Monthly Archives: August 2019

differential voting rights

PIB press release dated 16th August, 2019

The Ministry of Corporate Affairs has amended the provisions relating to issue of shares with Differential Voting Rights (DVRs) provisions under the Companies Act with the objective of enabling promoters of Indian companies to retain control of their companies in their pursuit for growth and creation of long-term value for shareholders, even as they raise equity capital from global investors.

            The key change brought about through the amendments to the Companies (Share Capital & Debentures) Rules brings in an enhancement in the previously existing cap of 26% of the total post issue paid up equity share capital to a revised cap of 74% of total voting power in respect of shares with Differential Voting Rights of a company.

Another key change brought about is the removal of the earlier requirement of distributable profits for 3 years for a company to be eligible to issue shares with Differential Voting Rights.

            The above two initiatives have been taken by the Government in response to requests from innovative tech companies & startups and to strengthen the hands of Indian companies and their promoters who have lately been identified by deep pocketed investors worldwide for acquisition of controlling stake in them to gain access to the cutting edge innovation and technology development being undertaken by them.

The Government had noted that such Indian promoters have had to cede control of companies which have prospects of becoming Unicorns, due to the requirements of raising capital through issue of equity to foreign investors.

Alongside the above two changes, another major step taken is that the time period within which Employee Stock Options (ESOPs) can be issued by Startups recognized by the Department for Promotion of Industry & Internal Trade (DPIIT) to promoters or Directors holding more than 10% of equity shares, has been enhanced from 5 years to 10 years from the date of their incorporation.

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GI tag for 4 new products

PIB press release dated 16th August, 2019

The Geographical Indication (GI) under the Department for Promotion of Industry and Internal Trade hasrecenly registered 4 new GIs. PalaniPanchamirtham from Palani Town in Dindigul District of Tamil Nadu State, Tawlhlohpuan and Mizo Puancheifrom the state of Mizoram and Tirur Betel leaf from Kerala are the latest additions to the list of registered GIs.

GI is an indication used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin. Such a name conveys an assurance of quality and distinctiveness which is essentially attributable to its origin in that defined geographical locality.

PalaniPanchamirtham, an abishegaPrasadam, from Palani Town is one of the main offerings in the Abisegam of Lord Dhandayuthapani Swamy, the presiding deity of ArulmiguDhandayuthapaniswamy Temple, situated in palani Hills, Palani Town in Dindigul District of Tamil Nadu. It is a combination of five natural substances, namely, banana, jaggery sugar, cow ghee, honey and cardamom in a definite proportion. It is prepared in a natural method without addition of any preservatives or artificial ingredients and is well known for its religious fervour and gaiety. This is the first time a temple ‘prasadam’ from Tamil Nadu has been bestowed with the GI tag.

Tawlhlohpuan, a medium to heavy, compactly woven, good quality fabric from Mizoram is known for warp yarns, warping, weaving & intricate designs that are made by hand. Tawlhloh, in Mizo language, means ‘to stand firm or not to move backward’. Tawlhlohpuan, which holds high significance in the Mizo society, is produced throughout the state of Mizoram, Aizawl and Thenzawl town being the main centre of production.

Mizo Puanchei, a colourful Mizo shawl/textile, from Mizoram, is considered as the most colourful among the Mizo textiles. It is an essential possession for every Mizo lady and an important marriage outfit in the state. It is also the most commonly used costume in Mizo festive dances and official ceremonies. The weavers insert the designs and motifs by using supplementary yarns while weaving to create this beautiful and alluring textile.

Tirur betel vine from Kerala, which is mainly cultivated in Tirur, Tanur, Tirurangadi, Kuttippuram, Malappuram and Vengara block panchayaths of Malappuram District, is valued both for its mild stimulant action and medicinal properties. Even though it is commonly used for making pan masala for chewing, it has many medicinal, industrial and cultural usagesand is considered as a remedy for bad breath and digestive disorders.

GI products can benefit the rural economy in remote areas, by supplementing the incomes of artisans, farmers, weavers and craftsmen. India’s rural artisans possess unique skills and knowledge of traditional practices and methods, passed down from generation to generation, which need to be protected and promoted.The Department for Promotion of Industry and Internal Trade has taken several initiatives in this regard and is actively involved in promotion and marketing of GIs.

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tax administration

PIB press release dated 14th August, 2019

With a view to bringing greater transparency in the functioning of the tax-administration and improvement in service delivery, almost all notices and orders of Income Tax Department are being generated electronically on the Income Tax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Board of Direct Taxes (CBDT) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as “communication”) were found to have been issued manually, without maintaining a proper audit trail of such communication.

In order to prevent such instances and to maintain proper audit trail of all communication, the CBDT has, vide Circular No.19/2019 dated 14.08.2019 laid down parameters specifying the manner in which any communication issued by any income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person will be dealt with. All such communication issued on or after the 1st of October, 2019 shall carry a computer-generated Document Identification Number (DIN) duly quoted in the body of such communication.

CBDT has also specified exceptional circumstances where the communication may be issued manually but only after recording reasons in writing and with the prior written approval of the Chief Commissioner / Director General of Income-Tax concerned. In cases where manual communication is required to be issued, the reason for issue of manual communication without DIN has to be specified alongwith the date of obtaining written approval of the Chief Commissioner / Director General of Income-Tax in a particular format. Any communication which is not in conformity with the prescribed guidelines shall be treated as invalid and shall be deemed to have never been issued. Further, CBDT has also laid down the timelines and procedure by which such communication issued manually will have to be regularised and intimated to the Principal Director General of Income-tax (Systems).

            In addition to the above, in all pending assessment proceedings, where notices were issued manually, prior to issuance of the above referred Circular, all such cases would be identified and the notices so sent would be uploaded on ITBA by 31st October, 2019.

This is another step taken by CBDT towards better delivery of taxpayer services while ensuring accountability in official dealings.

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free ATM transactions

RBI circular dated 14th August, 2019

Usage of ATMs – Free ATM transactions – Clarifications

2. It has come to our notice that transactions that have failed due to technical reasons, non-availability of currency in ATMs, etc., are also included in the number of free ATM transactions.

3. It is hereby clarified that transactions which fail on account of technical reasons like hardware, software, communication issues; non-availability of currency notes in the ATM; and other declines ascribable directly / wholly to the bank / service provider; invalid PIN / validations; etc., shall not be counted as valid ATM transactions for the customer. Consequently, no charges therefor shall be levied.

4. Non-cash withdrawal transactions (such as balance enquiry, cheque book request, payment of taxes, funds transfer, etc.), which constitute ‘on-us’ transactions (i.e., when a card is used at an ATM of the bank which has issued the card) shall also not be part of the number of free ATM transactions.

5. This directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

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Foreclosure charges

Banks to not levy foreclosure charges/ pre-payment penalties on any floating term loan sanctioned to individuals for purposes other than business. Earlier it was only on housing loans. Gist of RBI notification dated 2nd August, 2019 follows

Please refer to our circulars DBOD.No.Dir.BC.107/13.03.00/2011-12 dated June 5, 2012 and DBOD.Dir.BC.No.110/13.03.00/2013-14 dated May 7, 2014, in terms of which banks are not permitted to charge foreclosure charges / pre-payment penalties on home loans / all floating rate term loans sanctioned to individual borrowers.

2. In this connection, it is clarified that banks shall not charge foreclosure charges/ pre-payment penalties on any floating rate term loan sanctioned, for purposes other than business, to individual borrowers with or without co-obligant(s).

 

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