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R.C. JAIN & ASSOCIATES LLP

Education is not solely about earning a great living.

It means living a great life

Head Office:

622-624, The Corporate Centre, Nirmal Lifestyles, L.B.S. Marg, Mulund (W), Mumbai – 400080. Email: [email protected]

Phone: 25628290/91, 67700107

Website: www. rcjainca.com

NEWSLETTER

R. C. Jain and Associates LLP

INDEX

1. Income Tax ____________________________________________ 01

2. GST___________________________________________________ 09

3. RBI & FEMA____________________________________________ 17

4. Corporate Law__________________________________________ 16

EDITORIAL TEAM EDITOR

CA R. C. Jain

MEMBERS SUPPORT TEAM

CA Amit Shet Shilka Santhosh Ulhas Jain

Ekta Pamnani Sumeet Makhija Rohini Veer

Varun Deshpande Prajyot Chachle Mangesh Kolekar

Akhil Laxmeshwar Chetan Bhansali

Shimpee Rai

The contents provided in this newsletter are for information purpose only and are intended,

but not promised or guaranteed, to be correct, complete and up-to-date. The firm hereby

disclaims any and all liability to any person for any loss or damage caused by errors or

omissions, whether such errors or omissions result from negligence, accident or any other

cause.

1 R. C. Jain and Associates LLP

DIRECT TAX

Income Tax

1. MISCELLANEOUS - FILING OF INCOME TAX RETURNS REGISTERS AN UPSURGE OF 71 PER CENT UP TO 31-8-2018

There has been a marked improvement in the number of Income Tax Returns (ITRs) filed during FY 2018 (up to 31/08/2018, the extended due date of filing) compared to the corresponding period in the preceding year. The total number of ITRs e-filed upto 31/08/2018 was 5.42 crore as against 3.17 crore upto 31/08/2017, marking an increase of 70.86%. Almost 34.95 lakh returns were uploaded on 31/08/2018 itself, being the last date of the extended due date of filing of ITRs. A remarkable increase is seen in the number of ITRs in 2 categories i.e. ITRs filed by salaried Individuals (ITR-1& 2) as also those availing the benefit of the Presumptive Taxation Scheme (ITR-4). The total number of e-returns of salaried Individual taxpayers filed till 31/08/2018 increased to 3.37 crore from 2.19 crore returns filed during the corresponding period of 2017, registering an increase of 1.18 crore returns translating into a growth of almost 54%. A stupendous growth has been witnessed in the number of returns e-filed by persons availing the benefit of Presumptive Tax, with 1.17 crore returns having been filed up-to 31st August, 2018 compared to 14.93 lakh returns upto 31st August, 2017 registering a massive increase of 681.69%. The increase in the number of returns reveals a marked improvement in the level of voluntary compliance of taxpayers which can be attributed to several factors, including the impact of demonetization, enhanced persuasion & education of taxpayers as also the impending provision of late fee which would be effective on late filing of returns. This is indicative of an India moving steadily towards a more tax compliant society & reflects the impact of continuous leveraging of technology to improve tax payer service delivery.


DIRECT TAX

2. SECTION 112A OF THE INCOME-TAX ACT, 1961 - LONG TERM CAPITAL GAINS - NOTIFIED TRANSACTIONS OF ACQUISITION OF EQUITY SHARES - CHARGEABILITY TO STT SHALL NOT APPLY

In exercise of the powers conferred by sub-section (4) of section 112A of the Income-tax Act, 1961 (43 of 1961) hereinafter referred to as the Income-tax Act, the Central Government, with a view to specify the nature of acquisition in respect of which the provision of sub-clause (a) of clause (iii) of sub-section (1) of section 112A of the Income-tax Act shall not apply, hereby notifies the transactions of acquisition of equity share entered into—

I. before the 1st day of October, 2004; or II. on or after the 1st day of October, 2004 which are not chargeable to

securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004), other than the following, namely:—

(a) where acquisition of existing listed equity share in a company whose equity shares are not frequently traded in a recognized stock exchange of India is made through a preferential issue:

Provided that nothing contained in this clause shall apply to acquisition o of listed equity shares in a company;—

(i) which has been approved by the Supreme Court, High Court, National Company Law Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this behalf;

(ii) by any non-resident in accordance with foreign direct investment guidelines issued by the Government of India;

(iii) by an investment fund referred to in clause (a) of Explanation 1 to section 115UB of the Income-tax Act or a venture capital fund referred to in clause (23FB) of section 10 of the Income-tax Act or a Qualified Institutional Buyer; and

(iv) through preferential issue to which the provisions of chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 does not apply.


DIRECT TAX

(b) where transaction for acquisition of existing listed equity share in a company is not entered through a recognised stock exchange in India:

Provided that nothing contained in this clause shall apply to the acquisition of listed equity shares in a company which has been made in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and is—

(i) through an issue of share by a company other than the issue referred to in clause (a);

(ii) by scheduled banks, reconstruction or securitization companies or public financial institutions during their ordinary course of business;

(iii) approved by the Supreme Court, High Courts, National Company Law Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this behalf;

(iv) under employee stock option scheme or employee stock purchase scheme framed under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999;

(v) by any non-resident in accordance with foreign direct investment guidelines of the Government of India;

(vi) in accordance with Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 2011;

(vii) from the Government;

(viii) by an investment fund referred to in clause (a) to Explanation 1 to section 115UB of the Income-tax Act or a venture capital fund referred to in clause (23FB) of section 10 of the income-tax Act or a Qualified Institutional Buyer; and


DIRECT TAX

(ix) by mode of transfer referred to in section 47 or section 50B or sub-section (3) of section 45 or sub-section (4) of section 45 of the Income-tax Act, if the previous owner or the transferor, as the case may be, of such shares has not acquired them by any mode referred to in clause (a) or clause (b) or clause (c) [other than the transactions referred to in the proviso to clause (a) or clause (b)].

(c) acquisition of equity share of a company during the period beginning from the date on which the company is delisted from a recognised stock exchange and ending on the date immediately preceding the date on which the company is again listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 read with Securities and Exchange Board of India Act, 1992 (15 of 1992) and the rules made thereunder;

Explanation.— For the purposes of this notification,—

(a) "frequently traded shares" means shares of a company, in which the traded turnover on a recognised stock exchange during the twelve calendar months preceding the calendar month in which the acquisition and transfer is made, is at least ten per cent. of the total number of shares of such class of the company:

Provided that where the share capital of a particular class of shares of the company is not identical throughout such period, the weighted average number of total shares of such class of the company shall represent the total number of shares;

(b) 'listed' means listed in a recognized stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 and the rules made thereunder;

(c) "preferential issue" and "Qualified Institutional Buyer" shall have the meanings respectively assigned to them in sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

(d) "public financial institution" and "scheduled bank" shall have the meanings respectively assigned to them in Explanation to clause (viia) of sub-section (1) of section 36 of Income-tax Act;’


DIRECT TAX

(e) "recognized stock exchange" shall have the same meaning assigned to it in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956; and

(f) "reconstruction company" and "securitization company" shall have the meanings respectively assigned to them in sub-section (1) of section 2 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002).

This notification shall come into force with effect from the 1st day of April, 2019 and shall accordingly apply in relation to the assessment year 2019-20 and subsequent assessment years.

3. SECTION 80D OF THE INCOME-TAX ACT, 1961 - DEDUCTIONS -

MEDICAL INSURANCE PREMIUM - NOTIFIED SCHEME U/S. 80D(2)(a)

In exercise of the powers conferred by clause (a) of sub-section (2) of section 80D of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the Ex-Servicemen Contributory Health Scheme of the Department of Ex-Servicemen Welfare, Ministry of Defence, for the purposes of the said clause for the assessment year 2019-20 and subsequent assessment years.


DIRECT TAX

ITAT

Case Laws:

1. Issue Involved: Addition on account of exempt income treating the

same as business income.

Bhojison Infrastructure Pvt. Ltd. v. Income Tax Officer – (ITAT

Ahmedabad) – In favour of Assessee

Section 28(va) of the Income Tax Act, 1961

Gist of the Case:

1. The Assessee had entered into an agreement with a landlord for

development of the land, however the landlord decided to sell the land to

other parties instead of continuing with development proposal of the land.

2. However the assessee subsequently received damages for relinquishment

of “right to sue” which was claimed as exempt income by the assessee.

3. The Ld. AO treated the same as business income of the assessee under the

provisions of section 28(va).

4. However, the Ld. AR contended that the consideration received by the

assessee is a capital receipt and the “right to sue” not being in the nature of

property is not chargeable to tax being a capital receipt.

5. Further the Ld. AR submitted that compensation received in lieu of ‘right

to sue’ does not fall under the provisions of section 28(va).


DIRECT TAX

6. In order to attract the charge of tax on capital gains, the sin quo non is that

the receipt must have originated in a ‘transfer’ within the meaning of

section 45 r.w.s 2(47) of the Act. In absence of its transferability, the

compensation/damages received by assessee are not assessable as capital

gains.

7. The ITAT considered the assessee’s contentions that the capital receipt is

not chargeable to tax under the head “Capital Gains”.

8. The ITAT further held that from the facts of the case the assessee has not

received the amount under an agreement for not carrying out activity in

relation to any business or any activity mentioned under sec 28(va).

The entire judicial pronouncement bears Citation No.: ITA No.

2449/Ahd/2016 and can be referred accordingly.

2. Issue Involved: Govt. cannot deny credit of TDS to the assessee if the

deductor has not deposited the same.

Devansh Pravinbhai Patel v. Asst. Commissioner of Income Tax – (High

Court of Gujarat) – In favour of Assessee

Gist of the Case:

1. The assessee was an employee of Kingfisher Airlines and for AY 2012-13

he filed the Income Tax Return with TDS credit amounting to

Rs.2,68,498/-. However, the same amount was not deposited by the

employer.


DIRECT TAX

2. The petitioner raised the demand of such TDS in his liability to pay tax to

the Government. The Department however objected to this and raised

equivalent tax demand and in fact adjusted the refund of the assessee for

AY 2013-14 of Rs.47, 140/- against the demand.

3. The Assessee contended that the department cannot seek to recover the

amount from the deductee where he has suffered the deduction of tax.

4. The mere fact that the amount was not deposited by the deductor could

not permit the department to recover such amount from the deductee

which is against the statutory provisions and which has been held in

many cases.

5. The Court referred to a case of Bombay High Court and held that the

action of the department in not giving credit of TDS to the assessee for

which the assessee has produced form no. 16A and issuance of demand

notice u/s 221(1) cannot be sustained.

6. The High Court of Gujarat thus held that the department cannot deny the

benefit of tax deducted at source by the employer of the assessee and

credit of the same has to be given for the respective years.

The entire judicial pronouncement bears Citation No.: C/SCA/12965/2018

and can be referred accordingly.


INDIRECT TAX

GST

Notification

1. Eighth Amendment, 2018 to CGST Rules, 2017. (Notification No.

39/2018)

1) Drop proceedings of Suo Moto Cancellation

If a taxpayer registered under composition scheme has failed to furnish

returns for three consecutive tax periods or a normal taxpayer has not

furnished returns for six consecutive tax periods, furnishes all the

pending returns and makes full payment of tax dues along with

applicable interest and penalty on service of notice from a proper officer,

the proper officer shall drop the proceedings and pass an order in FORM

GST-REG 20.

2) Availment of ITC

If the document does not contain all the details as per chapter VI of the

CGST rules but contains the details of the amount of tax charged,

description of goods or services, total value of supply of goods or services

or both, GSTIN of the supplier and recipient and place of supply in case of

inter-State supply, input tax credit may be availed by such registered

person.

3) Adjusted Total Turnover under Refund (Chapter X)

Adjusted Total Turnover means the sum total of the value of-

i. The turnover in a State or a Union territory which is; aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union territory


INDIRECT TAX

by the said taxable person but excludes central tax, State tax, Union

territory tax, Integrated tax & Cess and

ii. the turnover of zero-rated supply of services determined as the value

of zero-rated supply of services made without payment of tax under

bond or letter of undertaking but excluding;

a) the value of exempt supplies other than zero-rated supplies; and

b) the turnover of supplies in respect of which refund is claimed

under sub-rule (4A) or sub-rule (4B) or both, if any,

4) Form GST ITC 04, GSTR 9 & GSTR 9A

i. ITC 04 is form for providing data of goods sent on job work and

received back, which is to be filed quarterly on 25th of succeeding

month of the quarter.

ii. GSTR 9 is form of filing annual return by a regular taxpayer, before

31st December following the financial year.

iii. GSTR 9A is a form for filing annual return by a person opting to pay

tax under composition scheme before 31st December following the

financial year.

The above mentioned forms can be referred in the link given below.

For details kindly refer the link

http://www.cbic.gov.in/resources//htdocs-cbec/gst/Notification-39-

2018-central_tax-English.pdf

http://www.cbic.gov.in/resources/htdocs-cbec/gst/Notification-39-2018-central_tax-English.pdf

http://www.cbic.gov.in/resources/htdocs-cbec/gst/Notification-39-2018-central_tax-English.pdf


INDIRECT TAX

2. Extension of filing Form GST ITC-04 (Notification No. 40/2018)

The due dates for furnishing details in Form GST ITC-04 in respect of

goods dispatched to a job worker or received from a job worker or sent

from one job worker to another, during the period from July, 2017 to June,

2018 till the 30th day of September, 2018.

http://www.cbic.gov.in/resources//htdocs-cbec/gst/Notification-40-

2018-central_tax-English.pdf

3. Waiver of Late fees (Notification No. 41/2018)

The Central government has waived late fees paid under Sec 47 of CGST

act for the following taxpayers;

i. The registered persons whose return in FORM GSTR-3B of the Central

Goods and Services Tax Rules, 2017 for the month of October, 2017,

was submitted but not filed on the common portal, after generation of

the application reference number;

ii. The registered persons who have filed the return in FORM GSTR-4 of

the Central Goods and Services Tax Rules, 2017 for the period October

to December, 2017 by the due date but late fee was erroneously levied

on the common portal

iii. The Input Service Distributors who have paid the late fee for filing or

submission of the return in FORM GSTR-6 of the Central Goods and

Services Tax Rules, 2017 for any tax period between the 1st day of

January, 2018 and the 23rd day of January, 2018.

http://www.cbic.gov.in/resources/htdocs-cbec/gst/Notification-40-%202018-central_tax-English.pdf

http://www.cbic.gov.in/resources/htdocs-cbec/gst/Notification-40-%202018-central_tax-English.pdf


INDIRECT TAX

4. Extension of filing Form GST ITC-01 (Notification No. 42/2018)

The due dates for making declaration in Form GST ITC-01 have been

extended for a period of 30 days from date of publication of Notification

no. 42/2018 dt. 4th September, 2018 for those tax payers who have opted

out of the composition scheme between 2nd March, 2018 and 31st March,

2018.

5. Extension of filing form GSTR 1 (Notification No. 43&44/2018)

The due date for furnishing details in Form GSTR 1 by taxpayers having aggregate turnover upto Rs.1.5 crores has been extended as follows;

The due date for furnishing details in Form GSTR 1 by taxpayers having

aggregate turnover above Rs.1.5 crores in the preceeding financial year or

the current financial year, from the month of July 2017 to September 2018

Sr. No Period Due Date

1 July-September 2017 31st October 2018

2 October-December 2017 31st October 2018

3 January-March 2018 31st October 2018

4 April-June 2018 31st October 2018

5 July-September 2018 31st October 2018

6 October-December 2018 31st January 2019

7 January-March 2018 30th April 2019


INDIRECT TAX

has been extended till 31st October 2018 and for the months from October

2018 to March 2019 till the eleventh day of the succeeding month.

For details kindly refer the link:

http://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-43-central-

tax-english.pdf


tax-english.pdf

6. Extension of filing Form GSTR 3B (Notification No. 45/2018)

The due date for monthly furnishing of Form GSTR-3B from the month July,

2017 to November, 2018 for taxpayers who had received provisional ID’s

but could not complete the migration process and eventually got migrated

post Notification no. 31/2018 is extended till 31st December, 2018.



tax-english.pdf

http://www.cbic.gov.in/resources/htdocs-cbec/gst/notfctn-43-central-tax-english.pdf







INDIRECT TAX

7. Ninth Amendment, 2018 to CGST Rules, 2018 (Notification No. 38/2018)

Amendment in Transition Rules

Sub rule 1A is inserted in Rule 117 that allows the commissioner, on

recommendation of the council, to extend the date for submitting the

declaration electronically in Form GST TRAN-1 upto 31st March, 2019 for

those registered who could not submit the said declaration by the due date

on account of technical difficulties on the common portal and in respect of

whom the Council has made a recommendation for such extension.

Proviso is inserted in Rule 117, in sub-rule (4), in clause (b), in sub-clause

(iii), which states that when a registered person submits Form GST Tran 1 as

above, may submit Form GST Tran 2 by 30th April, 2019.



tax-english.pdf

8. Tenth Amendment, 2018 to CGST Rules 2017 (Notification No. 49/2018)

Form GSTR-9C

Form GSTR-9C is the form of GST Audit. The Central Government has

introduced form GSTR-9C vide notification no. 49/2018-Central Tax.



tax-english-new.pdf



http://www.cbic.gov.in/resources/htdocs-cbec/gst/notfctn-49-central-tax-english-new.pdf



INDIRECT TAX

9. Applicability of TDS (Notification No. 40/2018)

The Central Government vide Notification No. 50/2018 appoints 1st

October, 2018 as the date on which the provisions of section 51 shall come

into force with respect to persons specified as follows;

1) a department or establishment of the Central Government or State

Government; or

2) local authority; or

3) Governmental agencies; or

4) such persons or category of persons as may be notified by the Government

on the recommendations of the Council,

Tax is to be deducted at the rate of one percent from the payment made or

credited to the supplier of taxable goods or services or both, where the total

value of such supply, under a contract, exceeds two lakh and fifty thousand

rupees.


http://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-50-central

tax-english.pdf

10. Applicability of TDS (Notification No. 51&52/2018)

The Central Government vide Notification No. 51/2018 appoints 1st

October, 2018 as the date on which the provisions of section 52 shall come

into force. Here in every electronic commerce agent, not being an agent

shall collect half percent (notified vide notification no. 52/2018-Central

http://www.cbic.gov.in/resources/htdocs-cbec/gst/notfctn-50-central%20tax-english.pdf

http://www.cbic.gov.in/resources/htdocs-cbec/gst/notfctn-50-central%20tax-english.pdf


INDIRECT TAX

Tax) of the net value of taxable supplies made through the operator

reduced by the aggregate value of taxable supplies returned to the

suppliers during the said month.

Refer the link for details:


tax-english-new.pdf

http://www.cbic.gov.in/resources //htdocs-cbec/gst/notfctn-52-central-

tax-english-new.pdf



http://www.cbic.gov.in/resources%09/htdocs-cbec/gst/notfctn-52-central-tax-english-new.pdf

http://www.cbic.gov.in/resources%09/htdocs-cbec/gst/notfctn-52-central-tax-english-new.pdf


RBI

RBI

1. RBI/2018-19/14 DBR.AML.BC.No.210/14.01.001/2018-19

Incorporation of Name of the Purchaser on the Face of the Demand Draft

In order to address the concerns arising out of the anonymity provided by

payments through demand drafts and its possible misuse for money

laundering, it has been decided that the name of the purchaser be

incorporated on the face of the demand draft, pay order, banker’s cheque,

etc., by the issuing bank. These instructions shall take effect for such

instruments issued on or after September 15, 2018.

2. RBI/2018-19/27

DNBR (PD) CC.No.094/03.10.001/2018-19

Diversification of activities of Standalone Primary Dealers-Foreign

Exchange Business

Standalone primary dealers permit them to offer foreign exchange

products to their FPI clients, as permitted by the Bank from time to time.

Such activities shall be part of their non-core activities. The SPDs shall

adhere to the following prudential regulations:

(i) SPDs, while calculating the total risk weighted assets, shall include the

forex exposures for maintenance of minimum Capital to Risk-Weighted

Assets Ratio (CRAR) of 15 per cent on an ongoing basis. Details of capital

charge calculation shall be as per the Master Directions on Standalone

Primary Dealers (Reserve Bank) Direction, 2016, as updated from time to

time.

(ii) SPDs shall adhere to the guidelines for foreign exchange exposure limits as

prescribed by the Bank from time to time.


RBI

(iii) SPDs shall frame a Board approved policy to undertake and monitor the

foreign exchange business.

SPDs desirous of offering forex products to their FPI clients may approach

the Reserve Bank of India, Foreign Exchange Department, Central Office,

and Mumbai for the necessary AD license.

3. RBI/2018-19/15

FIDD.CO.Plan.BC 07/04.09.01/2018-19

Priority Sector Lending - Targets and Classification: Lending to non-

corporate farmers – System wide average of last three years

Applicable system wide average figure for computing achievement

under priority sector lending for the FY 2018-19 is 11.99 percent for

overall direct lending to non-corporate farmers.


CORPORATE LAW

1. Companies (Prospectus and Allotment of Securities) Third

Amendment Rules,2018

Central Government hereby makes the above rules to amend the

Companies (Prospectus and Allotment of Securities) Rules, 2014.

In the Companies (Prospectus and Allotment of Securities) Rules, 2014,

after rule 9, the following rule shall be inserted, namely:-

Rule 9A. Issue of securities in dematerialized form by unlisted public

companies.-

(1) Every unlisted public company shall –

(a)Issue the securities only in dematerialized form; and

(b) facilitate dematerialization of all its existing securities in accordance

with provisions of the Depositories Act, 1996 and regulations made there

under.

(2) Every unlisted public company making any offer for issue of any securities

or buyback of securities or issue of bonus shares or rights offer shall

ensure that before making such offer, entire holding of securities of its

promoters, directors, and key managerial personnel has been

dematerialized in accordance with provisions of the Depositories Act,

1996 and regulations made there under.

(3) Every holder of securities of an unlisted public company,

(a) Who intends to transfer such securities on or after 2nd October, 2018,

shall get such securities dematerialized before the transfer; or

(b) Who subscribes to any securities of an unlisted public company

(whether by way of private placement or bonus shares or rights offer)

on or after 2nd October, 2018 shall ensure that all his existing securities

are held in dematerialized form before such subscription.


CORPORATE LAW

(4) Every unlisted public company shall facilitate dematerialization of all its

existing securities by making necessary application to a depository as

defined in clause (e) of sub-section (1) of section 2 of the Depositories Act,

1996 and shall secure International security Identification Number (ISIN)

for each type of security and shall in-form all its existing security holders

about such facility.

(5) Every unlisted public company shall ensure that _

(a) It makes timely payment of fees (admission as well as annual) to the

depository and registrar to an issue and share transfer agent in

accordance with the agreement executed between the parties;

(b) It maintains security deposit at all times, of not less than two years,

fees with the depository and registrar to an issue and share transfer agent

in such form as may be agreed between the parties; and

(c) It complies with the regulations or directions or guidelines or

circulars, if any, issued by the securities and Exchange Board or

Depository from time to time with respect to dematerialization of shares

of unlisted public companies and matters incidental or related thereto.

(6) No unlisted public company which has defaulted in sub-rule (5) shall

make offer of any securities or buyback its securities or issue any bonus or

right shares till the payments to depositories or registrar to an issue and

share transfer agent are made.

(7) Except as provided in sub-rule(s), the provisions of the Depositories Act

1996' the securities and Exchange Board of India (Depositories and

participants) Regulations, 1996 and the Securities and Exchange Board of

India (Registrars to an Issue and share Transfer Agents) Regulations,

1993 shall apply mutatis mutandis to dematerialization of securities of

unlisted public companies.


CORPORATE LAW

(8) The audit report provided under regulation 55A of the securities and

Exchange Board of India (Depositories and participants) Regulations,

1996 shall be submitted by the unlisted public company on a half-yearly

basis to the Registrar under whose jurisdiction the registered office of the

company is situated.

(9) The grievances, if any, of security holders of unlisted public companies

under this rule shall be filed before the Investor Education and protection

Fund Authority.

(10) The Investor Education and Protection Fund Authority shall initiate any

action against a depository or participant or registrar to an issue and

share transfer agent after prior consultation with the securities and

Exchange Board of India.

http://mca.gov.in/Ministry/pdf/CompaniesProspectus3amdRule_10092018

.pdf

2. Companies (appointment and remuneration of managerial

personnel) Amendment Rules, 2018

The Ministry of Corporate Affairs has vide its Notification dated 12th

September notified the amendment in Sections 196 to 201 of the

Companies Act, 2013 which relate to Appointment and remuneration of

managerial personnel. The Companies (Appointment and Remuneration

of Managerial Personnel) Rules 2014 and Schedule V of the Companies

Act, 2013 have also been amended to bring the same in line with the Act.

Consequent upon the amendments, Form MR-2 has been amended so as to

make it applicable only for appointment or re-appointment of managerial

personnel. The section-wise analysis of the changes made can be referred

in the below mentioned Link:

http://mca.gov.in/Ministry/pdf/companiesAmendRules_13092018.pdf

http://mca.gov.in/Ministry/pdf/CompaniesProspectus3amdRule_10092018.pdf

http://mca.gov.in/Ministry/pdf/CompaniesProspectus3amdRule_10092018.pdf

http://mca.gov.in/Ministry/pdf/companiesAmendRules_13092018.pdf


CORPORATE LAW

3. Companies (Corporate Social Responsibility Policy Rules)

Amendment Rules, 2018

Section 135 (1) of the Companies Act, 2013 which provides the criteria for

applicability of CSR to a company has been amended to substitute the words

“any financial year” with the words “the immediately preceding financial

year’’. Hence, now every company having net worth of Rs. 500 Crore or

more, or turnover of Rs.1000 crore or more or a net profit of Rs. 5 crore or

more during the immediately preceding financial year shall constitute a

Corporate Social Responsibility Committee of the Board. Earlier, for

checking the applicability of CSR provisions, the limits were required to be

checked for preceding 3(three) financial years. This amendment shall come

into force w.e.f. from 19th September, 2018.

http://mca.gov.in/Ministry/pdf/CompaniesCSRPolicyAmendRules2018_19092018.pdf

4. Companies (Indian Accounting Standards) Second Amendment Rules,

2018

These Rules shall amend Companies (Indian Accounting Standards) Rules,

2015.

In Indian Accounting Standard (Ind AS) 20. For paragraphs 23-28, the

following paragraphs shall be

Substituted, namely:-

23 A Government grant may take the form of a transfer of a non-monetary

asset, such as land or other resources, for the use of the entity. In these

circumstances, it is usual to assess the fair value of the non-monetary

asset and to account for both grant and asset at that fair value. An

alternative course that is sometimes followed is to record both asset and

grant at a nominal amount.




CORPORATE LAW

24 Government grants related to assets, including non-monetary grants at

fair value, shall be presented in the balance sheet either by setting up the

grant as deferred income or by deducting the grant in arriving at the

carrying amount of the asset.

25 Two methods of presentation in financial statements of grants or the

appropriate portions of grants related to assets are regarded as

acceptable alternatives.

26 One method recognizes the grant as deferred income that is recognized

in profit or loss on a systematic basis over the useful life of the asset.

27 The other method deducts the grant in calculating the carrying amount of

the asset. The grant is recognized in profit or loss over the life of a

depreciable asset as a reduced depreciation expense.

28 The purchase of assets and the receipt of related grants can cause major

movements in the cash flow of an entity. For this reason and in order to

show the gross investment in assets, such movements are often

disclosed as separate items in the statement of cash flows regardless of

whether or not the grant is deducted from the related asset for

presentation purposes in the balance sheet.

For paragraphs 32-33, the following paragraphs shall be substituted,

Namely:-

32 A Government grant that becomes repayable shall be accounted for as a

change in accounting estimate (see Ind AS 8, Accounting Policies,

Changes in Accounting Estimates and Errors). Repayment of a grant

related to income shall be applied first against any unamortized

deferred credit recognized in respect of the grant. To the extent that the

repayment exceeds any such deferred credit, or when no deferred credit

exists, the repayment shall be recognized immediately in profit or loss.


CORPORATE LAW

Repayment of a grant related to an asset shall be recognized by

increasing the carrying amount of the asset or reducing the deferred

income balance by the amount repayable. The cumulative additional

depreciation that would have been recognized in profit or loss to date in

the absence of the grant shall be recognized immediately in profit or

loss.

33 Circumstances giving rise to repayment of a grant related to an asset may

require consideration to be given to the possible impairment of the new

carrying amount of the asset.

http://mca.gov.in/Ministry/pdf/CompaniesIASsecondAmendment_21092018.pdf

5. Limited Liability Partnership (LLP) (Second Amendment), Rules,2018

MCA has notified the Limited Liability Partnership (LLP) (Second Amendment) Rules 2018 amending the procedure for incorporation of LLP. LLP Form 1 has been replaced with RUN-LLP for making application for reserving the name of LLP and Form 2 has been replaced with Form FiLLip for making application for Incorporation of LLP. Form FiLLiP will be an integrated form offering multiple services viz. allotment of DIN/Reservation of Name and Incorporation of LLPs. Hence, now the Incorporation of LLPs with new Designated Partners who do not possess DIN will resume. Few other LLP e-forms have been revised with minor modifications. Further Form RUN-LLP, Form 5, 17, 18 shall now be processed by Central Registration Centre (CRC) as per the amended LLP Rules. The amended LLP Rules shall come into force w.e.f. 2 Oct. 2018. Complete details of the LLP forms which have been replaced/modified are attached herewith for your reference.

http://mca.gov.in/MinistryV2/homepage.html



http://mca.gov.in/MinistryV2/homepage.html


CORPORATE LAW

6. External Commercial Borrowings (ECB) Policy – Liberalization:

The RBI has vide its notification dated 19th September, 2018 liberalized the existing norms for manufacturing sector.

a. ECBs by companies in manufacturing sector: As per the extant norms, ECB up to USD 50 million or its equivalent can be raised by eligible borrowers with minimum average maturity period of 3 years. It has now been decided to allow eligible ECB borrowers who are into manufacturing sector to raise ECB up to USD 50 million or its equivalent with minimum average maturity period of 1 year.

b. Underwriting and market making by Indian banks for Rupee denominated bonds (RDB) issued overseas: Presently, Indian banks, subject to applicable prudential norms, can act as arranger and underwriter for RDBs issued overseas and in case of underwriting an issue, their holding cannot be more than 5 per cent of the issue size after 6 months of issue. It has now been decided to permit Indian banks to participate as arrangers/underwriters/market makers/traders in RDBs issued overseas subject to applicable prudential norms.

7. Companies (Registered Valuers and Valuation Third Amendment Rules, 2018 The Ministry of Corporate Affairs has vide its Notification dated 25th September, 2018 notified the Companies (Registered Valuers and Valuation) Third Amendment Rules, 2018. The amendments in the said rules are given below:


Sr.No. Rule Amendment Provision prior

to the

amendment

Provision post-

amendment

1. Rule 11-

Transitional

arrangement

As per the

amendment,

persons rendering

valuation

services, on the

date of

commencement

of these rules,

may continue to

do so without

a certificate of

registration upto

31st January,

2019. (Earlier this

date was

extended from

31st March, 2018

to 30th

September,

2018.)

Any person who

may be rendering

valuation services

under the Act, on

the date of

commencement

of these rules (i.e.

18.10.2017),

may continue to

render valuation

services without a

certificate of

registration under

these rules upto

30th September,

2018.

Provided that if a

company has

appointed any

valuer before

such date and the

valuation or any

part of it has not

been completed

before 30th

September, 2018,

the valuer shall

complete such

valuation or such

part within three

months

thereafter.

Any person who

may be rendering

valuation services

under the Act, on

the date of

commencement

of these rules (i.e.

18.10.2017),

may continue to

render valuation

services without a

certificate of

registration under

these rules upto

31st January,

2019.

Provided that if a

company has

appointed any

valuer before

such date and the

valuation or any

part of it has not

been completed

before

31st January,

2019 the valuer

shall complete

such valuation or

such part within

three months

thereafter.


Sr.No. Rule Amendment Provision prior

to the

amendment

Provision post-

amendment

2. Rule 14-

Conditions of

recognition

An organization

which is eligible to

be recognized as a

Registered Valuers

Organization shall

be granted

recognition under

Rule 13 subject to

various conditions

which are laid down

in Rule 14. One of

the conditions to be

satisfied was that

the Registered

Valuer Organization

shall convert itself

into a Section 8

company within a

period of 1 (one)

year from the date

of commencement

of these rules. Now,

after the

amendment, this

period has been

extended upto 2

(two) years from the

date of

commencement of

the rules i.e. now

the last date shall be

17th October, 2019.

The recognition

granted under

Rule 13 shall be

subject to the

conditions that

the registered

valuers

organization shall

be converted or

registered as

company under

section 8 of the

Act, with

governance

structure and bye

laws specified in

Annexure-III,

within a period of

one year from the

date of

commencement

of these rules if it

is an organization

referred to in

proviso to sub-

rule (1) of rule

12.

The recognition

granted under

Rule 13 shall be

subject to the

conditions that

the registered

valuers

organization shall

be converted or

registered as

company under

section 8 of the

Act, with

governance

structure and bye

laws specified in

Annexure-III,

within a period of

two years from

the date of

commencement

of these rules if it

is an organization

referred to in

proviso to sub-

rule (1) of rule

12.

http://mca.gov.in/Ministry/pdf/CompaniesThirdAmendment_25092018.pdf

http://mca.gov.in/Ministry/pdf/CompaniesThirdAmendment_25092018.pdf

Allow us to tell you more!

R.C. JAIN & ASSOCIATES LLP Chartered Accountants Website: www.rcjainca.com Head Office: Mumbai - 622-624, The Corporate Centre,

Nirmal Lifestyle, L.B.S. Marg, Mulund (W), Mumbai – 400080. Email: [email protected] Phone: 25628290/91, 67700107

Branch Offices: Bhopal - 302, Plot No. 75 B, First Floor,

Above Apurti Supermarket, Near Chetak Bridge, Kasturba Nagar, Bhopal. Madhya Pradesh– 462 001 Email: [email protected] Phone: 0755-2600646

Aurangabad - Su-Shobha, Plot No.7,

Mitranagar, Behind Akashwani, Near Maratha Darbar Hotel, Aurangabad - 431001. Email: [email protected]

Phone: 0240-2357556

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