Circulars/Notifications
Transcription
Circulars/Notifications
1516 Legal Update Circulars/Notifications Given below are the important Circulars and Notifications issued by the CBDT, CBEC, FEMA, MCA during the last month for information and use of members. Readers are requested to use the citation/website or weblink to access the full text of desired circular/ notification. You are requested to please submit your feedback and suggestions on the column at [email protected] DIRECT TAXES (Matter on Direct Taxes has been contributed by the Direct Taxes Committee of the ICAI) I.NOTIFICATIONS 1. Agreement and protocol for avoidance of double taxation and prevention of fiscal evasion with Croatia–Notification No. 24/2015, dated 17-3-2015 In exercise of the powers conferred by Section 90 of the Income-tax Act, 1961, the Central Government has directed that all the provisions of the agreement and protocol between the Government of the Republic of India and the Government of the Republic of Croatia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, which was signed in Croatia on the 12.02.2014, shall be given effect to in the Union of India with effect from the 01.04.2016. 2. Agreement for avoidance of double taxation and prevention of fiscal evasion with Czechoslovak Socialist Republic– clarification on applicability of agreement dated 25.05.1987 in respect of Slovak Republic–Notification No. 25/2015, dated 23-3-2015 Slovak Republic is one of the independent States that has succeeded the Czechoslovak Socialist Republic. Under the applicable international laws regarding application of treaties in case of succession of States, this Agreement continues to be applicable in respect of the Slovak Republic, being one of the independent States to have succeeded the Czechoslovak Socialist Republic. In exercise of the powers conferred by Section 119 of the Income-tax Act, 1961, the Central Board of Direct Taxes has clarified that for the purpose of Section 90 of the said Act, the Agreement signed between the Government of the Republic of India and the Government of the Czechoslovak Socialist Republic on the 27.01.1986 for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income would continue to be applicable to the residents of the Slovak Republic. 3. Notification of the income computation and disclosure standards–Notification No. 32/2015, dated 31-03-2015 Under Section 145(1), income chargeable under the heads “Profits and gains of business or profession” or “Income from other sources” shall be computed in accordance with either the cash or mercantile system of accounting regularly employed by the assessee. Section 145(2) empowers the Central Government to notify in the Official Gazette from time to time, income computation and disclosure standards 36 THE CHARTERED ACCOUNTANT may 2015 to be followed by any class of assessees or in respect of any class of income. Accordingly, the Central Government has, in exercise of the powers conferred under Section 145(2), notified ten income computation and disclosure standards (ICDSs) to be followed by all assessees, following the mercantile system of accounting, for the purposes of computation of income chargeable to income-tax under the head “Profit and gains of business or profession” or “ Income from other sources”. This notification shall come into force with effect from 1st April, 2015, and shall accordingly apply to the A.Y. 2016-17 and subsequent assessment years. All the notified ICDSs are applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts. In the case of conflict between the provisions of the Income-tax Act, 1961 and the notified ICDSs, the provisions of the Act shall prevail to that extent. The ten notified income computation and disclosure standards (ICDSs) are: ICDS I ICDS II ICDS III ICDS IV ICDS V ICDS VI ICDS VII ICDS VIII ICDS IX ICDS X : : : : : : : : : : Accounting policies Valuation of inventories Construction contracts Revenue recognition Tangible fixed assets Effects of changes in foreign exchange rates Government grants Securities Borrowing costs Provisions, contingent liabilities and contingent assets 4. Income-tax (Fourth Amendment) Rules, 2015–Notified Rules for rollback of an Advance Pricing Agreement Extension of date for filing Form No. 3CEDA-Notification No. 33/2015, dated 01-04-2015 Section 92CC of the Income-tax Act, 1961 empowers the CBDT to enter into an advance pricing agreement with any person, determining the arm’s length price or specifying the manner in which arm’s length price is to be determined in relation to an international transaction to be entered into by that person. The CBDT can do so with the approval of the Central Government. Section 92CC(9) empowers the CBDT to prescribe the manner, form and procedure in respect of such advance pricing agreement. Further, to reduce current pending as well as future litigation in respect of the transfer pricing matters, Section 92CC(9A) provides a roll back mechanism www.icai.org 1518 Legal Update in the advance pricing agreement scheme. Accordingly, the advance pricing agreement may, subject to such prescribed conditions, procedure and manner, provide for determining the arm’s length price or for specifying the manner in which arm’s length price is to be determined in relation to an international transaction entered into by a person during any period not exceeding four previous years preceding the first of the previous years for which the advance pricing agreement applies in respect of the international transaction to be undertaken. The rules relating to Roll Back of an Advance Pricing Agreement (APA) have been notified through Notification No. 23 dated 14th March, 2015. As per sub-rule (5) of the newly prescribed rule 10MA, where an application for entering into an advance pricing agreement has been filed prior to 1.01.2015, the request for rollback in the newly prescribed Form No. 3CEDA may be filed at any time on or before 31.03.2015. Similarly, where an advance pricing agreement has been entered into before 1.01.2015, the said form may be filed before 31.03.2015. Various representations were received by the CBDT stating that in respect of the applications and agreements referred to above, which have been filed or entered into prior to 1.01.2015, the window provided up to 31.03.2015 is very short in light of the fact that the relevant rules have been notified only on 14.03.2015. Further, it has been represented that a reasonable period also needs to be provided in respect of the applications or agreements, as the case may be, filed or entered into up to 31.03.2015. Consequently, in exercise of the powers conferred by section 295 of the Income-tax Act, 1961, the CBDT notified Income tax (4th Amendment) Rules, 2015 which shall come into force on the date of their publication in the official Gazette. Accordingly, in a case where an application has been filed prior to 31.03.2015, application for roll back in Form No. 3CEDA along with proof of payment of additional fee may be filed at any time on or before 30.06.2015 or the date of entering into the agreement whichever is earlier. Similarly, in a case where an agreement has been entered into before 31.03.2015, application for roll back in Form No. 3CEDA along with proof of payment of additional fee may be filed at any time on or before 30.06. 2015. 5. Notification No. 38/2015 dated 10-04-2015 In exercise of the powers conferred by section 295 of the Income-tax Act, 1961, the Central Board of Direct Taxes notified Income tax (5th Amendment) Rules, 2015 which shall come into force on the date of their publication in the official Gazette. Form of application for allotment of PAN/Tax deduction and collection number by a Company which has not been registered under the Companies Act, 2013 prescribed Rule 114(1) prescribes Form 49A/49AA, as the case 38 THE CHARTERED ACCOUNTANT may 2015 may be, as the forms in which application for allotment of PAN has to be made. A proviso has been inserted in sub-rule (1) of rule 114 to require a company which has not been registered under the Companies Act, 2013 to make an application for allotment of a Permanent Account Number in Form No. INC-7 specified under Section 7(1) of the said Act for incorporation of the company. Further, such Companies are exempted from submitting the documents required under rule 114 (4) along with PAN Application. Rule 114A (1) prescribes Form 49B as the form in which application under Section 203(A) for allotment of a tax deduction and collection account number shall be made. A proviso has been inserted in rule 114A (1) to require a company which has not been registered under the Companies Act, 2013 to make an application for allotment of a Tax deduction and collection account Number in Form No. INC-7 specified under Section 7(1) of the said Act for incorporation of the company. List of documents which may be submitted as proof of Date of Birth/incorporation expanded In case of an individual being a citizen of India, Rule 114(4) requires the PAN application to be made in Form 49A accompanied by proof of identity, proof of address and proof of date of birth. A list of documents has been specified in Rule 114(4) which would serve as proof of identity, address and date of birth. The list of documents specified in respect of proof of date of birth has been expanded. It now includes mark sheet of recognised board; Aadhaar Card issued by Unique Identification Authority of India; elector’s photo identity card; photo identity card issued by Central Government or State Government or a Central or State PSU; CGHS Scheme photo card or ex-servicemen contributory Health scheme photo card and affidavit sworn before a magistrate stating the date of birth. However, copy of any of the above documents would serve as proof of date of birth only if it bears the name, date, month and year of date of birth of the applicant. A company registered in India has to make an application for PAN in Form 49A accompanied by a copy of certificate of registration issued by the Registrar of Companies. Rule 114(4) has been amended to permit such companies to submit either copy of certificate of registration issued by the Registrar of companies or corporate identity number allotted by the registrar under Section 7 of the Companies Act, 2013 along with Form 49A. 6. Notification of a body or authority or Board or trust or Commission and specified income accruing or arising to such body or authority etc. by the Central Government for exemption under Section 10(46) Section 10(46) exempts specified income arising to a body or authority or Board or trust or Commission which a. has been established or constituted by or under a www.icai.org Legal Update Central, State or Provincial Act, or constituted by the Central Government or a State Government, with the object of regulating or administering any activity for the benefit of the general public; b. is not engaged in any commercial activity; and c. is notified by the Central Government in the official gazette for the purpose of clause (c ) of Section 10(46) Accordingly, the following body or authority or Board or trust or Commission have been notified by the Central Government: Notification Name of Specified Income No. the Board exempt u/s 10(46) (Organisation) or Authority Applicable Financial Year 34/2015 Rajasthan (a) amount received 2012-13 to dated 10-04- State Pollution in the form of 2016-17 2015 Control Board government grants; (b) amount received as license fees and fines; (c) interest earned on government grants, license fees and fines. www.icai.org 35/2015 Haryana dated 10-04- Electricity 201 Regulatory Commission (a) grants and 2012-13 to loans made by the 2016-17 Government of Haryana; (b) fees received under the Electricity Act, 2003; (c) interest earned on government grants and loans and fees received under the Electricity Act, 2003. 36/2015 'Punjab State dated 10-04- Electricity 2015 Regulatory Commission (a) amount received 2011-12 to in the form of 2015-16. processing fee for determination of tariff; (b) amount received in the form of licence fee; (c) amount in the form of petition fee; and (d) amount of interest income earned on bank deposits. THE CHARTERED ACCOUNTANT may 2015 39 1519 1520 Legal Update Notification Name of No. the Board (Organisation) or Authority 26/2015 Kerala Toddy dated 24-03- Workers 2015 Welfare Fund Board Specified Income exempt u/s 10(46) Applicable Financial Year (a) Sums received under Kerala toddy Workers ’Welfare Fund Act, 1969 (Kerala Act No. 22 of 1969); (b)Contribution from the members as defined in clause (b) of section 2 of the Kerala Toddy Workers’ Welfare Fund Act, 1969 (Kerala Act No. 22 of 1969); (c) Interest earned from deposits in banks. 27/2015 Joint Electricity (a) Petition fees; dated 24-03- Regulatory (b) Licence fees; 2015 Commission (c) Interest earned for the State of from deposits in Goa and Union banks. Territories 2013-14 to 2017-18 28/2015 Bihar dated 24-03- Electricity 2015 Regulatory Commission The specific income of the above body or authority or Board or trust or Commission would be exempt subject to fulfillment of conditions specified in the relevant notifications. 2011-12 to 2015-16 (a) Amount received 2011-12 to in the form of 2015-16 Government grants; (b) Amount received as licence fee from licensees in electricity; (c) Amount received as application processing fee; and (d) Interest earned on Government grants and fee received. Maharashtra 29/2015 Amount received in dated 24-03- State AIDS the form of grants2015 Control Society in-aid from the Central Government 30/2015 Chhattisgarh dated 24-03- Building 2015 and Other Construction Workers Welfare Board West Bengal 31/2015 dated 24-03- Transport 2015 Workers Social Security Scheme 40 2011-12, 2012-13, 2013-14, 2014-15 and 201516 (a) Workers welfare 2013-14 to cess; 2017-18 (b) Interest income; and (c) Registration fee. (a) Amount received 2014-15 to in the form of 2018-19 Government grants; (b) Amount received as cess under the West Bengal Motor Transport Workers’ Welfare cess Act, 2010 (West Bengal Act V of 2010) and rules framed thereunder; THE CHARTERED ACCOUNTANT may 2015 Notification Name of Specified Income Applicable No. the Board exempt u/s 10(46) Financial (Organisation) Year or Authority (c) Amount received as registration fees and renewal fees paid by the registered beneficiaries; and (d) Interest earned on fixed deposits. 7. Amendment in Rule 2BB in respect of transport allowance– Notification No. 39/2015, dated 13-04-2015 In exercise of the powers conferred by Section 295 read with section 10(14) of the Income-tax Act, 1961, the CBDT has through Income-tax (Sixth Amendment) Rules, 2015 which comes into force on 1st April, 2015 amended Rule 2BB. Accordingly, the transport allowance which can be claimed as an exemption by an employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty has been increased from R800 p.m. to R1,600 p.m. In case of a blind or orthopaedically handicapped employee with disability of lower extremities the upward revision is from R1,600 p.m. to R3,200 p.m. 8. Amendment in Rule 12(1); 12(3); 12(4) and 12(5)–Notification No. 41/2015, dated 15.04.2015 In exercise of the powers conferred by Section 295 of the Income-tax Act, 1961, the Central Board of Direct Taxes has, through this notification, notified Income-tax (seventh Amendment) Rules, 2015 which shall come into force from 1st April, 2015. Rule 12 of the Income tax Rules, 1962 has been amended to provide for the following: (i) An assessee being a business trust which is not required to furnish return of income or loss under any other provisions of Section 139, shall furnish the return of its income in respect of its income or loss in every previous year in Form No. ITR-7. (ii) A person who is a resident, other than not ordinarily resident in India within the meaning of Section 6(6) and has income from any source outside India cannot furnish return of income in Form SAHAJ (ITR 1) and Form SUGAM (ITR 4S). (iii) Sub-rule (3) of Rule 12 providing for the manner of furnishing the return of income has been substituted. New Sub rule (3) contains a table with 4 columns. Column (ii) refers to the person required to file the return of income, column (iii) contains the conditions and column (iv) specifies the manner of furnishing the return of income for the persons mentioned in column (ii) satisfying the relevant condition mentioned in column (iii). A tabular form www.icai.org Legal Update will ensure better understanding and will provide more clarity to the assessee. The following are some of the changes in Rule 12(3) applicable for the Assessment Year 2015-16: 1. The manner of furnishing the return of income would include transmitting the data in the return electronically under electronic verification code in case of the following persons: a. Individual or Hindu undivided family whose accounts are NOT required to be audited under Section 44AB. b. A person required to furnish the return in FormITR 7, other than a political party(such persons cannot furnish return of income in paper mode) c. Firm or Limited Liability partnership or any person1, whose accounts are NOT required to be audited under Section 44AB and who is required to file return in Form ITR-5. “Electronic Verification Code” means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Incometax (Systems) or Director General of Income-tax (Systems).’ 2. 1 2 Furnishing a bar coded return in paper form is not a permitted mode of furnishing return of income for any person. (iv) Under sub-rule (4) of Rule 12, the Director General of Income-tax (Systems) was authorised to specify the procedures, formats and standards for ensuring secure capture and transmission of data and he was also responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the returns in the manner specified in clauses (ii), (iii) and (iv) of sub-rule (3). This Sub-rule has been amended to authorise Principal Director General of Income-tax (Systems), in addition to Director General of Income-tax (Systems) for the above purposes. (v) In Appendix II, the forms namely SAHAJ (ITR-1), ITR2, SUGAM (ITR-4S) and ITR-V have been substituted.2 The complete text of the above Notifications can be downloaded from the link below: http://www. i n c o m e t a x i n d i a . g o v. i n / Pa g e s / c o m m u n i c at i o n s / notifications.aspx II. CIRCULARS 1. Clarification regarding Explanation 5 to clause (i) of subSection (1) of Section 9 of Income-tax Act, l961–Circular No. 4/2015, dated 26-03-2015 Section 9 of the Income-tax Act provides for incomes which are deemed to accrue or arise in India. As per Section 9(1)(i), all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from Other than an individual/ Hindu undivided family, Company and a person required to furnish the return in Form ITR-7. As reported by PTI, the Government will be reviewing/reconsidering the new ITR Forms that require disclosure of details regarding bank accounts and foreign trips undertaken.. www.icai.org THE CHARTERED ACCOUNTANT may 2015 41 1521 1522 Legal Update any asset or source of income in India, or through the transfer of a capital asset situate in India. Explanation 5 to clause (i) of sub-Section (1) of Section 9 was inserted by the Finance Act, 2012 to clarify that an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India". This circular clarifies that the dividends declared and paid by a foreign company outside India in respect of shares which derive their value substantially from assets situated in India would NOT be deemed to be income accruing or arising in India by virtue of the provisions of Explanation 5 to Section 9(1)(i)of the Act. 2. Chargeability of interest under Section 17B of the Wealth-tax Act, 1957 on self-assessment tax paid before the due date of filing of return of net wealth–Circular No. 5/2015, dated 09-042015 Interest under Section 17B of the Wealth-tax Act, 1957 (hereinafter the Act) is charged in case of default in furnishing of return of net wealth by an assessee. The interest is charged at the specified rate on the amount of tax payable on the net wealth. Since the provisions of Section 17B do not provide for reduction of the amount of self-assessment tax from the amount on which interest under Section 17B is chargeable, interest is being charged on the amount of self-assessment tax paid by the assessee even before the due date of filing of return of net wealth. The CBDT has through this circular clarified that no interest under Section 17B of the Wealth-tax Act, 1957 is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing return of net wealth. 3. Capital gains in respect of units of Mutual Funds under the Fixed Maturity Plans on extension of their term–Circular No. 6/2015, dated 09-04-2015 Fixed Maturity Plans (FMPs) are closed ended funds having a fixed maturity date wherein the duration of investment is decided upfront. Prior to amendment by the Finance (No. 2) Act, 2014, units of a mutual fund under the FMPs held for a period of more than twelve months qualified as long term capital asset. The amendment in sub-Section (42A) of Section 2 by the Finance (No. 2) Act, 2014 changed the period of holding in case of unlisted shares and units of a mutual fund (other than an equity oriented (fund) for their qualification as long term capital asset to more than 36 months. As a result, gains arising out of any investment in the units of FMPs made earlier and sold/ redeemed after 10.07.2014 would be taxed as short term capital gains if the unit was held for a period of 36 months or less. To enable the FMPs to qualify as a long term capital asset, some Asset Management Companies (AMCs) administering mutual funds have offered extension of the duration of the FMPs to a date beyond 36 months from the date of the original investment by providing to the investor an option of 42 THE CHARTERED ACCOUNTANT may 2015 roll-over of FMPs in accordance with the provisions of Regulation 33(4) of the SEBI (Mutual Funds) Regulation, 1996. The CBDT has, vide this Circular, clarified that the roll over in accordance with the aforesaid regulation will not amount to transfer as the scheme remains the same. Accordingly, no capital gains will arise at the time of exercise of the option by the investor to continue in the same scheme. The capital gains will, however, arise at the time of redemption of the units or opting out of the scheme, as the case may be. The complete text of the above circulars can be downloaded from the link below: http://www.incometaxindia.gov.in/ Pages/communications/circulars.aspx III. PRESS RELEASE Introduction of Undisclosed Foreign Income and Assets Imposition of Tax) Bill, 2015- Press Release, Dated 20-3-2015 The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 has been introduced in the Parliament on 20.03.2015. The proposed new legislation provides for separate taxation of any undisclosed income in relation to foreign income and assets. Such income will henceforth not be taxed under the Income-tax Act but under the stringent provisions of the proposed new legislation. The proposed new legislation will apply to all persons resident in India. The provisions of the Act will apply to both undisclosed foreign income and assets (including financial interest in any entity). Undisclosed foreign income or assets shall be taxed at the flat rate of 30 percent. No exemption or deduction or set off of any carried forward losses which may be admissible under the existing Income-tax Act, 1961, shall be allowed. Violation of the provisions of the proposed new legislation will entail stringent penalties. The proposed new legislation provides enhanced punishment for various types of violations. The complete text of the above Press Release can be downloaded from the link below: http://www. incometaxindia.gov.in/Pages/communications/circulars. aspx INDIRECT TAXES (Matter on Indirect Taxes has been contributed by the Indirect Taxes Committee of the ICAI) A. SERVICE TAX 1. Exemption to taxable services provided against scrip issued under SEIS/ MEIS under FTP 2015-2020 CBEC vide Notification No. 10/2015-ST and 11/2015-ST, Dated: April 8, 2015 has exempted the taxable services provided or agreed to be provided by a person, located in the taxable territory from the whole of the service tax leviable thereon under Section 66B, against a duty credit scrip issued to an exporter by the Regional Authority under Merchandise Exports from India Scheme (MEIS) or Service Exports from India Scheme (SEIS) of the Foreign Trade Policy 2015, subject www.icai.org Legal Update to the conditions listed in the notification. Any amount due to the Central Government under this notification shall be recoverable under the provisions of the said Act and the rules made there under. [Notification No. 10/2015-ST, Dated: April 8, 2015 & Notification No. 11/2015-ST, Dated: April 8, 2015] 2. Change in Rate of Service Tax to be effective from date to be Notified after enactment of the Finance Bill, 2015 The Finance Bill, 2015 has proposed to increase effective rate of Service Tax from 12.36% to 14%. The 'Education Cess' and 'Secondary and Higher Education Cess' shall be subsumed in the revised rate of Service Tax. CBEC vide Circular No. 183/02/2015-ST, Dated: April 10, 2015 has clarified that the effective increase in Service Tax rate will be from a date to be notified by the Government after the enactment of the Finance Bill, 2015. [Circular No. 183/02/2015-ST, Dated: April 10, 2015] B. CUSTOMS 1. Facility of Online Message Exchange between Customs and other regulatory agencies to implement ‘Indian Customs Single Window Project' CBEC vide Circular No. 09/2015-Cus, Dated: March 31, 2015 has made a beginning towards implementing ‘Indian www.icai.org Customs Single Window Project’ by executing an electronic online message exchange between the Food Safety and Standards Authority of India (FSSAI) and the Department of Plant Protection, Quarantine and Storage (PQIS) with the Customs with effect from 01.04.2015 at JNPT (NhavaSheva), ICD, Tughlakabad and ICD, Patparganj. Under the new online message exchange system for import goods between these two agencies viz. FSSAI and PQIS and the Customs, there will be seamless online exchange in real time of the Customs Bill of Entry (Import declaration) with these agencies and Release Order (RO) from both the agencies will be received by the Customs in electronic message format. As the electronically received RO in regard to Bs/E referred to FSSAI/PQIS shall be accepted by the Customs for clearance of the imported foods items/plant materials, the Customs shall not insist that a physical copy of the RO shall be issued by these agencies. For the cases where details required for other regulatory agencies are not captured in the current B/E format, the importers would continue to furnish these additional details to the respective agency. [Circular No. 09/2015-Cus, Dated: March 31, 2015] 2. Usage of Digital Signature Certificates in Remote EDI filing (RES) of Customs Documents In order to prioritise trade facilitation and creating an environment for ease of doing business CBEC vide Circular THE CHARTERED ACCOUNTANT may 2015 43 1523 1524 Legal Update No. 10/2015-Cus dated March 31, 2015 has allowed the electronic submission of digitally signed Customs process documents viz. Bills of Entry, Shipping Bills, Import General Manifest (IGM), Export General Manifest (EGM) and Consol General Manifest (CGM) with effect from 1st April 2015 by importers, exporters, customs brokers, shipping lines, airlines or their agents. This facility of digitally signing the documents that are filed electronically would provide the necessary assurance regarding the integrity and non-repudiation of these documents. This shall also enhance the acceptability of such documents by other agencies. It has also been clarified that when Customs process documents are digitally signed, the Customs will not insist on the user physical signing the said documents thereby reducing the need of hard copies. It is important to note that the importers recognised under the Accredited Client Programme (ACP), shall be required to mandatorily file Bills of Entry with digital signature w.e.f. 01.05.2015 in line with Circular No.42/2005Cus., dated 24.11.2005 which emphasises the same. The process for operationalizing the facility to use Digital Signature Certificate for filing the Customs process documents has been given on https://www.icegate.gov.in & http://www.cca.gov.in. In case of any technical difficulty in digitally signing the said documents, the users may contact (i) [email protected] (phone no. 1800 301 1000) and (ii) [email protected] from 10 a.m. to 6 p.m. on working days (phone no. 1800 233 1010). [Circular No. 10/2015-Cus dated March 31, 2015] 3. Facility for suo moto payment of customs duty in case of bona fide default in export obligation under Advance/EPCG authorisations CBEC vide Circular No. 11/2015- Cus., Dated: April 01, 2015 has provided a procedure to enable quicker payment of duty to curb the issue of increased interest cost for authorisation holders (AH) who come forward to the Regional Authority (RA) of DGFT for regularisation of their cases of bona fide default in export obligation (EO) under the Advance Authorisation or EPCG Schemes but have to wait for the detailed calculations in this regard before being able to deposit the duty involved. Under this procedure, the application must show, inter alia, the AH's own/self-calculation of the duty payable for the default in EO and interest thereon. During pendency of detailed calculation by the RA, AH may; (i) Deposit, in cash, the own/self-calculated duty amount, along with interest in cash by challan (showing relevant particulars) in the designated bank at the port where the authorisation is registered. One copy of the paid challan shall be submitted to the Customs Authority at the said port which shall update its records; and/or (ii) Produce valid duty credit scrip before the Customs Authority at the port where the authorisation is registered for debit of the own/self-calculated duty 44 THE CHARTERED ACCOUNTANT may 2015 amount. The debit shall only be in respect of goods that are permitted to be imported under the relevant scrip. However, the AH shall pay the interest in cash in the designated bank at the port where the authorisation is registered. One copy of the paid challan shall be submitted to the Customs Authority at the said port which shall update its records. On receipt of the excess import letter issued by RA after its detailed calculations, the Customs would confirm the actual amount of duty payable for the default in EO and interest thereon. On receipt of the redemption from RA, the Customs Authority shall reconcile and initiate the prescribed actions for releasing the Bond/ BG. [Circular No. 11/2015- Cus., Dated: April 01, 2015] 4. Khurja notified as an ICD CBEC vide Notification No. 36/2015-Cus., (NT), Dated: April 7, 2015 has notified the following as an ICD for the purpose mentioned against it: Inland Customs Depot Purpose Khurja, District Bulandshahr, "Unloading of imported Uttar Pradesh goods and loading of export goods" [Notification No. 36/2015-Cus., (NT), Dated: April 7, 2015] 5. Refund Claim of 4% SAD under Notification No. 102/2007-Customs dated 14.09.2007 CBEC vide Circular No. 12/2015- Cus., Dated: April 09, 2015 has amended Circular No. 6/2008-Customs dated 28.04.2008 to provide that importers may file refund claim of 4% SAD refund in terms of Notification No. 102/2007-Customs dated 14.09.2007 at the Customs stations where imports are made. However, the number of such claims at a Customs station shall be limited to one in a particular month. [Circular No. 12/2015- Cus, Dated: April 09, 2015] 6. Exemption to goods imported against scrips/authorisation issued under FTP 2015-2020 CBEC vide Notifications No. 16-22/2015-CUS, Dated: April 1, 2015 & 24&25-CUS, Dated: April 8, 2015 has exempted the goods specified therein imported against a duty credit scrip/post export EPCG duty scrip/valid authorisation issued etc. under the Foreign Trade Policy 2015-20 from duties specified therein. The various conditions for availing said exemptions have also been specified. [Notifications No. 16-22/2015-CUS, Dated: April 1, 2015 & 24&25 -CUS, Dated: April 8, 2015] C. EXCISE 1. Exemption to goods cleared against scrip issued under FTP 2015-20 CBEC vide Notifications No. 18-21/2015-CE, Dated: April 8, 2015 has exempted the goods cleared against a duty credit www.icai.org Legal Update scrip/post export EPCG duty scrip issued by the Regional Authority under the Foreign Trade Policy 2015-20 from (i) the whole of the duty of excise leviable thereon under the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985; (ii) the whole of the additional duty of excise leviable thereon under Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957; and (iii) the whole of the additional duty of excise leviable thereon under Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. The exemption is subject to the conditions listed in the notification. Any amount due to the Central Government under this notification shall be recoverable under the provisions of the said Act and the rules made there under. [Notifications No. 18-21/2015-Central Excise, Dated: April 8, 2015] D. VALUE ADDED TAX (VAT) Rajasthan VAT 1. Liability to furnish information by certain persons Section 80A of the Act has been inserted which mandate person, to furnish information as may be notified by the www.icai.org Commissioner, who does the following activity within the State of Rajasthan through electronic media: (i) effects sale or purchase or places offer for sale or purchase; or (ii) transports, receives for transportation or delivers goods in pursuance of sale or purchase effected; or (iii) receives any amount in connection with the goods sold or purchased, whether for himself or on behalf of the seller or purchaser. In case of default in furnishing information, he shall be liable to pay penalty not exceeding R1 lakh, and in case of a continuing default, a further penalty of R1,000 for every day of such continuance. [Notification No. F.2(24) Vidhi/ 2/2015] 2. Facility to create sub-user for issuance of Declaration Forms for Import/Export of Notified Goods A new facility to create sub-user has been provided on www. rajtax.gov.in in order to facilitate use of e-declaration forms VAT-47A /VAT-49A for import/export of notified goods by registered dealers. The detailed procedure has been prescribed in the circular. [Circular-No. 24-No. F.16 (95)/Tax/CCT/14-15/5356 Dated 23rd March, 2015] THE CHARTERED ACCOUNTANT may 2015 45 1525 1526 Legal Update Andhra Pradesh VAT 3. Builders of Residential Apartments, houses, buildings, Commercial Complexes- unregistered builders to be registered The Assistant Commercial Tax Officers are directed to conduct street survey programme in the division exclusively for registering the builders, who are not registered with the department. [Circular No. CCT's Ref. No. E3/356/2015, dated 17th March, 2015] 4. Transit Pass must be surrendered within five days from the date of Entry As per Section 47 of AP VAT Act, person in-charge of vehicle passing through the state in transit is required to obtain and surrender the Transit pass. A provision has been made to Blacklist and block the vehicle in VATIS-GIS, where the Transit pass is not surrendered within 5 days from the date of entry unless delay is for genuine reason. [Circular No. CCT's Ref. No. Enft/E3/357/2015, dated 20th March, 2015] 5. The Check post officials are not permitted to collect tax and penalty from the owner of the goods or the in-charge of the goods vehicle. It has been reiterated that the Check post officials can collect user fee only related to Transit Passes and are not permitted to collect tax and penalty from the owner of the goods or the in-charge of the goods vehicle for any irregularity noticed. The Commercial Tax Officer having the jurisdiction of the Check post or the assessing authority of the dealer is directed to collect tax and penalty if any. Further, Commercial Tax Officer and assessing authority of the dealer has been advised to impose penalty in the fit cases. [Circular No. CCTs Ref. No.Enft /D2/611/2015, dated 4th April, 2015] West Bengal VAT 6. Settlement of dispute relating to tax, penalty or interest arising out of an assessment. • The application is to be filed in Form 1 of the West Bengal Sales Tax (Settlement of Dispute) Rules, 1999, before the appropriate Senior Joint Commissioner in respect of any period ending on or before 31st March, 2010, for which an application for appeal or revision has been filed on or before 31st January, 2015 and which has not been finally heard and is still pending. • The last date for filing application for settlement is 31st July, 2015. • The dispute can be settled upon payment of a fraction of disputed tax as specified below: 46 THE CHARTERED ACCOUNTANT may 2015 SI. Dispute related to: No. 1 Arrear tax for non-furnishing/ non-production of statutory Certificates/ Declarations 2 3 4 5 Arrear tax for disallowance of any claim of input tax credit Any other arrear tax not covered by serial Nos. 1 and 2 above Amount to be paid for settlement: 100 % of remaining balance amount of arrear tax in dispute after adjusting Certificates/ Declarations in possession of applicant, or the amount already paid towards such arrear, whichever is higher; 15 % of arrear tax in dispute or the amount already paid towards such arrear, whichever is higher; 55 % of arrear tax in dispute or the amount already paid towards such arrear, whichever is higher; Nil; Any arrear interest related to arrear tax in dispute Any arrear penalty Nil; related to assessment for the eligible period [Circular No. 01/2015 Dated: 27th March, 2015] 7. Change in the Jurisdiction of Central Registration Unit. With effect from the 1st April, 2015 all registrations presently being granted by Registration Unit (Howrah), Registration Unit (Bally) and Registration Unit (Behala) will be granted by the Central Registration Unit situated at 14, Beliaghata Road, Kolkata-700015. All applications for registration remaining pending on the close of 31st March, 2015 will stand transferred to Central Registration Unit. [Trade Circular No. 02/2015 Dated: 27th March, 2015] 8. E-Appeal for all the dealers registered under WBVAT Act from 01.04.2015 All Dealer registered under WBVAT Act and the CST Act are required to file petition of Appeal/revision/ review electronically as per the procedure laid down in Trade Circular No. 14/2013 dated 05.12.2013 [Trade Circular No. 03/2015Dated: 1st April, 2015] Delhi VAT 9. Date of Filing of reconciliation return in Form 9 for the year 2013-14 extended to 30th June, 2015 The date of filing of online return in Form 9, containing details of interstate sale at concessional rates against statutory forms C/F/H, has been extended to 30/06/2015. [Circular No 30 of 2014-15 No.F.7(420)/Policy/2011/PF/948954 Dated 31st March, 2015] www.icai.org Legal Update 10. Date of Filing of online information in Form DP-1 extended to 30th June, 2015 The date of filing of online information in Form DP-1 has been extended to 30/06/2015. The purpose of Form DP-1 is to facilitate the registered dealers to update the details and make necessary amendments in their registration records. [Notification No. F.3(352)/Policy/VAT/2013/936-947 Dated 31st March, 2015] 11. The Net Tax amount can be carried forward to next calendar month or tax period or refund can claimed at the end of tax period A Dealer shall be entitled to carry forward the Net Tax amount to the next calendar month or tax period or to claim a refund after adjusting the CST amount payable at the end of tax period. [Notification No. F.14(2)/LA-2015/ cons21aw/40-54 Dated 30th March, 2015] Puducherry VAT 12. Amendment in Puducherry VAT Act Following amendments have been made in Puducherry VAT Act vide Notification No. 68/Leg/2015-LD, dated 30th March, 2015: • A proviso in sub-Section (2) in Section 8 has been inserted to provide that any dealer can pay the www.icai.org registration fee for three years in advance by remitting a sum equal to three times of the fees specified under sub-Section (2). • The Composition tax rate has been increased from 4% to 5 % in case of dealer executing works contract as defined in Section 15. • The limit of turnover for audit of accounts by Chartered Accountant or Cost Accountants under Section 54 has been enhanced to R1 crore from R50 lakh. [Notification No. 68/Leg/2015-LD, dated 30th March, 2015] Maharashtra VAT 13. Amendment in Maharashtra VAT Act Following amendments have been made in Maharashtra VAT Act: • An explanation 1A has been inserted in clause (20) in Section 2 to clarify that purchase price shall not include the amount of service tax levied or leviable under the Finance Act, 1994 and collected separately by the seller. • An explanation 1A has been inserted in clause (25) in Section 2 to clarify that sale price shall not include the amount of service tax levied or leviable under the Finance Act, 1994 and collected separately from the purchaser. • A proviso in sub-section (2) in Section 30 has been inserted that in case a dealer files an annual revised return, then the interest shall be payable on the excess THE CHARTERED ACCOUNTANT may 2015 47 1527 1528 Legal Update amount of tax, as per such annual revised return, from the dates mentioned in column (2) of the Table, till the date of payment of such excess amount of tax. Registration status in the year for which Interest to be annual revised return is filed computed from (a) Dealer, holding certificate of registration for whole year. (b) Certificate of registration granted, effective from any date up to the 30th 1st October of the September of the year to which revised year, to which the return relates. annual revised (c) Certificate of registration cancelled, return relates. effective on any date after the 30th September of the year to which revised return relates. effective date of (d) Certificate of registration granted, registration effective from any date after the 30th September of the year to which revised return relates. (e) Certificate of registration cancelled, Effective date of effective on any date prior to the 30th cancellation of September of the year to which revised registration. return relates. Karnataka VAT 14. Major Changes applicable form 1st April, 2015 in Karnataka VAT Act • The limit of annual taxable turnover for registration has been increased from 7.5 lakh to 10.0 lakh. • Provision for filing single first appeal against reassessments for several tax periods of one financial year has been introduced. • The Period for disposal of appeal by Karnataka Appellate Tribunal has been enhanced from 180 days to 365 days from the date of Stay order. • Provision for claiming input tax credit of previous tax periods in the returns filed during subsequent tax periods has been made (through amendment in sub-Section (3) of Section 10). • The permission for Granting Special Accounting Scheme has brought under "SAKALA". • The Dealers can file an appeal electronically before the First Appellate Authority and receive orders electronically. • The Dealers have to upload the details of CST statutory forms which will be linked to the turnover declared by the dealers in their returns. • The credit of input tax would be allowed to the extent of output tax paid on commodities when it is sold at a price lower than the purchase price. • TDS at applicable rate, on the goods purchased by Government department/Local Bodies/other bodies should be deducted with effect from the date to be notified. 48 THE CHARTERED ACCOUNTANT may 2015 Tamil Nadu VAT 15. The Manual “C” and “F” forms can be issued to dealer till 31/05/2015 Circular No.10/2015 CC4/678/2012 Dated 7th April, 2015 provides that manual C and F Forms can be issued to dealers after providing details like Tin No., Form Code, Dealer name etc. till 31/05/2015. Further, the manual forms can be issued for all the missed out invoices and for any mistake in already generated online forms. [Circular No.10/2015 CC4/678/2012 Dated 7th April, 2015] FEMA (Matter on FEMA has been contributed by CA Manoj Shah, Mumbai and CA Hinesh Doshi, Mumbai) A. Acquisition/transfer of immovable property–Prohibition on citizens of certain countries A.P. (DIR Series) Circular No. 83 dated March 11, 2015 As per FEMA Notification No. 21/2000-RB dated 3rd May, 2000, no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan without prior permission of the Reserve Bank shall acquire or transfer immovable property in India, other than lease, not exceeding five years. It has been observed that Macau and Hong Kong are the two Special Administrative Regions of China. As they are notified separately, it has been decided in consultation with the Government of India, that the citizens of Macau and Hong Kong will also be included in the list of countries which are prohibited to acquire/transfer immovable property in India in terms of Regulation 7 of FEMA. Reserve Bank has amended the principal regulations vide Notification No. FEMA 335/2015-RB dated February 4, 2015. B. Non Resident Deposits–Stat 5 and Stat 8 Returns– Discontinuation A. P. (DIR Series) Circular No. 85 dated March 18, 2015 As banks’ submission of NRD-CSR data in XBRL platform is stabilised, it has been decided to discontinue the submission of Stat 5 and Stat 8 returns from March 2015. Accordingly banks, dealing in foreign exchange may stop sending Stat 5 and Stat 8 returns (both hard and soft copy) to the Department of Statistics and Information Management, Reserve Bank of India. C. Review of Foreign Direct Investment (FDI) Policy on Insurance Sector–amendment to ‘Consolidated FDI Policy Circular of 2014’ A. P. (DIR Series) Circular No. 94 dated April 08, 2015 and Press Note No. 3 (2015 Series) dated March 02, 2015 issued by Department of Industrial Policy & Promotion The extant FDI policy for Insurance sector has been reviewed and further liberalised. Earlier FDI in insurance www.icai.org Legal Update sector was allowed only up to 26% under Automatic route. The same has been increased from 26% to 49%. FDI up to 26% is under Automatic route and beyond 26% and up to 49% under government approval. Also new activity viz. “Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999)” has been included in the definition of ‘Insurance’. Besides, the salient changes over the existing regime include following: a. Foreign investment in Indian insurance company shall be limited up to forty-nine percent of the paid up equity capital; b. Foreign direct investment up to 26 % shall be under automatic route and beyond 26 % and up to 49 % shall be with Government approval; c. Foreign investment in the sector is subject to compliance of the provisions of the Insurance Act, 1938 and the condition that companies bringing in FDI shall obtain necessary license from the Insurance Regulatory & Development Authority of India for undertaking insurance activities. d. An Indian insurance company shall ensure that its www.icai.org ownership and control remains at all times in the hands of resident Indian entities; e. Foreign portfolio investment in an Indian insurance company shall be governed by the provisions of Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2000 and provisions of the Securities Exchange Board of India (Foreign Portfolio Investors) Regulations. f. Any increase of foreign investment of an Indian insurance company shall be in accordance with the pricing guidelines specified by Reserve Bank of India under the Foreign Exchange Management Act, 1999. g. Terms 'Control', 'Equity Share Capital', 'Foreign Direct Investment' (FDI), 'Foreign Investors', 'Foreign Portfolio Investment', 'Indian Insurance Company', 'Indian Company', 'Indian Control of an Indian Insurance Company', 'Indian Ownership', 'Non-resident Entity', 'Public Financial Institution', 'Resident Indian Citizen', 'Total Foreign Investment' will have the same meaning as provided in Notification No. G.S.R 115 (E), dated 19th February, 2015. Accordingly, the amended paragraph 6.2.17.7 of the THE CHARTERED ACCOUNTANT may 2015 49 1529 1530 Legal Update ‘Consolidated FDI Policy Circular of 2014’ effective from 17.04.2014, to be read as below: S No. Sector/Activity 6.2.17.7 6.2.17.7.1 Insurance (i) Insurance Company (ii) insurance Brokers % of FDI Cap/ Entry route Equity 49% {FDI+FPI Automatic (FII,QF)+NRI up to 26% +FVCI+DR} (iii) Third Party Administrators (iv) Surveyors and Loss Assessors 6.2.17.7.2 Government route beyond 26% and up to 49% (v) Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) Other Conditions (a) No Indian Insurance Company shall allow the aggregate holdings by way of total foreign investment in its equity shares by foreign investors, including portfolio investors, to exceed forty nine percent of the paid up equity capital of such Indian company. (b)Foreign Direct investment proposals which take the total foreign investment in the Indian Insurance company above 26% and up to the cap of 49% shall be under government route. (c) Foreign investment in the sector is subject to compliance of the provisions of the Insurance Act, 1938 and the condition that Companies bringing in FDI shall obtain necessary license from the Insurance Regulatory & Development Authority of India for undertaking insurance activities. (d) An Indian insurance company shall ensure that its ownership and control remains at all times in the hands of resident Indian entities referred to in Notification No. G.S.R 115 (E) dated 19th February 2015. (e) Foreign Portfolio investment in an Indian Insurance company shall governed by the provisions contained in sub-regulations (2), (2A), (3) and (8) of Regulation 5 of FEMA Regulations, 2000 and provisions of the Securities Exchange Board of India (Foreign Portfolio Investors) Regulations. 50 THE CHARTERED ACCOUNTANT may 2015 S No. Sector/Activity % of FDI Cap/ Entry route Equity (f ) Any increase of foreign investment of an Indian insurance company shall be in accordance with the pricing guidelines specified by the Reserve Bank of India under the FEMA. (g) The foreign equity investment cap of 49 percent shall apply on the same terms as above to Insurance Brokers, Third Party Administrators, Surveyors and Loss Assessors and Other Insurance Intermediaries appointed under the provisions of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) (h)Provided that where an entity like a bank, whose primary business is outside the insurance area, is allowed by the Insurance Regulatory and Development Authority of India to function as an insurance intermediary, the foreign equity investment caps applicable in that sector shall continue to apply, subject to the condition that the revenues of such entities from their primary (i.e. non insurance related) business must remain above 50 percent of their total revenues in any financial year. (i) The provisions of paragraphs 6.2.17.2.2(4)(i) (c) & (e) relating to ‘Banking Private Sector’, shall be applicable in respect of bank promoted insurance companies. (j) Terms ‘control’, ‘Equity Share Capital’, ‘Foreign Direct investment (FDI)’, ‘Foreign Investors’, ‘Foreign Portfolio Investment’, ‘Indian Insurance Company’, ‘Indian Company’, ‘Indian Control of an Indian Insurance Company’, ‘Indian Ownership’, ‘Non-resident entity’, ‘Public Financial Institution’, ‘Resident Indian Citizen’, ‘Total Foreign Investment’ will have the same meaning as provided in Notification No. G.S.R 115(E) dated 19th February 2015. Consequent to the above, paragraph 6.2.17.2.2 (4) (i) (c) of the Consolidated FDI Policy Circular of 2014 is amended as under: “Applications for foreign direct investment in private banks having joint venture/subsidiary in insurance sector may be addressed to the Reserve Bank of India (RBI) for consideration in consultation with the Insurance Regulatory and Development Authority of India (IRDAI) in order to ensure that the 49% limit of foreign shareholding applicable for the insurance sector is not breached.” www.icai.org Legal Update A copy of Press Note 3 (2015 Series) dated March 2, 2015 issued in this regard by DIPP, Ministry of Commerce & Industry, Government of India is appended. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India (Third Amendment) Regulations, 2015 notified vide Notification No. FEMA.340/2015-RB dated March 3, 2015, c.f. G.S.R. No. 183 (E) dated March 12, 2015 D. Risk Management and Inter Bank dealings: Revised guidelines relating to participation of residents in the Exchange Traded Currency Derivatives (ETCD) Market A. P. (DIR Series) Circular No. 90 dated March 31, 2015 Increase in Position limits not requiring establishment of underlying exposure: Presently, domestic participants are allowed to take a long (bought) as well as short (sold) position upto USD 10 million per exchange. As a measure of further liberalisation, it has now been decided to increase the limit (long as well as short) in USD-INR pair upto USD 15 million per exchange. In addition, domestic participants shall be allowed to take long as well as short positions in EUR-INR, GBP-INR and JPY- INR pairs, all put together, upto USD 5 million equivalent per exchange. Rationalisation of documentation requirements for both Importers and Exporters: As a measure of liberalisation in the ETCD market, it has now been decided that, instead of the statutory auditor’s certificate, a signed undertaking to the same effect from the Chief Financial Officer (CFO) or the senior most functionary responsible for company's finance and accounts and the Company Secretary (CS) may be produced. In the absence of a CS, the Chief Executive Officer (CEO) or the Chief Operating Officer (COO) shall co-sign the undertaking along with the CFO. Increase in eligible limit for Importers hedging contracted exposure: At present, importers are permitted to hedge their contracted exposures in the ETCD market upto 50 % of their eligible limit as defined in para (2)(b)(i) of the above circular. With a view to bringing at par both exporters and importers, it has now been decided to allow importers to take appropriate hedging positions up to 100 % of the eligible limit. Non-Receipt of The Chartered Accountant Journal This is for the information of Members/subscribers who fail to receive The Chartered Accountant journal despatched to them either due to un-intimated change of address or postal problems. Members and Students are requested to inform the respective regions immediately after you change the address to ensure regular and timely delivery of journals to you as the mailing list is drawn from ICAI’s centralised database updated till 15th of every month. Subscribers are requested to mail their changed address to [email protected]. Members can also update their address online in the ‘Members’ section placed on the top bar of ICAI website. The required link in the ‘Members’ section is titled ‘Members: Update Your Residential and Professional Addresses’ (http://www.icai.org/addupdate/). Fill the Membership No and Date of Birth to open the Form. Fill the Form to update your changed address. After updating the address online, the member is also required to download the updated Form and submit the same at their respective regions with their signature. Please note that once updated in the respective regional head offices’ records, the new address gets automatically updated in the centralised data base of the Institute, from where the journal mailing list is prepared. While updating the address members can opt for their ‘Residential Address’ to receive the copy of the journal by clicking the option “Do you want to get your journal on Residential Address” at the bottom of the Form. Thereafter you will get your copy of the Journal at your residential address. Any queries or complaints in this regard can also be sent by email at [email protected] (for members) and [email protected] (for students and Subscribers) or contact at 0120-3045921. www.icai.org THE CHARTERED ACCOUNTANT may 2015 51 1531 1532 Legal Update any bills of exchange or promissory note, transferring any security or acknowledging any debt. Similarly, financial service shall mean any activity which a financial institution is permitted to carry on by the Respective Act of the Parliament or Government of India or any Regulatory Authority empowered to regulate the concerned financial institution. It may be noted that subject to the provisions of Section 1 (3) of Foreign Exchange Management Act, 1999, nothing contained in any other Regulations shall apply to a financial institution or a branch of a financial institution set up in an IFSC unless there is some express and specific provision to that effect in the Foreign Exchange Management (International Financial Services Centre) Regulations 2015 or the other Regulations. Reserve Bank of India has issued the subject Notification through the Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 which have been notified vide Notification No.FEMA.339/2015-RB dated March 2, 2015, vide G.S.R. No. 218(E) dated March 23, 2015. E. Risk Management and Inter Bank dealings: Revised Limits for Foreign Portfolio Investors (FPIs) in the Exchange Traded Currency Derivatives (ETCD) Market A. P. (DIR Series) Circular No. 91 dated March 31, 2015 Increase in limits without establishing underlying exposure: Presently, FPIs can take both long (bought) as well as short (sold) position upto USD 10 million per exchange. As a measure of further liberalisation, it has now been decided to increase the limit (long as well as short) in USD-INR pair upto USD 15 million per exchange. In addition, FPIs shall be allowed to take long as well as short positions in EURINR, GBP-INR and JPY-INR pairs, all put together, upto USD 5 million equivalent per exchange. These limits shall be monitored by the exchanges and breaches, if any, may be reported. For the convenience of monitoring, exchanges may prescribe fixed limits for the contracts in currencies other than USD such that these limits are within the equivalent of USD 5 million. F. Operational guidelines on International Financial Services Centre (IFSC) A. P. (DIR Series) Circular No. 92 dated March 31, 2015 In terms of Foreign Exchange Management (International Financial Services Centre) Regulations 2015 dated March 2, 2015 a financial institution or a branch of a financial institution set up in the IFSC and permitted/recognised as such by the Government or a Regulatory Authority shall be treated as person resident outside India. Therefore, their transaction with a person resident in India shall be treated as a transaction between a resident and non-resident and shall be subject to the provisions of Foreign Exchange Management Act, 1999 and the Rules/Regulations/Directions issued there under. The financial transaction in this context shall mean making or receiving payment, drawing, issuing or negotiating 52 THE CHARTERED ACCOUNTANT may 2015 G. Export of Goods and Services–Project Exports A. P. (DIR Series) Circular No. 93 dated April 1, 2015 Exim Bank have been permitted to consider according post-award approvals without any monetary limit and permit subsequent changes in the terms of post award approval within the relevant FEMA guidelines/ regulations. Further, in terms of para B. 11 (i) of the revised Memorandum of instructions on Project and Service exports, Exim Bank in participation with commercial banks in India may extend Buyer’s credit upto the limit of USD 20 million to foreign buyers in connection with export of goods on deferred payment terms and turn key projects from India. With a view to further liberalising the procedure and as the Working Group structure has been dismantled, it has been decided to withdraw the limit of USD 20 million for Buyer’s credit which may be extended to foreign buyers in connection with export of goods on deferred payment terms and turn key projects from India. CORPORATE LAWS (Matter on Corporate Laws has been contributed by CA. Rahul Joglekar) MCA (www.mca.gov.in) 1. MCA Order No. S.O.(E) dated 10th April 2015–Companies (Auditor’s Report) Order 2015 MCA has published the Companies (Auditor’s Report) Order 2015 in the official gazette with immediate applicability. All audit reports issued by the auditors after the date of the said order shall contain the CARO 2015 wherever applicable. For a complete text of this order, please refer the link: http://www. mca.gov.in/Ministry/pdf/Companies_Auditors_Report_ Order_2015.pdf www.icai.org Legal Update 2. MCA Circular No. 07/2015 dated 10th April 2015– Remuneration to managerial person under Schedule XIII of the Companies Act, 1956-Clarification with regard to payment for period. MCA has clarified that a managerial person of a listed company or its subsidiaries drawing excess remuneration than the limits under the Companies Act 1956 may continue to receive remuneration for his remaining term in accordance with terms and conditions approved by company as per relevant provisions of Schedule XIII of earlier Act even if the part of his/her tenure falls after 1st April, 2014. For a complete text of this circular, please refer the link: http://www.mca. gov.in/Ministry/pdf/General_Circular_07_2015.pdf 3. MCA Circular No. 06/2015 dated 9th April 2015–Clarification under Section 186(7) of the Companies Act 2013. MCA has clarified that where effective yield of tax free Bonds is greater than the prevailing yield of 1 year, 3 year, 5 year or 10 year G-Sec closest to the tenor of the Bonds, there is no violation of Section 186(7) of the Comapanies Act 2013. For a complete text of this circular, please refer the link: http:// www.mca.gov.in/Ministry/pdf/General_Circular_06_2015. pdf 4. MCA Notification No. GSR (E) dated 31st March 2015– Amendment of Companies (Acceptance of Deposit) Rules 2014 MCA has amended the aforesaid rules to provide for certain relaxation in regard to acceptance and repayment of deposits by companies. The amendment provides extension upto 30th June 2015 to repay the application monies for securities accepted by the companies between 1st April 2014 and 31st March 2015. Certain amendments w.r.t rating for deposits accepted by the companies have also been made. For a complete text of this notification, please refer the link: http://www.mca.gov.in/Ministry/pdf/Acceptance_Deposits_ AmendmentRules_01042015.pdf 5. MCA Circular No. 05/2015 dated 30th March 2015– Clarification with regard to applicability of Companies (Acceptance of Deposits) Rules 20l4. MCA has clarified that amounts received by private companies prior to 1st April, 2014 shall not be treated as 'deposits' under the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014 subject to the condition that the relevant private company shall disclose, in the notes to its financial statements for the financial year commencing on or after 1st April, 2014 the quantum of such amounts and the accounting head in which such amounts have been shown in the financial statement. Further it is also clarified that any renewal or acceptance of fresh deposits on or after 1st April, 2014 shall, however, be in accordance with the provisions of Companies Act, 2013 and rules made thereunder. For a complete text of this circular, please refer the link: http:// www.mca.gov.in/Ministry/pdf/General_Circular_5-2015. pdf. www.icai.org THE CHARTERED ACCOUNTANT may 2015 53 1533