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The Digital Payment Resolution System

The Digital Payment Resolution System

In the latest development, the Reserve Bank of India, vide circular dated 6th August 2020, has announced Online Dispute Resolution System for Digital Payments. The system aims to resolve the disputes and grievances relating to the digital payment with nil or minimal manual intervention. The resolution system will be system-driven and will be using a rule-based mechanism. The current article explains the reason for the introduction of the resolution system, list of transactions covered under the resolution system, channels available to lodge the dispute/ grievances and working of the resolution system.

Reason for the introduction of resolution system

As widely known, the Government is promoting more and more use of digital payment mode. Additionally, the occurrence of COVID-19 pandemic has tremendously increased the usage of digital payment. With the increase in the number of digital payments, there has been a corresponding increase in the number of disputes and grievances.

The need to introduce the transparent dispute resolution system was also highlighted in the Payment System Vision 2021 of the Reserve Bank of India. Adhering the same, the online dispute resolution system is announced.

Coverage of transactions under resolution system

The online dispute resolution system will cover the following kinds of transactions-

Sr. No. Particulars Transactions covered
1 ATM and Micro-ATM Account debited but cash not dispensed.
2 Card to card transfer Card account debited but receiver card account not credited.
3 Point of sale (card present) Account debited but approval not received at a merchant location.
4 Card not present (e-commerce) Account debited but approval not received at merchant system.
5 Immediate Payment System (i.e. IMPS) Account debited but receiver account not credited.
6 Unified Payment System (i.e. UPI)

Account debited but receiver account not credited.

Account debited but approval not received at a merchant location.

7 Aadhaar Enabled Payment System

Account debited but receiver account not credited.

Account debited but approval not received at a merchant location.

8 Aadhaar Payment Bridge System Delay in crediting receiver’s account.
9 National Automated Clearing House

Delay in crediting receiver’s account.

Account debited despite the revocation of a debit mandate.

10 Prepaid Payment Instruments (card/ wallet)

Receiver’s prepaid payment instruments not credited.

Instrument debited but approval not received at a merchant location.

The Reserve Bank of India has initially introduced the dispute resolution system only for the failed transactions. However, the circular, dated 6th August 2020, clearly states that the once the dispute resolution system is successfully implemented the same will be extended to cover dispute and grievances other than those related to failed transactions.

Channels to lodge the disputes and grievances

Both web-based and paper-based complaint forms will be available for lodging the disputes and grievances. Further, channels like Interactive Voice Response, SMS, call centre, mobile applications, etc. will also be made available.

Working of dispute resolution system

The working of the dispute resolution system for resolving the disputes and grievances arising out of the failed transactions is explained hereunder-

  1. Each Payment System Operators will make available an online dispute resolution system.
  2. Access to the online dispute resolution system is to be given to the participating Payment System Participants.
  3. Both the Payment System Operators and their Payment System Participants will provide the customers with an access to lodge the dispute and grievances.

Other Important Points

  • The dispute and grievances can easily be lodged by providing only the necessary minimum details.
  • After lodging the dispute and grievance, the customer will be allotted a unique reference number. Such a unique reference number will enable the customer to track the status of the dispute/ grievance.
  • In case the dispute/ grievance remains unresolved, even after one month. Then, the customer may contact the respective regulator.

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Companies (Acceptance of Deposits) Amendment Rules, 2020

Companies (Acceptance of Deposits) Amendment Rules, 2020

Ministry of Corporate Affairs (MCA) has further amended the Companies (Acceptance of Deposits) Rules, 2014 in a notification dated 7th September 2020 to be called Companies (Acceptance of Deposits) Amendment Rules, 2020. The notification broadly pertains to two amendments concerning start-up companies with respect to the Acceptance of deposits. This is released in Gazette as per the requirement of the Government of India and this article will provide details on the same.

The Gist of the Companies (Acceptance of Deposits) Amendment Rules, 2020

In the Companies (Acceptance of Deposits) Rules, the amendment is brought under rules 2 and 3 which specifies the conditions for acceptance of deposits (Money or Loan) by a start-up company. This change has been made by amending rule 2, in sub-rule (1), in clause (c), in sub-clause (xvii) and rule 3, in sub-rule (3), in the second proviso, in clause (i) of Companies (Acceptance of Deposits) Rules, 2014.

As stated above, the notification broadly pertains to two amendments about start-up companies with respect to the following:

  • Acceptance of deposit in a form of the convertible note
  • Acceptance of deposits from members by a start-up company which are private companies

Existing Rule 2(1)(c)(xvii) of Companies (Acceptance of Deposits) Rules, 2014

Earlier, start-up companies were allowed to accept a deposit for an amount of Rs. 25 Lakhs or more by way of in a single tranche from a person. Such convertible notes must be convertible into equity shares or repayable within a period not exceeding 5 years from the date of issue.

Note: Start-up Company means a private company incorporated under the Companies Act, 2013 and recognized by the Department for Promotion of Industry and Internal Trade.

Understanding the term Convertible note

A convertible note means an instrument evidencing receipt of money initially as a debt, which is repayable at the option of the holder, or which is convertible into such number of equity shares of the start-up company upon occurrence of specified events and as per the other conditions agreed to and indicated in the instrument.

Please click on the official link on Rule 2(1)(c)(xvii) of Companies (Acceptance of Deposits) Rules, 2014  for reference

Amendment made in Companies (Acceptance of Deposits) Amendment Rules, 2020

As mentioned above, the amendment is made in rules 2 and 3 of Companies (Acceptance of Deposits) Rules, 2014 and the startup company needs to satisfy the following conditions. The changes contemplated are as follows::

Acceptance of Deposit in form of convertible note:

As per this new amendment, the limit for repayment of deposit (money/loan) is increased to 10 years which means that start-up companies can now accept a deposit in form of a convertible note which is convertible/repayable up to 10 years from the date of issue. Before this amendment, the period of repayment was fixed at 5 years from the date of issue.

Acceptance of deposits from members by a start-up which is private companies

This amendment now allows start-up which is private companies to accept the deposit from its members without any restrictions for 10 years from the date of its incorporation as against the earlier time frame of 5 years.

Definition for Startup – As per Companies (Acceptance of Deposits) Amendment Rules, 2020

The above amendments are in line with the amendment to the definition of ‘start-up’ notified by the Department of Promotion of Industry and Internal Trade (DPIIT) vides notification dated 19 February 2019.

To access tax benefits and easier compliance, companies have to be recognized as Startups by the Department for Promotion of Industry and Internal Trade (DPIIT). Startups recognized by DPIIT can avail of Intellectual property rights (IPR) related benefits. The definition of a startup as per the DPIIT’s notification dated 19.02.2019 is explained here for reference:

  • Tenure – Entity shall be considered as a start-up up to 10 years from the date of incorporation
  • Turnover – Turnover for any of the financial years since incorporation has not exceeded Rs.100 Crores
  • Areas of Operation – It is working towards innovation, development, or improvement of products or processes or services or scalable business model with a high potential of employment generation or wealth creation

Acceptance of Deposits by Startups

As per the rules, deposit includes any receipt of money by way of deposit or loan by a company. The startup can receive money from the following entities/Governments and such amount will be considered as Deposit as per the Companies (Acceptance of Deposits) Amendment Rules, 2020:

Any amount from the Central Government or a State Government or any other source whose repayment is guaranteed by the Central Government or a State Government

  • Amount from a local authority or a statutory authority constituted under an Act of Parliament or a State Legislature
  • Any amount received from foreign Governments, international banks, multilateral financial institutions, foreign Governments owned development financial institutions, foreign export credit agency, foreign collaborators, foreign bodies corporate and foreign citizens, foreign authorities, or persons resident outside India
  • Any amount received as a loan or facility from any banking company or the State Bank of India and Public Financial Institutions
  • Any amount received against the issue of commercial paper or any other instruments issued under the guidelines of the Reserve Bank of India
  • Any amount received by a company from any other company
  • Any amount received from a person who, at the time of the receipt of the amount, was a director of the company or a relative of the director of the Private company
  • Any amount raised by the issue of non-convertible debenture not constituting a charge on the assets of the company and listed on a recognized stock exchange as per applicable regulations made by the Securities and Exchange Board of India.
  • Any amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company like non-interest bearing security deposit
  • Any non-interest bearing amount received and held in trust
  • Any amount received for the business of the company
  • Any amount brought in by the promoters of the company by way of unsecured loan in pursuance of the stipulation of any lending financial institution or a ban
  • Any amount accepted by a Nidhi company
  • Any amount received by way of subscription in respect of a chit under the Chit Fund Act, 1982
  • Any amount received by the company under any collective investment scheme in compliance with regulations
  • of the Securities and Exchange Board of India
  • An amount of twenty-five lakh rupees or more received by a start-up company, by way of a convertible note (convertible into equity shares or repayable within a period not exceeding ten years] from the date of issue) in a single tranche, from a person. (As per Companies (Acceptance of Deposits) Amendment Rules, 2020)

The notification pertaining to the Companies (Acceptance of Deposits) Amendment Rules, 2020 is as follows:

Rule_08092020

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The Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020

The Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020

Recently, the Ministry of Finance introduced the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020. The rules shall come into force from 21st September 2020. The rule imposes significant compliance obligation on the importers claiming preferential rate benefits under trade agreement. The new rules are briefly explained in the current article.

Insertion of provisions relating to rules of origin under the trade agreement

Provisions of section 28DA were inserted in the Customs Act, 1962, vide the Finance Act, 2020. Section 28DA covers the administration of the rules of origin under the trade agreements. In continuance, recently, the Government came up with the following notification and circular-

  1. Notification No. 81/2020- Customs (N.T.) dated 21st August 2020 – introduces the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 which provides a detailed procedural framework for governing the preferential duty claims; and
  2. Circular No. 38/2020- Customs dated 21st August 2020 – clarifies various aspects of the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020.

Applicability and features of the new rules

The rules shall apply to the importer claiming a preferential rate of duty in terms of the Trade Agreement. The features of the rules are explained hereunder-

Procedure to be undertaken by the importer/ his agent-

  1. Obtain ‘Certificate of Origin ’ covering each item/ good on which preferential rate of duty is claimed.
  2. Details to be mentioned in the bill of entry-
    1. Declaration stating that the imported goods qualify as originating goods.
    2. Mention the tariff notification against all the goods on which preferential rate of duty is claimed.
    3. Enter the following details of the certificate of origin
      1. Reference number of the certificate.
      2. Date of issuance.
  • Originating criteria.
  1. Mention whether the goods are transported directly from the country of origin.
  2. Mention if the third country issues the certificate of origin.
  1. Possess origin related information in Form-I. The importer should also possess all the supporting documents relating to Form-I for a period of 5 years from the date of filing of the bill of entry.

It must be noted here that, as and when required, the proper officer can call for information, as mentioned in Form-I, and supporting documents thereof. The importer is required to submit the information within ten working days. However, if the importer fails to submit the information or the information is insufficient, then, the proper officer shall forward the verification proposal to the nodal officer of customs.

Cases, wherein, a preferential claim can be denied without verification-

Under the following cases, the proper officer can deny the preferential claim without verification-

  1. Where the certificate of origin is incomplete, and the same is not as per the format as prescribed under the Rules.
  2. Where there is any alteration in the certificate of origin and the same is not authorized by the issuing authority.
  3. Where the certificate of origin is produced after the expiry of the validity period.
  4. Where the certificate of origin is issued for an item/ good not eligible for preferential tariff treatment under trade agreement.

Cases, wherein, verification request can be made to the verification authority-

Under the following circumstances, the proper officer can request for verification of the certificate of origin from the verification authority-

  1. Where there is a doubt with regard to the genuineness/ authenticity of the certificate of origin.
  2. Where the criteria of the country of origin, as stated in the certificate of origin has not been met.
  3. Where the verification is being conducted on a random basis.

Notably, the above verification request may be made only in case the importer fails to provide the appropriate information or provides insufficient information. The preferential treatment can be suspended until the time the verification is not concluded.

Other important points

  • Provisions relating to the treatment of identical goods-

    • Once it is determined that the goods originating from a particular exporter or producer do not satisfy the origin criteria, then, the Principal Commissioner or the Commissioner of Customs will reject other claims for identical goods importer from the same exporter or producer, without further verification.
    • In case of such rejection, the importer needs to be communicated in writing.
  • Cases, wherein, the importer fails to provide the information or fails to exercise reasonable care. Then, the proper officer can implement a system of compulsory verification. Accordingly, all the subsequent bill of entry claiming preferential rate shall be taken up for verification.
  • The preferential claim shall be disallowed, and penalty will be levied in case there is a suppression of facts or willful misstatements or collusions to avail the undue benefit.
  • In case there is conflict between the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 and the Rules of Origin, the provision of the Rules of Origin will prevail.

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Income Tax 20th Amendment Rules 2020

Income Tax 20th Amendment Rules 2020

The Central Board of Direct Taxes (CBDT) has further amended the Income-tax Rules, 1962 in a notification dated 17th August 2020 to be called Income Tax 20th Amendment Rules 2020. This is released in Gazette as per the requirement of the Government of India and this article will provide details on the same.

The Gist of the Income Tax 20th Amendment Rules 2020

The Income-tax Rules, the amendment is brought under rule 2DB which specifies the other conditions for the pension fund. For clause (23FE) of section 10 of Income-tax Rules, the pension fund needs to satisfy six other conditions.

This change has been made by adding a new rule 2DB after rule 2DA under section 10(23FE) of the Income Tax Act, 1961 of the Income Tax Rules 1962.

Clause (23FE) of section 10 of Income-tax rules

Section 10(23FE) of the Income Tax Act, 1961, as inserted by the Finance Act, 2020, provides for an exemption to the specified income of certain entities including notified Venture Capital fund & Pension Funds (PF) from investment in specified infrastructure sectors.

Existing Rule 2DA under Section 10(23FE) of Income-tax rules

Rule 2DA of Income-tax rules specifies the Guidelines for approval under clause (23FA) of section 10

  • A venture capital fund or venture capital company needs to make an application in Form No. 56AA for getting approval from the Central Government. The Central Government may approve the venture capital fund or the venture capital company, subject to some condition.
  • A venture capital fund or a venture capital company should be registered with the Securities and Exchange Board of India and established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992)
  • A venture capital fund or a venture capital company shall not invest more than twenty-five per cent of its total monies raised or total paid-up share capital in one venture capital undertakings

The venture capital fund need to maintain books of account and get such books audited by an accountant and furnish the report of such audit duly signed and verified by such accountant to the Central Government before the due date of filing of the return

After the verification, the Central Government will pass an order in writing granting approval or refusing approval to the venture capital fund or Venture Capital Company

Please click on the official link on Rule 2DA of clause (23FA) of section 10 of Income Tax Rules 1962  for reference

Amendment made in Income Tax 20th Amendment Rules 2020

As mentioned above, a new Rule 2DB has been inserted, and the pension fund needs to satisfy the following conditions:

Governing Law

The pension fund will be regulated under the law of a foreign country including the laws made by any of its political constituents being a province, state, or local body under which PF is created.

Purpose of the Pension Fund

The pension fund is responsible for administering or investing the assets for meeting the statutory obligations and defined contributions of one or more funds established for the following purposes:

  • For providing retirement
  • For offering social security
  • For providing employment
  • For granting disability benefits and death benefits
  • Any similar compensation to the participants of pension funds

Note: The Pension fund should not undertake any commercial activity within or outside India

Intimating details of Investments

The pension fund will intimate the details in respect of each investment made by it in India during the quarter within one month from the end of the quarter in Form No. 10BBB.

Income Tax Return Filing for Pension Fund

Further, it will file a return of income on or before the due date and furnish along with such return a certificate in Form No.10BBC in respect of compliance to the provisions of clause (23FE) of section 1

Procedure to File Investments Details of Pension Fund to CBDT

According to clause (23FE) of section 10 of the Income-tax Act, 1961, the applicant of the Pension Fund needs to furnish the applications to CBDT before investing.

Form No. 10BBA

As per the clause (23FE) of section 10, the pension fund needs to make an application in Form No.10BBA enclosing relevant documents and evidence, to the following prescribed authority:

  • Member (Legislation), Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, North Block, New Delhi during the financial year 2020-2021.
  • Member, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, New Delhi having supervision and control over the work of Foreign Tax and Tax Research Division during the other financial years.

Details Required

The applicant needs to furnish the following details to CBDT for making investments:

  • Name of the Pension Fund
  • Address of the Pension Fund
  • Tax Identification Number of the country of residence
  • Country of residence
  • Permanent Account Number
  • Details of law under which the Pension Fund is created

Documents Required

The applicant needs to furnish the following documents:

  • Documents constituting the Pension Fund and any later amendment
  • Any other relevant document or information

Form 10BBB

A new Form 10BBB has been inserted which is for the Intimation by Pension Fund of investment under clause (23FE) of section 10 of the Income-tax Act, 1961.

The applicant needs to intimate the details of the investment within one month from the end of the quarter ending on 30th June, 30th September, 31st December, and 31st March of the financial year.

Form 10BBC

A new Form 10BBC has been inserted to publish the Certificate of accountant in respect of compliance (return) to the provisions of clause (23FE) of section 10 of the Income-tax Act, 1961 by the notified Pension Fund.

The notification pertaining to the Income Tax 20th Amendment Rules 2020 is as follows:

notifications_67_2020

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Exemption from obtaining/ furnishing PAN by non-resident

Exemption from obtaining/furnishing PAN by non-resident

Vide notification dated 10th August 2020, the Central Board of Direct Taxes has introduced the Income Tax (19th Amendment) Rules, 2020. The amendment rules inserted new sub-rule (3) to rule 37BC and new rule 114AAB to the Income Tax Rules 1962. The gist of the amendment is that the non-resident earning income only from the investment in a specified fund is not required to obtain Permanent Account Number (i.e. PAN). Further, the non-resident is also not required to furnish PAN to the tax deductor. The amendment is effective from 10th August 2020. The said amendments are briefly explained in the current article.

Category of non-resident exempt from obtaining of PAN

Provisions of section 139A of the Income Tax Act mandates every person earning taxable income in India and other specified persons to obtain PAN. However, the provisions of newly inserted rule 114AAB to the Income Tax Rules 1962 states that the non-resident is not required to obtain PAN if both the below criteria are satisfied-

  1. An exemption is available only to a non-resident (other than a company or a foreign company); and
  2. During the previous year, the non-resident has made an investment in the specified funds.

Conditions to be satisfied for claiming exemption under rule 114AAB

In order to avail the above exemption of not obtaining PAN, the non-resident is required to satisfy various conditions. The said conditions are listed herein below-

  1. During the previous year, the non-resident should be earning an income only from an investment made in the specified funds. Meaning thereby, the non-resident shouldn’t not be earning any other income other than income from the investment made in the specified funds.
  2. TDS should have been duly deducted under section 194LLB and deposited by the specified fund to the Government.
  3. Following details/ documents are to be furnished by the non-resident to the specified fund-
    1. Details of name, e-mail id and contact number.
    2. Details of the address of the country/ specified territory where he is resident.
    3. A declaration stating that he is resident of a country/ specified territory outside India.
    4. Tax Identification Number or Unique Number in the country/ specified territory of his residence.
  4. Compliance to be done by the specified fund-
    1. Furnish a quarterly statement in Form 49BA. The statement is to be furnished for the quarter during which the details/ documents are received from the non-resident. The statement is to be filed within 15 days from the end of the relevant quarter. Form 49BA is to be furnished either to the Principal Director General of Income Tax (System) or the Director-General of the Income Tax (System) or his authorized person; and
    2. Upload the declaration received from the non-resident.

Category of non-resident exempted from the furnishing of PAN

As per section 206AA of the Income Tax Act, in case of non-furnishing of PAN, the deductor would be liable to deduct TDS at a higher rate of 20% (in some case 5%).

However, the newly inserted sub-rule (3) to rule 37BC of the Income Tax Rules exempts the non-resident, who is covered under rule 114AAB, from the necessity of furnishing of PAN to the deductor.

Synopsis of the amendment-

A non-resident (other than a company or a foreign company) deriving income only from the investment in specified funds are eligible for the following exemptions-

Rule via which the exemption is available Relevant exemption
Rule 114AAB An eligible non-resident is exempted from obtaining Permanent Account Number (PAN)
Rule 37BC (3) An eligible non-resident is exempted from the requirement of furnishing of PAN to the tax deductor

 

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Animal Husbandry Infrastructure Development Fund (AHIDF)

Animal Husbandry Infrastructure Development Fund (AHIDF)

The Ministry of Animal Husbandry, Dairying and Fisheries launched the Animal Husbandry Infrastructure Development Fund (AHIDF) worth Rs. 15,000 Crores, which was approved under the Atma Nirbhar Bharat Abhiyaan stimulus package . The key objective of the fund is to incentivize individual entrepreneurs, private companies, MSMEs, Farmers Producers Organization (FPOs) , and Section 8 companies to establish dairy & meat processing and animal feed plants. The project under AHIDF would be eligible for a loan up to 90 per cent of the estimated cost from scheduled banks and the Government will provide a 3 per cent interest subsidy on these loans.

Objective of AHIDF

The objective of the Animal Husbandry Infrastructure Development Fund (AHIDF) is as follows:

  • To develop entrepreneurship and generate employment
  • To promote exports and increase the export contribution in the milk and meat sector
  • To help to increase the milk and meat processing capacity in India
  • To make available increased price realization for the producer
  • To make available quality milk and meat products for the domestic consumer
  • To fulfil the objective of the protein-enriched quality food requirement of the growing population of our country
  • To make available quality concentrated animals feed to cattle, buffalo, sheep, goat, pig to poultry to provide balanced ration at affordable prices

Eligible Criteria for AHIDF

The eligible entities for getting support from the Animal Husbandry Infrastructure Development Fund (AHIDF) are as follows:

  • Farmer Producer Organization (FPO)
  • Private Companies
  • Individual Entrepreneurs
  • Section 8 Companies
  • Micro Small and Medium Enterprises (MSME

Eligible Entities for AHIDF

Dairy Processing

The entities engaged in the Diary processing are eligible for the benefit of the AHIDF. The establishment of new units or strengthen existing dairy processing units with quality and hygienic milk processing facilities, package facilities, or any other activities related to dairy processing can also apply for the benefit.

Value-Added Dairy Product Manufacturing

The trader/entrepreneur can avail the loan for the establishment of new units and strengthening of existing manufacturing units for the value addition of the following milk products.

  • Ice Cream Unit
  • Cheese Manufacturing Unit
  • Ultra-High Temperature (UHT) Milk processing unit with tetra packaging facilities
  • Flavoured Milk Manufacturing Units
  • Milk Powder Manufacturing Units
  • Whey Powder manufacturing units
  • Any other milk products and value addition manufacturing units

Meat Processing and Value Addition of Facilities

The entrepreneur can avail the benefit of AHIDF for the establishment of the new meat processing unit and strengthening of existing meat processing facilities for sheep, goat, poultry, pig, buffalo in rural, semi-urban, and urban areas.

Large scale integrated meat processing units

Animal Feed Manufacturing Units

The entrepreneur can avail the benefit for the establishment of Animal Feed Manufacturing and strengthening units:

  • Establishment of Mini, Medium and Large Animal Feed Plant
  • Total mixed Ration Block Unit
  • Mineral Mixture Plant
  • Enrich Silage Making unit
  • Animal feed testing laboratory

Prescribed Authority

The Ministry of Animal Husbandry, Dairying and Fisheries is the implementing agency of the Animal Husbandry Infrastructure Development Fund (AHIDF)

Quantum of Loan

The project under the Animal Husbandry Infrastructure Development Fund (AHIDF) is eligible for a loan up to 90% of the estimated actual project cost from the Scheduled Bank based on the project report.

Beneficiary Contribution

The details of beneficiary contribution for the AHIDF are tabulated here for reference:

Sl.No

Entity

Beneficiary Contribution

1

Micro and Small Units

10%

2

Medium Enterprises

15%

3

Other categories Enterprises

25%

Note:

Interest subvention will not be allowed for the loan sanctioned for procurement of land, working capital, old machinery, and vehicle for personal use.

Interest subvention

The interest subvention for the Animal Husbandry Infrastructure Development Fund (AHIDF) loan is 3% for all eligible entities.

Lending Rate of Interest

The rate of interest will be fixed by Scheduled banks and should not be exceeded at 200 basis points plus External Bench Mark Based Lending Rate (EBLR) for the eligible entities whose projects are falling within MSME defined ceilings.

Credit Guarantee Fund

A credit guarantee fund of Rs.750 crore will be established and the fund will be managed by the National Bank for Agriculture and Rural Development (NABARD). The Ministry of Animal Husbandry and Dairying will pay Rs.75 crore per year over 10 years towards Credit Guarantee at the beginning of each fiscal year.

The credit guarantee will be provided only for those projects which are viable and covered under MSME ceilings and the credit guarantee will be 25% of the credit facility available to the borrower.

Loan Disbursement

The entire amount of AHIDF of Rs.15000 crore will be disbursed by the scheduled banks within a period of 3 years starting from 2020 – 2021.

Repayment of AHIDF Loan

The maximum repayment period of the AHIDF loan is eight years inclusive of 2 years moratorium on the principal amount.

Statutory Clearance Required for AHIDF Project Implementation

The entrepreneurs are required to get the necessary clearances, permits, and licenses for the implementation of the integrated project under the AHIDF. An indicative list of statutory clearances required is as follows:

  • Local Authority Clearances as per the State Requirements
  • No objection from the land authority on the leaseholds ownership of the land
  • Consent to Establish (COE) and Consent to Operate (CO) from the State pollution control Board
  • Trade License
  • Food Safety and Standard Authority of India
  • Water and Air Acts
  • State Electricity Board
  • MSME Registration (only for MSMEs)
  • Registration under Companies Act
  • Registration under the Labour Act/ Employees’ Provident Fund Organization
  • Any other statutory clearances required from the respective state to establish dairy, meat processing, and animal feed plant

Documents Required for AHIDF Loan

Documents Required for AHIDF Loan is listed as follows:

  • Detailed Project including component-wise cost break up, total cost, recurring cost, net income, and viability of the project
  • Proof of Address – PAN/TIN/AaDhard Card/MSME Certificate
  • Proof of Landholding – Ownership or lease, conversion
  • Educational Certificate, Training Certificate, Income proof
  • Bank Statement of the last six month relevant for the project
  • Cite plan for the project
  • List of Machinery and Equipment
  • List out plan (both civil and Machinery) of the processing facility
  • All statutory Clearance (as mentioned above)
  • Road Map to Ensure the Quality Management of the Project, Product Promotion, and Market development.

Prepare Detailed Project Report for AHIDF (DPR)

The entrepreneur needs to prepare a viable project report seeking a loan under the AHIDF along with a self-contained proposal.

Every project report must include the proposal for the establishment of a quality management unit for Milk, meat and animal feed, packaging unit, and product promotion.

The project report must report the future market generation, employment opportunity, and procurement of raw materials.

The DPR, especially for infrastructure related to dairy processing, meat processing, and valued addition and establishment of Animal feed planed, should be prepared based on the following:

  • Identification of the suitable site
  • Necessary engineering and socio-economic investigation and surveys
  • Planning and designing of the facilities
  • Model studies

Note: The applicant can approach the Udyami Mitra Portal of Sidbi for technical assistance in preparing the Detailed Project Report.

AHIDF Application Procedure

The entrepreneur needs to submit the detailed project report and proposal through the Udyami Mitra Portal of Sidbi. The format of application for seeking interest subvention is as follows:

guidelines_for_ahidf-22-23

The concerned bank after due appraisal of interest subvention under AHIDF will forward the application to the Department for approval of interest subvention through online mode.

Project Evaluation and sanction of Loan

  • The Department of Animal Husbandry and Dairying will scrutinize the application, evaluate and appraise the proposal sanctioned by the bank for approval of interest subvention under AHIDF.
  • The project approval committee will recommend the project above Rs.50Crore to the Project Sanctioning Committee (PSC) after the screening and evaluation of the projects.
  • The bank will send a copy of loan sanction to Project Approval Committee before such projects being considered for interest subvention under AHIDF.
  • The Project Approval Committee will also recommend for Credit Guarantee on each project falling within the definition of MSME once the loan is sanctioned by the Bank.
  • All the projects will be assessed by the Committee based on the Eligibility Criteria of Applicant, Eligible activities proposed banks approval, geographical preferences, MSME certification, and economic viability.

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Imposition of Ceiling Limit on MEIS Benefit

Imposition of Ceiling Limit on MEIS Benefit

Recently, the Ministry of Commerce and Industry, vide notification no. 30/2015-2020- DGFT dated 1st September 2020, announced ceiling on Merchandise Exports from India Scheme (shortly known as MEIS). Interestingly, as per the Government officials, 98% of the exporters, claiming MEIS benefits, will remain unaffected by the new ceiling limit prescribed under MEIS.

The present article briefly explains the recent announcements undertaken by the Government in MEIS and its effect thereon.

Background of MEIS

The Foreign Trade Policy 2015-2020 introduced the following two schemes-

  1. Merchandise Exports from India Scheme (i.e. MEIS); and
  2. Service Export from India Scheme (i.e. SEIS).

The main objective of MEIS is to encourage the manufacture and export of notified/ certified products/ goods. MEIS aims to offset the infrastructural inefficiencies and associated costs of exporting products/ goods produced in India. The exporters receive ‘duty credit scrips’ in the form of incentives under MEIS.

Recent announcements-

Vide notification no. 30/2015-2020- DGFT dated 1st September 2020, two paragraphs, namely, 3.04A and 3.04B, are inserted in the Foreign Trade Policy 2015-2020. The effect of the insertion of the new paragraphs is explained hereunder-

  • The gist of paragraph 3.04A-

    • The total reward allowable to an Importer-exporter code holder (i.e. IEC holder) cannot exceed INR 2 Crores.
    • The ceiling limit of INR 2 Crores per exporter is applicable to the exports made during the period 1st September 2020 to 31st December 2020.
    • The period of 1st September 2020 to 31st December 2020 shall be calculated based on the Let Export Order date of the shipping bills.
    • Following exporters will not be eligible to submit any claim under the MEIS scheme-
      • IEC holder who has not done any export during the period 1st September 2019 to 31st August 2020, or
      • Exporter who has obtained IEC on or after 1st September 2020.
    • The ceiling limit of INR 2 Crores per exporter can be further revised downwards to strictly limit the total prescribed allocation under MEIS to INR 5,000 Crore for the period 1st September 2020 to 31st December 2020.
  • The gist of paragraph 3.04B-

The export benefits available under MEIS shall not be available against the exports made with effect from 1st January 2021. In short, the MEIS scheme will be withdrawn from 1st January 2021.

Effect of the recent announcement

Based on the analysis of MEIS claim for the relevant period of the year 2018-2019, the Government argues that the recent restriction (i.e. ceiling limit of INR 2 Crore per exporter) will affect only 2% of the exporters.

However, the sudden and immediate effect of the limit would definitely affect the financials of the exporters to the extent that the buyers will surely not going to revise the price. Additionally, as stated, the exporter will always have the terror of sudden downward reduction in the ceiling limit.

Thankfully, the withdrawal of MEIS from 1st January 2021 is notified by the Government four months in advance and the same will certainly help the exporter for future pricing decision. Noticeably, from 1st January 2021, MEIS scheme will be replaced by the newly announced scheme namely Remission of Duties or Taxes on Export Product (RoDTEP).

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Interest on Delayed Payment of GST

Interest on Delayed Payment of GST

Recently, by enacting the proviso to section 50(1) and making it effective prospectively, the matter of interest on delayed payment of GST again gained the limelight. However, some clarification has been done vide the press release dated 26th August 2020.

The present article tries to explain the hierarchy of actions taken in the matter, analysis the current position along with applicable formula and illustration.

Hierarchy of actions taken in the matter

Since the introduction of Goods and Service Tax, i.e. 1st July 2017, interest payable on delayed payment of GST has always been a subject matter of dispute. Time-to-time action taken by the Government, in the matter, is tabulated hereunder-

Insertion of the proviso to section 50(1) of the Central Goods and Services Tax Act, 2017.

·   The proviso was introduced vide Finance (No. 2) Act 2019 dated 1st August 2019.

·   The proviso stated that interest on delayed payment should be levied on that portion of the tax that is paid by debiting ‘Electronic Cash Ledger’ i.e. net GST liability.

·   The effective date of the amendment was pending to be notified.

CBIC twitter in the matter.

·    CBIC tweeted on 15th February 2020 via an official twitter account.

·    As per the tweet, interest on delayed payment of GST has to be collected on a Net Basis.

39th GST Council Meeting

·    39th GST Council Meeting was held on 14th March 2020.

·    Vide the press release it was stated that interest on delayed payment of GST is to be charged on net cash tax liability. It was also stated that the amendment should be done retrospectively.

Implementation of the proviso to section 50(1) of the Central Goods and Services Tax Act, 2017

·    Vide notification no. 63/2020- Central Tax dated 25th August 2020 the proviso to section 50(1) was made effective.

·    However, as per the notification, the provisions will be effective prospectively from 1st September 2020.

Subsequent press release

·    Vide the press release dated 26th August 2020, the Central Board of Indirect Taxes and Customs come up with the clarification in the matter.

·    As per the clarification, the proviso to section 50(1) is given prospective effect due to certain technical limitations.

·    Further, it is stated that no recoveries shall be made for the past periods.

Analyzing the current position in the matter

Following conclusion can be derived at after going through the above hierarchy of actions-

  • The proviso to section 50(1) clearly states that in case the return is filed belatedly, interest shall be payable only on the tax liability paid in cash i.e. net tax liability.
  • The proviso is made effective from 1st September 2020.
  • As per the latest press release, past period recovery is prohibited. Which means that the interest shall be payable on net tax liability and the same shall be effective from 1st July 2017.

Applicable formula and Illustrations thereon

In order to calculate the interest on delay payment of GST, one needs to apply the following formulas-

  1. The formula for calculating ‘net tax liability’-

Net tax liability = Total tax payable on outward supply – Input Tax Credit on inward supply.

  1. The formula for calculating ‘interest on delay payment of GST’-

Interest payable = Net tax liability * interest rate * No. of days payment delayed/365.

Let us understand the above formulas with the help of an illustration-

Suppose, INR 1,00,000 is payable by the taxpayer as a total tax on Outward supply for the month of January 2020. INR 20,000 is available as an input tax credit to the taxpayer. There is a delay of 10 days in payment of GST.

Net Tax Liability = INR 1,00,000 – INR 20,000 = INR 80,000.

Interest payable = INR 80,000*18%*10/365 = INR 395.

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Adultery: A Ground for Divorce in India

Adultery: A Ground for Divorce in India

Adultery as defined under Section 497 of the Indian Penal Code, 1860, is whoever has sexual intercourse with a person who is and whom he knows or has reason to believe to be the wife of another man, without the consent or connivance of that man, such sexual intercourse not amounting to the offence of rape, is guilty of the offence of adultery.”

Personal laws all over the world censure the act of adultery, and it is contemplated as a ground for divorce or separation. Moreover, the Hindu law that has no concept of separating or divorcing once married also condemns the act of adultery unambiguously. In the current scenario, adultery is a ground for divorce or separation.

The key ingredients of adultery are: 

  • An act of sexual intercourse outside marriage
  • The intercourse should be voluntary

Adultery is a crucial matter, and it has always been a matter of disparity in the related judgments of the courts. The primary reason is to decide which circumstantial evidence can be considered as proof of adultery. For example, Odisha High Court in the case of Banchanidde vs Kamladas said that only irresistible conclusion could be adultery, as circumstances should be so compelling.

However, in the case of Subbarma vs Saraswathi, Madras High Court said that if an unrelated person is found with the wife after midnight, it may be considered as an adulterous act.

In another case Maclenna vs Maclenna, Outer House, Court of Session, Scotland, the court faces a dilemma when the question raised that whether a wife using Artificial Insemination Donor (AID) without her husband’s consent can be considered as adultery or not. However, the court stated that AID could not be considered as adultery and rule in favour of the wife. Nevertheless, it is noteworthy that the burden of proof that whether the act of adultery took place or not lies on the petitioner only.

Hindu Laws on Adultery

Adultery is defined under Section 13(1) of the Hindu Marriage Act, 1955, is a ground for divorce in India. According to it, adultery is an act of voluntarily indulging into sexual intercourse out of marriage, i.e. any person who is not the spouse of the respondent. Thus, it becomes necessary for the petitioner to prove that he/she is married to the respondent, and the respondent made voluntary sexual intercourse with another person.

Any of the spouse filing a divorce petition have to prove the statement with pieces of evidence. With time and significant cases, Indian courts have emphasized that the act of adultery have to be proved beyond a reasonable doubt. However, over the years Honourable Supreme Court’s in such cases seems to differ, stating that proving beyond reasonable doubts is a compulsion for criminal cases, not civil cases.

In a similar case Dastane vs Dastane, the Supreme Court stated that the presence of proof beyond a reasonable doubt is not a necessity, when such crucial personal relationships are involved, like a husband and his wife.

Kerala High Court in the case of Ammini E.J. vs Union of India stated that between the spouses, the husband is in an advantageous condition when it comes to adultery being a ground for divorce because along with the wife proving adultery, will face uncomfortable situations. Therefore, it will be discriminatory towards the wife. In the case, the court also ruled that the wife can also file a divorce petition against her husband on the grounds of only adultery, without any other offence such as desertion or cruelty.

The Marriage Laws (Amendment) Act, 1976

The Marriage Laws (Amendment) Act, 1976 passed and made the ground for divorce and judicial separation common. Under the amendment, any aggrieved party can file a petition for divorce or judicial separation by choice.

Prior to this, enactment was considered as the conduct of immorality. Though adultery was a matter of grave shame, still it was not a ground for divorce. This amendment made the grounds for divorce and judicial separation same, and it was marked as a significant development in the category of Hindu Personal law.

Adultery Under Hindu Marriage Act, 1955

Section 10 of the Hindu Marriage Act, 1955, says adultery is defined as a ground for judicial separation. The section states that the parties can file a decree for judicial separation or divorce because they are mentioned under Section 13(1) of the act. However, it is irrespective of the fact that before or after the commencement of adultery marriage being solemnized.

In the case of Sulekha Bairagi vs Prof. Kamala Kanta Bairagi, Calcutta High Court, the matter was that according to the husband, his wife used to visit the co-respondent and was caught in a compromising position. The wife was also accused of neglecting her marital duties. The court took the decision in favour of the petitioner, i.e. the husband on the merit of the provided evidence and thus granted the judicial separation.

The above cases prove the fact that decisions of such cases are bases on the facts and nature. There need not be similarity, as the decision is on a merit basis.

Muslim Laws on Adultery

According to Quran, the act of adultery is a severely punishable offence, and it is to be punished by stoning to death. However, due to humane treatment to the citizens under a democratic constitution, it is not possible. Under Muslim law, a husband has a right to divorce his wife if he has enough evidence to prove the wife’s adulterous relationship. However, only in the circumstances of false evidence, a wife can ask to withdraw the accusations or can divorce him.

But, in case the husband withdraws the claims and apologizes in the particular manner prescribed by the law, the claim of the wife gets subsists. Allahabad High Court sated in the case of Tufail Ahmad vs Jamila Khatun that this may be used as a ground for divorce to such wives who are not guilty of the act of adultery.

Dissolution of Muslim Marriages Act, 1939

Section 2(viii)(b)of the Dissolution of Muslim Marriage Act,1939, states that if a man leads an ill-famed life or associates himself with any woman of evil repute, his wife can sue the man on charges of cruelty. This concept of Muslim law is close to the concept of adultery.

In the Zaffar Hussain v. Ummat-ur-Rahma, 1919at Allahabad High Court, the wife accused her husband of stating before people that she had illicit intercourse with her brother. In its judgment, the court ruled that if a woman is falsely accused of adultery, she can claim divorce for the same. On the other hand, the wife is not liable to claim a divorce if the accusations of adultery are true.

Christian Laws on Adultery

The Indian Divorce and Act, 1869 and Indian Christian Marriages Act, 1872 deals with the divorce and judicial separation laws for Christians in India. The Indian Divorce Act, 1869, Section 22, bars divorce with mensa et toro (legal separation). But, it has made a provision for judicial separation on the grounds of adultery.

Procedure

There are dual procedures when it comes to granting a divorce in India under the Indian Christian Marriage Act, 1872.

Under the first one, the Christian couple has to obtain an annulment from the concerned Church where the marriage was performed, and then they may apply the courts for a divorce. It is noteworthy that under the act, the wife had to prove a few other grounds as well, along with adultery, such as cruelty, insanity, change in religion, etc. Whereas in the case of the husband, proving just the act of adultery of his wife is enough ground for divorce. However, Section 11 of the Christian Marriage Act, 1872 states that the adultery has to be pleaded and be present as a co-respondent.

  • The Bombay High Court in 1997, in Pragati Varghese vs Cyril Georg, commented that proving other grounds along with adultery puts unreasonable pressure on the wife and is unfair towards her. The court allowed the act of adultery as an independent ground for seeking a divorce.
  • The Kerala High Court in the case of Ammini E.J. vs Union of India ruled that it is violative to Article 21 of the Constitution of India for a Christian woman to prove other offences like cruelty or desertion along with adultery.

Under the second way, a Christian woman is allowed to file a petition for judicial separation on the grounds of adultery. Section 22 of the act, is not applicable for the decree of divorce buy allows both the husband and the wife, a judicial separation on the grounds of adultery.

Adultery under Special Marriage Act, 1954

The act of adultery is recognized by the Special Marriage Act, 1954 as it is a valid ground for divorce if the respondent had have voluntary sexual intercourse with a person who is not his/her spouse, after solemnization of the marriage. Under the act adultery is a separate offence, and it does not need to be presented with any other offence in order to file a petition for divorce or judicial separation.

Calcutta High Court in the case of Sari v. Kalyan, 198, mentioned that though adultery does not have the burden of preponderance, it is a serious matter, and it needs to be proved beyond any kind of reasonable doubt. This is because when it comes to adultery, there may not exist prima facia evidence, but the circumstantial evidence needs to be sufficed.

Conclusion

Adultery has always been demoralized in our country. In fact, in India, the discouragement has been grown with time. In our country, till the year 1976 adultery was a ground for divorce only if the spouse was living in adultery, but now, a petition of divorce or judicial separation can be filed even if there is one single instance of voluntary sexual intercourse with a person other than the spouse.

In India, the judiciary has taken a serious view on the concept of adultery. It has taken the various social conditions, circumstances of the party applied for divorce and the presence of children in consideration. The cases when filing the petition has been delayed when there are children are taken lightly. However, there is no compulsion to use this rule in all adultery related cases. It is the complete discretion of the concerned court to decide each case in its own merits and demerits. The merits and demerits can be the economic status, children (if any), family condition and society.

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Form GSTR-4 Due Date Extension 2020

Form GSTR-4 Due Date Extension 2020

Form GSTR-4  is a quarterly GST return  that must be filed by a person enrolled under the GST Composition Scheme.  The Central Board of Indirect Taxes and Customs (CBIC)  extend the due date for filing form GSTR-4 annual returns for the financial year 2019-2020 till October 31, 2020. The original deadline for filing the Form GSTR-4   return was 15.07.2020 which was earlier extended till 31.08.2020, on July 13th, 2020.

Synopsis of Notification

The Central Board of Indirect Taxes and Customs (CBIC) vide its notification No. 64/2020-Central Tax dated 31.08.2020 extends the due date of filing form GSTR-4 till August 31, 2020, by amending the Notification No. 21/2019- Central Tax dated April 23, 2019. This notification specifies the guidelines for registered persons paying taxes under Section 10 of the Central Goods and Service Tax Act, 2017, which is related to composition levy.

For extension, CBIC amends the first provision of the third paragraph of the Notification No. 21/2019, to extend the due date of Form GSTR-4 till “August 31, 2020†instead of “July 15, 2020â€.

GSTR- 4 Filing – Annual Return for Composition Scheme

The person enrolled under the GST composition scheme needs to file the GSTR 4 annual return. Unlike a normal taxpayer who needs to furnish 3 monthly returns, businesses registered under the GST Composition Scheme is required to furnish only one return which is GSTR-4 and its is need to be filed by 30th of April, following a financial year.

The dealer opted the composition scheme can pay a flat GST tax based on the sales turnover. Entities with an annual turnover of up to Rs 1.5 crore and satisfying other criteria can be enrolled under the GST Composition Scheme.

GST Composition Scheme

The GST composition scheme is formed to help small taxpayers having a turnover of up to Rs.1.5 crore per annum (The limit for north-Eastern states and Himachal Pradesh is Rs.75 lakh.) with a simple GST compliance mechanism. Firms registered under the GST composition scheme can able to pay tax at prescribed rates and file GST returns.

Service providers are not eligible for GST composition scheme, expect for restaurant service providers (which do not serve alcohol).

Under the Composition Scheme, manufacturers and traders are liable to pay GST at 1 per cent, while it is 5 per cent for restaurant service providers

Form GSTR-4 Return Filing

To help taxpayers to file GSTR-4 return offline, Goods and Service Tax Network (GSTN) provides the Excel-based GSTR 4 Offline Utility. Taxpayers can file form GSTR-4 return by uploading the JSON file generated from the Offline utility to the GST portal.

Know more about Form GSTR-4 Return Filing

FORM GST CMP-08

The composition scheme taxpayers also need to file a self-assessed tax return in a one-page statement, that is Form GST CMP 08 as per the Central Goods and Service Tax (GST) Rules, 2017. The taxpayer is required to file this quarterly return (Form GST CMP 08) by the 18th day of the month.

Penalty for GSTR-4 Late Filings

A late fee of Rs.200 per day will be levied from the taxpayer if the form GSTR- 4 is not filed within the due date. As per the rules, the maximum late fee should not exceed Rs. 5000.

The CBIC’s notification pertaining to the Form GSTR-4 return Due Date Extension is attached below for reference.

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