Corporate and Professional Updates on 5th February 2019

Direct Tax Updates:

ANGEL TAX:

• The industry department setting up a panel comprising startups, angel investors and income tax officials to look into the issue. The department for promotion of industry and internal trade who heads the panel.
• India introduced a so-called angel tax in 2012, which counts investments received by startups above their fair market value as taxable income, much to the dismay of angel investors and the startup community. CBDT officials were against scrapping the angel tax altogether citing the possibility of a spurt in shell companies engaged in money laundering, they were ready to look at options to bring a carve-out for startups.
• Automatic exemption from angel tax or startups registered with DPIIT could be asked to submit additional documents to prove their genuineness. The CBDT officials looked willing to consider the second option. Further discussions will take place on the proposals.
• The objective is to devise a mechanism through which startups can be differentiated from shell companies and get a blanket relief from angel tax,” he added. A survey by the Indian Venture Capital Association on Local Circles showed that 73% of the startups that raised capital have received one or more angel tax notices under the Income Tax Act since their inception. When asked what happens to the angel tax notices already sent to startups, CBDT would not take any coercive action against startups.
• The notices issued to startups are for initiation of assessment. “The number of cases where actual tax demand has been raised is far less In Last Month DPIIT eliminated the need for certification from an inter-ministerial body for startups seeking exemption from angel tax demands. Such applications routed through DPIIT will now be processed by CBDT within 45 days. Startups were not happy with the clarification and sought a blanket exemption from angel tax.
• Angel tax, framed as an anti-abuse provision, was introduced in the Income Tax Act in 2012 to curb the practice of politicians accepting bribes in the guise of share premium in unlisted firms set up by them. The Income Tax Act provides for taxation of the share premium that is above the fair valuation of shares as “other income”. As startups are valued on the basis of the business potential of their ideas, which could change with time, they find it hard to justify the premium. Tax officials prefer to value these enterprises on the basis of their net asset value, but companies tend to be valued on the basis of their earnings potential.

Updates Regarding Rebate:

• The government opted to announce a tax rebate on annual income up to ~5 lakh instead of raising the exemption limit as it did not wish to tinker with rate slabs, The emphasis of the budgetary exercise was on maintaining the economic reforms road map set over four-and-a-half years by Prime Minister Narendra Modi and Union minister Arun Jaitley so that India could continue to be the world’s fastest growing major economy, as per the current finance Minister Piyush Goyal.
• The announced annual payout of 6,000 to small and marginal farmers was in keeping with the government’s efforts to ensure sustainable growth in the agriculture sector.

Indirect Tax:

• GSTN adds 2 New Features in the GST Portal including List of Preferred Banks list while making Payment and the Monthly Refund applications by Quarterly GSTR-1 filers.
• CBIC excludes Certain Exempt Services for determining Eligibility for Composition Scheme. CBIC clarifies that the value of supply of exempt services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account – (i) for determining the eligibility for composition scheme under second proviso to sub-section (1) of section 10; (ii) in computing aggregate turnover in order to determine eligibility for composition scheme under GST.

SEBI Updates:

• SEBI may re-consider the Liquidity Enhancement Scheme (LES) framework for the Commodities Segment. In the equity segment, there is no such restriction on launching the scheme.
• SEBI almost finalises the mechanism for “Tap Issue of Bonds” through a Shelf Offer Document and likely to implement it from FY 2020. Under Tap Issue, companies will be allowed to file Shelf Prospectus on the same lines as Private Placements, once a year and raise money when required without going through the process of seeking approval from regulatory authorities.

Other Updates:

• SBI, other performing PSBs may see stake sale.
• CERC pushes for 100% power sale in spot market.
• IDBI may now become LIC IDBI Bank or LIC Bank.
• TDSAT exempts RCom from one-time spectrum charge.
• India’s exports to surpass USD 314 bn peak this year.
• Tata’s plea to bid for Bhushan Steel struck down.
• RCOM goes to NCLT to speed up Jio deal, hopes move will expedite DoT nod.
• Fugitive tycoon Vijay Mallya’s extradition to India approved by UK minister.
• Zee group’s Subhash Chandra gives personal guarantee to mutual funds.
• NCLAT asks govt for list of IL&FS firms categorised by financial position.
• Setback for Tata Steel as NCLAT upholds creditors decision on Bhushan Power.
• Sugar mills want Centre to hike ex-mill price to help clear arrears.
• Fiscal deficit for April-December at 112% of FY19 Budget Estimate.
• to begin process to monetise assets of CPSEs from April.
• Anti-dumping duty imposed on ‘fluoroelastomers’ from China.
• JSW Steel’s bid for Bhushan Power upheld.
• SRF posts a 26% jump in consolidated net.
• ONGC Videsh looks to pare stake in one of its costliest acquisitions.
• RBI to announce policy before noon on 7 February.
• Ruia, Essar Steel directors move NCLT to squash Mittal’s bid.
• UPL open to buy back TPG Cap, ADIA stakes in Arysta.
• Amfi’s MF campaign may turn focus on debt funds Nimesh Shah.
• IndoStar to buy IIFL’s CV financing business.
• Rating agencies downgrade various loan facilities of DHFL.
• Jet Airways debt resolution plan outline is ready.
• Aditya Birla Fashion Q3 net up 100% to Rs 70 crore.
• TPG Growth set to invest $30 Million in Solara Active.
• Coal India approves share owner buyback worth Rs 1,050 crore.
• Governance standards improving in corporate India.
• Essel Promoters sell Shares worth over Rs 1,050 cr in 6 firms.
• Tribunal sets Feb 11 deadline to decide on Arcelor-Essar bid.
• Vedanta Resources rating downgraded to Negative.

Key Due Dates:

• Due Date for Payment of TDS & TCS Deducted/Collected in the month of January is 7th February 2019.
• Due Date for TDS Return for the month of January is 10th January 2019.

Quote of the Day:

“If you want to change attitudes, start with a change in behavior. In other words, begin to act the part, as well as you can, of the person you would rather be, the person you most want to become. Gradually, the old, fearful person will fade away.”

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 decision do consult your professional /tax advisor for their 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 & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at https://carajput.com for any query you can write to singh@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: singh@carajput.com  or call at 09811322785/4- 9555555480.