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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 eboard@icai.in
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
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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
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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.
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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
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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
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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..
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THE CHARTERED ACCOUNTANT
may 2015
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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
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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
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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
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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) icegate.helpdesk@icegate.gov.in (phone no. 1800 301
1000) and (ii) dscsupport@ncode.in 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
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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
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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]
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may 2015
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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]
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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
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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
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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.
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THE CHARTERED ACCOUNTANT
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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
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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
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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
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‘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.”
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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 eb@icai.in.
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 journal@icai.in (for members) and
eb@icai.in (for students and Subscribers) or contact at 0120-3045921.
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THE CHARTERED ACCOUNTANT
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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
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