -Quarterly TCS certificate in respect of tax collected by any person for the quarter ending June 30, 2019.
• 30-07-2019 – Furnishing challan-cum-statement in respect of tax deducted u/s 194-IA/194IB in the month of June’19.
• 31-07-19 – GSTR-1 for June Quarter applicable for taxpayers with Annual Aggregate turnover up to Rs. 1.50/- Crore.
• 31-07- 2019 – Quarterly statement of TDS for the quarter ending 30 June 2019.
• 31-07- 2019 – Income Tax return for the F.Y 2018-19 (A.Y 2019-20) for all assessee other than (a) corporate-assessee or (b) non-corporate assessee (whose books of account are required to be audited) or (c) working partner of a firm whose accounts are required to be audited or (d) an assessee who is required to furnish a report u/s 92E.
• 31-07-2019- Payment of Professional Tax and Shop and Establishment taxes.
• 31-07-2019- Form 67 Due date for claiming Foreign Tax Credit, upload statement of Foreign income offered for tax for the previous year 2018-19 and of Foreign tax deducted or paid on such incomes.