Monthly Archives: January 2019

MSME return

The Ministry of Micro, Small & Medium Enterprises had vide its notification dated 2nd November, 2018 directed that all companies who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services shall submit a half yearly return to the Ministry of Corporate Affairs stating inter alia the amount of payments due and the reasons for the delay.

So this MSMED notification was to be regulated by the MCA.

Now MCA has vide its order dated 22nd January, 2019 effectuated this notification of MSMED. MCA has gazetted an order called Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers), Order, 2019.

The Order states that every “specified company” shall file in MSME Form 1 details of all outstanding dues to micro or small enterprise suppliers existing on the date of notification of this order i.e. on 22nd January, 2019 within 30 days from the date of publication of this notification i.e. within 21st February, 2019. 

The Order further states that every “specified company” shall file a half yearly return for the period April to September by 31st October and for the period October to March by 30th April, every year. 

So ONE immediate compliance of outstanding micro and small suppliers within 30 days and TWO half yearly returns every year.

What is “Specified company” is not clarified in any of the notification but it is safe to assume that it means that all companies who supplies of goods or services from micro or small enterprises.

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Return of deposits – amendment

MCA has vide its notification dated 22nd January, 2019 amended the Companies (Acceptance of Deposits), Rules, 2014. The salient features of the amendments are as follows:

1) Any amount received by a company from Real Estate Investment Trusts will be treated as exempt deposits as per amendment to 2(1)(c)(xviii);

2) In Rule 16, an explanation has been added which says that form DPT-3 shall be used for filing return of deposit or particulars of transaction not considered as deposit, or both, by every company, other than government company.

This means that particulars of exempted deposits such as unsecured loans from directors, their relatives, shareholders (within the limit), inter-corporate borrowings etc. all need to be reported in this format.

Further, fail to understand why government companies are exempted from this requirement. If the government is serious about corporate governance, then in my view even government companies should have been asked to comply.

Rule 16 pertains to a return of deposits to be filed with the Registrar in form DPT-3.

3) Rule 16A has been amended by inserting a sub-rule (3), which states that every company, other than a government company,  shall file a one time return of outstanding receipt of money or loan by a company but not considered as deposits, from 1st April, 2014 to the date of the notification of this amendment i.e. 22nd January, 2019 in form DPT-3 within 90 days from the date of publication of this notification alongwith fees.

Rule 16A pertains to disclosures in the financial statements and Rule 16 pertains to return of deposits. Unable to comprehend why this amendment has been carried out in Rule 16A rather than Rule 16 which is the correct rule for this subject matter, which is yet another return. Especially when they have made an amendment to Rule 16 giving an explanation as above, amendment of this item in the Rule 16 would have been apt. Another feature I have observed is the bad drafting in the sub-rule (3). They have mentioned “outstanding receipt of money or loan by a company” it should have been “outstanding receipt of money or loan received by a company.”

It is also not clear, “outstanding” as on what date – 22nd January, 2019 or the last audited financial year ended date i.e. 31st March, 2018.

Here also unable to comprehend why the government companies are exempt from this requirement. Frankly, if the Indian government is serious about corporate governance then they should make an example out of  the government companies in asking them to comply equally with non government companies.

So another one time return to be filed by all the companies in India along with the requisite fees. So an added one time compliance like the KYC one which came in August- September, 2018. This form DPT-3 to be filed within 90 days i.e. on or before 21st April, 2019. Its going to be mayhem in India Inc. because the 2nd round of KYC compliance will start from 1st April, 2019 onwards and that will run for a month and then this compliance will simultaneously run in April 2019. Knowing the tendency and propensity of companies to sleep until the last minute, its going to be mayhem in April, 2019

So much for ease of doing business in India.

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filing of resolutions

MCA has amended section 117(2) of the Companies Act, 2013 vide Companies Ordinance 2019 which has been gazetted on 12th January, 2019.

The amended section 117(2) reads as follows:

“(2) If any company fails to file the resolution or agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of Rs.100,000 and in case of continuing failure, with a further penalty of Rs.500 for each day after the first during which such failure continues subject to a maximum of Rs.25 lakhs and every officer of the company including the liquidator of the company, if any, shall be liable to a penalty of Rs.50,000/- and in case of continuing failure, with a further penalty of Rs.500 for each day after the first during which such failure continues subject to a maximum of Rs.5 lakhs.”

What has changed is that earlier the phrase was “shall be punishable with fine”, now it is replaced with “shall be liable to penalty”. There must be some implications for this change.

Earlier the penalty on the company was ranging from Rs.1 lakh to Rs.25 lakhs, now it is fixed as Rs.100,000/-. The provision of continuing failure penalty has been brought in, which was not there earlier.

Similarly, the penalty for the officer in default was ranging from Rs.50,000/- to Rs.5 lakhs, but now it has been fixed at Rs.50,000/- and here also the continuing failure provision has been introduced.

Section 117 pertains to filing of special resolutions and agreements which is required for key important matters such as special resolutions passed in general meetings, Board resolution for appointment, re-appointment, or renewal of appointment or variation in terms of appointment of managing director. Resolution which requires the company to be would up voluntarily and resolutions passed in pursuance to section 179(3) – these are Board resolutions for important items such as borrowings, buy-back, issue of securities, making calls on shareholders, investment, grant loans or give guarantee or provide security in respect of loans, approve financial statement & Board report, diversify the business, amalgamation, merger, reconstruction, take over etc.

These resolutions are filed in form MGT-14 and the normal time for filing the same is 30 days from the date of passing the resolutions.

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Annual Return

MCA has vide the Companies Ordinance 2019 which has been gazetted on 12th January, 2019 amended section 92 as follows:

Section 92 pertains to annual return to be filed by every company in India. This is one of the two mandatory annual filings to be done by every company in India. It is required to be filed within 60 days from the date of the annual general meeting or where no AGM is held, within 60 days from the last date on which AGM should have been held. It contains details of the Directors, shareholders, debt, managerial remuneration, share transfers, board meetings, general meetings, etc.

Section 92(5) is the penalty section, which has been modified. The amended section 92(5) states as follows:

“If a company fails to file its annual return under sub-section (4) before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to penalty of Rs.50,000/- and in case of continuing failure, with a further penalty of Rs.100 per day during which the failure continues, subject to maximum of Rs.500,000/-.”

What has changed is that earlier the company was subject to a penalty of not less than Rs.50,000/- but which may extend to Rs.500,000/- and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to 6 months OR fine of Rs.50,000/- which may extend to Rs.5000,000/- or with both.

So the imprisonment has been removed and penalty for both the company and officer in default has been made common i.e. Rs.50,000/-. Penalty for continuing failure has been added, which was not there hitherto.

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registration of charges

MCA has made changes to section 77 of the Companies Act, 2013 vide the Companies Ordinance, 2019 which has been gazetted on 12th January, 2019.

Earlier section 77 allowed charges to be filed within 300 days of its creation. Now that 300 days period has been reduced to 60 days. Under the old Companies Act, 1956, the charges were required to be filed within 30 days of its creation failing which the matter has to be settled by filing a extension of time application to the then Company Law Board.

Under the Companies Act, 2013 when it was first enacted, this period was enhanced to 300 days as a measure of ease of doing business.

Now again it has been reduced to 60 days from the date of its first creation.

If the charges are created before the Companies Act Ordinance 2019 then still the charges can be filed within 300 days, but if the charges are created after the Ordinance has come into force, i.e. 12th January, 2019, then 60 days is the time limit. Even for the 60 days, there will be additional filing fees after 30 days.

If the registration is not made within 300 days under the old provision, then it can still be made within 6 months of the Ordinance coming into force with additional filing fees being paid. This means that the government has given sufficient time for filing of the charges, if the charges were created before the Ordinance came into force – 300 days + 6 months after the ordinance

If the charges are created after the Ordinance has come into force and still the form is not filed within 60 days, then on application further 60 days is given, but here the additional fees will be on ad valorem basis. The ad valorem basis will be prescribed by the government.

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appointment of KMP

Section 203(5) of the Companies Act, 2013 has been amended vide Companies Ordinance, 2019 as follows:

Section 203(5) after amendment reads as follows:

“If any company makes a default in complying with the provisions of this section, such company shall be liable to a penalty of Rs.500,000 and every director and KMP of the company who is in default, shall be liable to a penalty of Rs.50,000 and where default is a continuing one, with a further penalty of Rs.1000/- per day after the first day, during which such default continues but not exceeding Rs.500,000/-.

The earlier section mentioned penalty of not less than Rs.100,000 on the company, but which may extend to Rs.500,000/- Now it is one figure of Rs.500,000/- All other provisions are the same except the wordings earlier was “shall be punishable with fine” has been replaced with  “shall be liable to penalty”.

Unable to comprehend the meaning of this phrase change.

Section 203 pertains to appointment of managing director, CEO or manager, company secretary and chief financial officer in certain specified companies. The specifications are contained in Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 wherein it is stated that every listed company and every public company having paid up share capital of Rs.10 crore or more shall have whole-time key managerial personnel. It also applies to private company having paid up share capital of Rs.5 crores or more and they are required to appoint whole time company secretary.

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External Commercial Borrowings

RBI has vide its notification dated 16th January, 2019 rationalised the ECB framework to improve the ease of doing business.

Salient features of the new ECB framework are as follows:

  1. Merging of Tracks: Merging of Tracks I and II as “Foreign Currency denominated ECB” and merging of Track III and Rupee Denominated Bonds framework as “Rupee Denominated ECB”.

  2. Eligible Borrowers: This has been expanded to include all entities eligible to receive FDI. Additionally, Port Trusts, Units in SEZ, SIDBI, EXIM Bank, registered entities engaged in micro-finance activities, viz., registered not for profit companies, registered societies/trusts/cooperatives and non-government organisations can also borrow under this framework.

  3. Recognised Lender: The lender should be resident of FATF or IOSCO compliant country. Multilateral and Regional Financial Institutions, Individuals and Foreign branches / subsidiaries of Indian banks can also be lenders as detailed in Annex.

  4. Minimum Average Maturity Period (MAMP): MAMP will be 3 years for all ECBs. However, for ECB raised from foreign equity holder and utilised for specific purposes, as detailed in the Annex, the MAMP would be 5 years. Similarly, for ECB up to USD 50 million per financial year raised by manufacturing sector, which has been given a special dispensation, the MAMP would be 1 year as given in the Annex.

  5. Late Submission Fee (LSF) for delay in Reporting: Any borrower, who is otherwise in compliance of ECB guidelines, except for delay in reporting drawdown of ECB proceeds before obtaining LRN or Form ECB 2 returns, can regularize the delay by payment of LSF as per the laid down procedure.

4. ECB up to USD 750 million or equivalent per financial year, which otherwise are in compliance with the parameters and other terms and conditions set out in the new ECB framework, will be permitted under the automatic route not requiring prior approval of the Reserve Bank. The designated AD Category I bank while considering the ECB proposal is expected to ensure compliance with applicable ECB guidelines by their constituents. Any contravention of the applicable provisions will invite penal action or adjudication under the Foreign Exchange Management Act, 1999.

The copy of the RBI notification can be found here

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GST simplification

Press release by Ministry of Finance on GST simplification.

Major Decisions taken by the GST Council in its 32nd Meeting held today under the Chairmanship of the Union Minister of Finance & Corporate Affairs, Shri Arun Jaitley 

Posted On: 10 JAN 2019 6:18PM by PIB Delhi

The GST Council in its 32nd Meeting held today under the Chairmanship of the Union Minister of Finance & Corporate Affairs, Shri Arun Jaitley in New Delhi took the following major decisions to give relief to MSME (including Small Traders) among others –

1.   Increase in Turnover Limit for the existing Composition Scheme: The limit of Annual Turnover in the preceding Financial Year for availing Composition Scheme for Goods shall be increased to Rs 1.5 crore. Special category States would decide, within one week, about the Composition Limit in their respective States.

1.1    Compliance Simplification: The compliance under Composition Scheme shall be simplified as now they would need to file one Annual Return but Payment of Taxes would remain Quarterly (along with a simple declaration).

2.    Higher Exemption Threshold Limit for Supplier of Goods: There would be two Threshold Limits for exemption from Registration and Payment of GST for the suppliers of Goods i.e. Rs 40 lakhs and Rs 20 lakhs. States would have an option to decide about one of the limits within a weeks’ time. The Threshold for Registration for Service Providers would continue to be Rs 20 lakhs and in case of Special Category States at Rs 10 lakhs.

3.   Composition   Scheme for Services: A Composition Scheme shall be made available for Suppliers of Services (or Mixed Suppliers) with a Tax Rate of 6% (3% CGST +3% SGST) having an Annual Turnover in the preceding Financial Year up to Rs 50 lakhs.

3.1  The said Scheme Shall be applicable to both Service Providers as well as Suppliers of Goods and Services, who are not eligible for the presently available Composition Scheme for Goods.

3.2  They would be liable to file one Annual Return with Quarterly Payment of Taxes (along with a Simple Declaration).

4.     Effective date: The decisions at Sl. No. 1 to 3 above shall be made operational from the 1st of April, 2019.

5.    Free Accounting and Billing Software shall be provided to Small Taxpayers by GSTN.

 6.   Matters referred to Group of Ministers:

        i.   A seven Member Group of Ministers shall be constituted to examine the proposal of giving a Composition Scheme to Boost the Residential Segment of the Real Estate Sector.

      ii.    A Group of Ministers shall be constituted to examine the GST Rate Structure on Lotteries.

7.  Revenue Mobilization for Natural Calamities: GST Council approved Levy of Cess on Intra-State Supply of Goods and Services within the State of Kerala at a rate not exceeding 1% for a period not exceeding 2 years.

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transmission of shares

SEBI has vide its circular dated 4th January, 2019 clarified that in case of transmission of shares held in demat mode, it shall follow the same procedure in respect of documentation as is specified in case of transmission of shares in physical mode. In physical mode, it has been specified that succession certificate or probate of will or will or letter of administration or court decree etc. as may be applicable in terms of the Indian Succession Act, 1925 are the documentary requirements.

Now in terms of the aforesaid circular, the same documentary requirements shall be applicable to transmission of securities held in demat made. So basically the successors or heirs have to produce the above set of documents to prove their title and submit the same to the depository participant.

Copy of SEBI circular is enclosed here

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customer protection – prepaid instruments

Gist of RBI notification dated 4th January, 2019 on customer protection for authorised non banks pre-paid instruments.

Please refer to paragraph 9 of Statement on Developmental and Regulatory Policies regarding framework for limiting customer liability in respect of unauthorised electronic payment transactions involving PPIs, announced in the Fifth Bi-monthly Monetary Policy Statement for 2018-19 by the Reserve Bank of India (RBI).

2. As you are aware, a framework for ‘Risk Management’ and ‘Customer Protection’ has already been laid down in paragraphs 15 and 16 of Master Direction on Issuance and Operation of Prepaid Payment Instruments (PPI MD) issued vide DPSS.CO.PD.No.1164/02.14.006/2017-18 dated October 11, 2017 (updated as on December 29, 2017). With a view to further strengthen customer protection for the PPIs which are issued by entities other than banks, the criteria for determining the customers’ liability in unauthorised electronic payment transactions resulting in debit to their PPIs have been reviewed as under:

Applicability

3. The provisions of these directions will be applicable to all authorised non-bank PPI issuers (referred to as ‘PPI issuer’ hereafter). Bank PPI issuers will continue to be guided by DBR.No.Leg.BC.78/09.07.005/2017-18 dated July 6, 2017 or DCBR.BPD.(PCB / RCB). Cir.No.06/12.05.001/2017-18 dated December 14, 2017, as applicable. PPIs issued under the arrangement of PPI-MTS (PPIs for Mass Transit Systems) as per paragraph 10.2 of PPI MD will be outside the purview of these directions except for the cases of contributory fraud / negligence / deficiency on the part of the PPI-MTS issuer.

Categories of electronic payment transactions

4. For the purpose of this circular, electronic payment transactions have been divided into two categories:

  1. Remote / Online payment transactions (transactions that do not require physical PPIs to be presented at the point of transactions e.g. wallets, card not present (CNP) transactions, etc.).

  2. Face-to-face / Proximity payment transactions (transactions which require the physical PPIs such as cards or mobile phones to be present at the point of transactions e.g. transactions at Point of Sale, etc.).

5. Reporting of unauthorised payment transactions by customers to PPI issuers

  1. PPI issuers shall ensure that their customers mandatorily register for SMS alerts and wherever available also register for e-mail alerts, for electronic payment transactions.

  2. The SMS alert for any payment transaction in the account shall mandatorily be sent to the customers and e-mail alert may additionally be sent, wherever registered. The transaction alert should have a contact number and / or e-mail id on which a customer can report unauthorised transactions or notify the objection.

  3. Customers shall be advised to notify the PPI issuer of any unauthorised electronic payment transaction at the earliest and, shall also be informed that longer the time taken to notify the PPI issuer, higher will be the risk of loss to the PPI issuer / customer.

  4. To facilitate this, PPI issuers shall provide customers with 24×7 access via website / SMS / e-mail / a dedicated toll-free helpline for reporting unauthorised transactions that have taken place and / or loss or theft of the PPI.

  5. Further, a direct link for lodging of complaints, with specific option to report unauthorised electronic payment transactions shall be provided by PPI issuers on mobile app / home page of their website / any other evolving acceptance mode.

  6. The loss / fraud reporting system so established shall also ensure that immediate response (including auto response) is sent to the customers acknowledging the complaint along with the registered complaint number. The communication systems used by PPI issuers to send alerts and receive their responses thereto shall record time and date of delivery of the message and receipt of customer’s response, if any. This shall be important in determining the extent of a customer’s liability. On receipt of report of an unauthorised payment transaction from the customer, PPI issuers shall take immediate action to prevent further unauthorised payment transactions in the PPI.

Limited liability of a customer

6. A customer’s liability arising out of an unauthorised payment transaction will be limited to:

Customer liability in case of unauthorised electronic payment transactions through a PPI
S. No. Particulars Maximum Liability of Customer
(a) Contributory fraud / negligence / deficiency on the part of the PPI issuer, including PPI-MTS issuer (irrespective of whether or not the transaction is reported by the customer) Zero
(b) Third party breach where the deficiency lies neither with the PPI issuer nor with the customer but lies elsewhere in the system, and the customer notifies the PPI issuer regarding the unauthorised payment transaction. The per transaction customer liability in such cases will depend on the number of days lapsed between the receipt of transaction communication by the customer from the PPI issuer and the reporting of unauthorised transaction by the customer to the PPI issuer –  
i. Within three days# Zero
ii. Within four to seven days# Transaction value or ₹ 10,000/- per transaction, whichever is lower
iii. Beyond seven days# As per the Board approved policy of the PPI issuer
(c) In cases where the loss is due to negligence by a customer, such as where he / she has shared the payment credentials, the customer will bear the entire loss until he / she reports the unauthorised transaction to the PPI issuer. Any loss occurring after the reporting of the unauthorised transaction shall be borne by the PPI issuer.
(d) PPI issuers may also, at their discretion, decide to waive off any customer liability in case of unauthorised electronic payment transactions even in cases of customer negligence.
# The number of days mentioned above shall be counted excluding the date of receiving the communication from the PPI issuer.

The above shall be clearly communicated to all PPI holders.

Reversal timeline for zero liability / limited liability of a customer

7. On being notified by the customer, the PPI issuer shall credit (notional reversal) the amount involved in the unauthorised electronic payment transaction to the customer’s PPI within 10 days from the date of such notification by the customer (without waiting for settlement of insurance claim, if any), even if such reversal breaches the maximum permissible limit applicable to that type / category of PPI. The credit shall be value-dated to be as of the date of the unauthorised transaction.

8. Further, PPI issuers shall ensure that a complaint is resolved and liability of the customer, if any, established within such time, as may be specified in the PPI issuer’s Board approved policy, but not exceeding 90 days from the date of receipt of the complaint, and the customer is compensated as per provisions of paragraph 6 above. In case the PPI issuer is unable to resolve the complaint or determine the customer liability, if any, within 90 days, the amount as prescribed in paragraph 6 shall be paid to the customer, irrespective of whether the negligence is on the part of customer or otherwise.

Board approved policy for customer protection

9. Taking into account the risks arising out of unauthorised debits to PPIs owing to customer negligence / PPI issuer negligence / system frauds / third party breaches, PPI issuers need to clearly define the rights and obligations of customers in case of unauthorised payment transactions in specified scenarios. PPI issuers shall formulate / revise their customer relations policy, with approval of their Boards, to cover aspects of customer protection, including the mechanism of creating customer awareness on the risks and responsibilities involved in electronic payment transactions and customer liability in such cases of unauthorised electronic payment transactions. The policy must be transparent, non-discriminatory and should stipulate the mechanism of compensating the customers for the unauthorised electronic payment transactions and also prescribe the timelines for effecting such compensation. PPI issuers shall provide the details of their Board approved policy in regard to customers’ liability formulated in pursuance of these directions, as well as the provisions of paragraph 15 and 16 of PPI MD, to all customers at the time of issuing the PPI. PPI issuers shall display their Board approved policy, along with the details of grievance handling / escalation procedure, in public domain / website / app for wider dissemination.

Burden of proof

10. The burden of proving customer liability in case of unauthorised electronic payment transactions shall lie on the PPI issuer.

Reporting and monitoring requirements

11. The PPI issuers shall put in place a suitable mechanism and structure for reporting of the customer liability cases to the Board or one of its Committees. The reporting shall, inter-alia, include volume / number of cases and the aggregate value involved and distribution across various categories of cases. The Board or one of its Committees shall periodically review the unauthorised electronic payment transactions reported by customers or otherwise, as also the action taken thereon, the functioning of the grievance redressal mechanism and take appropriate measures to improve the systems and procedures.

12. Directions contained in paragraph 16.4 of PPI MD as applicable to non-bank PPI issuers are being modified accordingly.

13. The directive is issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007), and shall come into effect from March 01, 2019.

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FDI in e-commerce

Review of the FDI policy in e-commerce issued by the DIPP on 26th December, 2018

1.0       To provide clarity to FDI policy on e-commerce sector, Para 5.2.15.2 of the Consolidated FDI Policy Circular 2017 will now read as under:

5.2.15.2 E-commerce activities

Sector/Activity

% of Equity/FDI Cap

Entry Route

E-commerce activities

100%

Automatic

5.2.15.2.1 Subject to provisions of FDI Policy, e-commerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce.

5.2.15.2.2 Definitions:

i)    E-commerce- E-commerce means buying and selling of goods and services including digital products over digital & electronic network.

ii)   E-commerce entity-     E-commerce entity means a company incorporated under the Companies Act 1956 or the Companies Act 2013 or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in section 2 (v) (iii) of FEMA 1999, owned or controlled by a person resident outside India and conducting the e-commerce business.

iii)  Inventory based model of e-commerce- Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly. 

iv)  Marketplace based model of e-commerce- Marketplace based model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller.

5.2.15.2.3 Guidelines for Foreign Direct Investment on e-commerce sector

i)          100% FDI under automatic route is permitted in marketplace model of e-commerce.

ii)         FDI is not permitted in inventory based model of e-commerce.

5.2.15.2.4          Other Conditions

i)          Digital & electronic network will include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles etc.

ii)         Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis.

iii)        E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfillment, call centre, payment collection and other services.

iv)        E-commerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. Such an ownership or control over the inventory will render the business into inventory based model. Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies. 

 v)        An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.

vi)        In marketplace model goods/services made available for sale electronically on website should clearly provide name, address and other contact details of the seller. Post sales, delivery of goods to the customers and customer satisfaction will be responsibility of the seller.

vii)       In marketplace model, payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India.

viii)      In marketplace model, any warrantee/ guarantee of goods and services sold will be responsibility of the seller.

ix)        E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner. Such services will include but not limited to fulfilment, logistics, warehousing, advertisement/ marketing, payments, financing etc. Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory.

  x)       Guidelines on cash and carry wholesale trading as given in para 5.2.15.1.2 of Consolidated FDI Policy Circular 2017 will apply on B2B e-commerce.

xi)        e-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.

xii)       e-commerce marketplace entity will be required to furnish a certificate along with a report of statutory auditor to Reserve Bank of India, confirming compliance of above guidelines, by 30th of September of every year for the preceding financial year.

            Subject to the conditions of FDI policy on services sector and applicable laws/regulations, security and other conditionalities, sale of services through e-commerce will be under automatic route.

3.0       The above decision will take effect from 01 February, 2019.

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CRZ notification

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved the Coastal Regulation Zone (CRZ) Notification, 2018 which was last reviewed and issued in 2011, with periodic amendments to some clauses. The move comes in the backdrop of a series of representations received by the Ministry of Environment, Forest & Climate Change from various Coastal States/UTs, besides other stakeholders, for a comprehensive review of the provisions of the CRZ Notification, 2011, particularly related to the management and conservation of marine and coastal eco-systems, development in coastal areas, eco-tourism, livelihood option and sustainable development of coastal communities etc.

Benefits

The proposed CRZ Notification, 2018 will lead to enhanced activities in the coastal regions thereby promoting economic growth while also respecting the conservation principles of coastal regions. It will not only result in significant employment generation but also to better life and add value to the economy of India. The new notification is expected to rejuvenate the coastal areas while reducing their vulnerabilities.

Salient Features:

(i)         Allowing FSI as per current norms in CRZ areas: As per CRZ, 2011 Notification, for CRZ-II (Urban) areas, Floor Space Index (FSI) or the Floor Area Ratio (FAR) had been frozen as per 1991 Development Control Regulation (DCR) levels. In the CRZ, 2018 Notification, it has been decided to de-freeze the same and permit FSI for construction projects, as prevailing on the date of the new Notification. This will enable redevelopment of these areas to meet the emerging needs.

(ii)        Densely populated rural areas to be afforded greater opportunity for development: For CRZ-III (Rural) areas, two separate categories have now been stipulated as below:

(a)  CRZ-III A – These are densely populated rural areas with a population density of 2161 per square kilometre as per 2011 Census. Such areas shall have a No Development Zone (NDZ) of 50 meters from the HTL as against 200 meters from the High Tide Line stipulated in the CRZ Notification, 2011 since such areas have similar characteristics as urban areas.

(b)  CRZ-III B – Rural areas with population density of below 2161 per square kilometre as per 2011 Census. Such areas shall continue to have an NDZ of 200 meters from the HTL.

(iii)       Tourism infrastructure for basic amenities to be promoted: Temporary tourism facilities such as shacks, toilet blocks, change rooms, drinking water facilities etc. have now been permitted in Beaches. Such temporary tourism facilities are also now permissible in the “No Development Zone” (NDZ) of the CRZ-III areas as per the Notification. However, a minimum distance of 10 m from HTL should be maintained for setting up of such facilities.

(iv)      CRZ Clearances streamlined: The procedure for CRZ clearances has been streamlined. Only such projects/activities, which are located in the CRZ-I (Ecologically Sensitive Areas) and CRZ IV (area covered between Low Tide Line and 12 Nautical Miles seaward) shall be dealt with for CRZ clearance by the Ministry of Environment, Forest and Climate Change. The powers for clearances with respect to CRZ-II and III have been delegated at the State level with necessary guidance.

(v)       A No Development Zone (NDZ) of 20 meters has been stipulated for all Islands: For islands close to the main land coast and for all Backwater Islands in the main land, in wake of space limitations and unique geography of such regions, bringing uniformity in treatment of such regions, NDZ of 20 m has been stipulated.

(vi)       All Ecologically Sensitive Areas have been accorded special importance: Specific guidelines related to their conservation and management plans have been drawn up as a part of the CRZ Notification.

(vii)      Pollution abatement has been accorded special focus: In order to address pollution in Coastal areas treatment facilities have been made permissible activities in CRZ-I B area subject to necessary safeguards.

(viii)     Defence and strategic projects have been accorded necessary dispensation. 

Background:

With the objective of conservation and protection of the coastal environment, Ministry of Environment and Forest and Climate Change notified the Coastal Regulation Zone Notification in 1991, which was subsequently revised in 2011. The notification was amended from time to time based on representations received.

A need was felt overtime to undertake a comprehensive revision of the notification on the basis of number of representations from various Coastal States/UTs, besides other stakeholders particularly related to the management and conservation of marine and coastal eco-systems, development in coastal areas, eco-tourism, livelihood options and sustainable development of coastal communities etc. Therefore, the Ministry of Environment, Forest & Climate Change constituted a Committee in June 2014 under the Chairmanship of Dr. Shailesh Nayak (Secretary, Ministry of Earth Sciences) to examine the various issues and concerns of Coastal States/UTs and other stakeholders for recommending appropriate changes in the CRZ Notification, 2011.

The Shailesh Nayank Committee held wide ranging consultations with State Governments and other stakeholders and submitted its recommendations in 2015. The recommendations were further examined in consultation with Members of Parliament of Coastal States and Union Territories besides other concerned Ministries of Government of India. A draft notification was issued in April, 2018 for inviting comments from public at large.

A number of suggestions and comments were received by the Government and based on overall imperative of sustainable development of Coastal areas and need for conserving the Coastal environment, Government has approved the Coastal Regulation Zone Notification 2018 which is expected to go a long way in meeting the aspirations of Coastal communities besides ensuring welfare of poor and vulnerable populations.

The changes brought about in the CRZ Notification will further add to creating additional opportunities for affordable housing. This will benefit not only the housing sector but the people at large looking for shelter. The Notification is so designed that it balances the needs in such a way that both are fulfilled. Tourism has been one of the greatest creators of livelihood and jobs. The new Notification will boost tourism in terms of more activities, more infrastructure and more opportunities and will certainly go a long way in creating employment opportunities in various aspects of tourism. This will also give boost to people, desirous of seeing and enjoying the beauty of the mighty seas.

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GSTR3B – waiver of late fee

The Central Government has vide a notification click here waived the late fee on delayed filing of form GSTR3B. Any amount of late fee which is in excess of Rs.25/- per day is waived. Similarly where the tax payable is NIL and still the registered person has to file the return, any excess late fee over Rs.10 per day is waived off. This is applicable for all GSTR3B returns from July, 2017 onwards i.e. from the inception of GST system. Originally the penalty was Rs.25/- each for the state and centre and Rs.10 each for the state and central tax regime. Now part of the late fee has been waived.

So here it is only a partial waiver. But where the registered person has failed to furnish the return for the periods July 2017 to September, 2018 but has subsequently filed the same between 22nd December, 2018 and 31st March, 2019, the entire late fee is waived off.

This sounds ridiculous unless I am missing some thing here. That means if you have not filed at all but are filing now between those above dates, then you get full waiver, otherwise only partial waiver.

This begs a major question – why the hell did the government deem it so bloody important to levy a late fee and penalty in the first place if they have to go back and waive it from retrospective effect. Sounds like poor governance from the government.

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CERSAI

Gist of RBI notification dated 27th December, 2018 follows

It is now mandatory for banks/ NBFCs etc. to file security interest created on immoveable property (other than equitable mortgage by deposit of title deeds), moveable and intangeable assets in CERSAI.

CERSAI is central registry of securitisation asset reconstruction and security interest of India. It is an online platform for registration of transaction of securitisation, asset reconstruction of financial assets, and creation of security interest over property as contemplated in the SARFAESI Act.

Please refer to circulars DBOD.Leg.No.BC.86/09.08.011/2010-11 dated April 21, 2011RPCD.CO.RRB.BC.No.72/03.05.33/2010-11 dated May 19, 2011DNBS.(PD). CC.No.24/SCRC/26.03.001/2010-2011 dated May 25, 2011 and RPCD.CO.RCB.BC. No.73/07.38.03/2010-11 dated May 26, 2011 advising banks/financial institutions(FIs) to register the transactions relating to securitization and reconstruction of financial assets and those relating to mortgage by deposit of title deeds with CERSAI.

2. The Government of India has subsequently issued a Gazette Notification dated January 22, 2016 for filing of the following types of security interest on the CERSAI portal:

  1. Particulars of creation, modification or satisfaction of security interest in immovable property by mortgage other than mortgage by deposit of title deeds.

  2. Particulars of creation, modification or satisfaction of security interest in hypothecation of plant and machinery, stocks, debts including book debts or receivables, whether existing or future.

  3. Particulars of creation, modification or satisfaction of security interest in intangible assets, being know how, patent, copyright, trademark, licence, franchise or any other business or commercial right of similar nature.

  4. Particulars of creation, modification or satisfaction of security interest in any ‘under construction’ residential or commercial or a part thereof by an agreement or instrument other than mortgage.

3. CERSAI had started registration of the data in respect of paragraphs 2 (a) to (c) above, for the security interests created on or after January 22, 2016, w.e.f. May 25, 2016 for Scheduled Commercial Banks and w.e.f. July 1, 2016 for all other entities registered with them. Further, the registration of data in respect of paragraph 2(d) above has commenced since June 8, 2017 for all banks and FIs registered with CERSAI. Meanwhile, the banks/ FIs have also started registering the security interests created before January 22, 2016 (subsisting records). However, it is observed that the extent of registration on the CERSAI portal is very low, both for current and subsisting records.

4. Banks/FIs are therefore advised to complete filing the charges pertaining to subsisting transactions by March 31, 2019. Banks/FIs are also advised to file the current charges relating to all transactions with CERSAI on an ongoing basis.

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MSME – TReDS

Vide a notification issued by the Govt. of India on 2nd November, 2018, all companies with a turnover of more than Rs.500 crores, and all Central Public Sector Enterprises shall get themselves registered at the Trade Receivables Discounting System Platform set up by the RBI. The Registrar of Companies in each state shall be the competent authority to monitor the compliance of these instructions in respect of companies under its respective jurisdiction and Department of Public Enterprises is the authority for the public sector enterprises.

The RBI guidelines in respect of the Trade Receivables Discounting Sytem (TReDS) is given here

So this is another set of compliances to be done by these big companies.

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