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Taxation & Accounting

GST E-invoicing – Recent Amendment

GST E-invoicing – Recent Amendment

E-invoicing under Goods and Services Tax is an electronic invoicing system through which the invoices will be uploaded by the specified class of registered person and the same will be authenticated by the designated portal. From 1st January 2020, e-invoicing has been implemented on a voluntary basis.

The present article covers some of the important recent amendments with regards to e-invoicing under GST.

Flow and gist of amendments

  1. Notification No. 13/2020- Central Tax dated 21st March 2020 provided date of implementation of e-invoicing and also specified the class of registered person exempted from e-invoicing.
  2. Notification No. 60/2020- Central Tax dated 30th July 2020 amended the Central Goods and Services Tax Rules, 2017 and came up with Form GST INV-01 relating to Format / Schema for e-invoice.
  3. Notification No. 61/2020- Central Tax dated 30th July 2020 amended the class of registered person exempted from e-invoicing.

Date of implementation of e-invoicing under GST

As per the latest amendment, the e-invoicing system under GST is likely to be implemented from 1st October 2020.

It is worth noting here that earlier the date of implementation was fixed as 1st April 2020, however, vide notification no. 13/2020- Central Tax, the date of implementation has been extended to 1st October 2020.

Class of registered person exempted from e-invoicing under GST

Following class of registered person are exempted from issuing e-invoicing-

  1. The following categories of supplier of taxable services-

    1. An insurer; or
    2. A banking company; or
    3. A financial institution; or
    4. A non-banking financial company; or
    5. A goods transport agency supplying service; or
    6. Supplying passenger transportation service; or
    7. Supplying service by way of admission of the exhibition of cinematograph films in multiplex screens.

The above categories of registered person are not required to issue e-invoice. The exemption is available irrespective of their aggregate turnover.

  1. A Special Economic Zone Unit-

Vide Notification No. 61/2020- Central Tax dated 30th July 2020 an exemption from e-invoicing has also been provided to a special economic zone unit. The said exemption is available irrespective of the aggregate turnover of the special economic zone unit.

  1. Aggregate turnover -based exemption-

All the registered person having an aggregate turnover up to INR 500 Crore in a financial year is exempted from issuing e-invoice under GST.

It is important to note here that earlier, as per notification no. 13/2020- Central Tax, a registered person up to an aggregate turnover up to INR 100 Crores was exempt, however, vide notification no. 61/2020- Central Tax, the exemption has been increased up to INR 500 Crores.

Format/ Schema for e-invoice

Vide Notification No. 60/2020- Central Tax dated 30th July 2020, the Central Board of Indirect Taxes and Customs has come up with the Central Goods and Services Tax (Ninth Amendment) Rules, 2020. Accordingly, the entire form GST INV-01 relating to Format/ Scheme for e-invoice has been substituted.

Synopsis of amendments

Sr. No. Notification No. and date Particulars
1 Notification No. 13/2020- Central Tax dated 21st March 2020 Exempted certain class of registered person and specified the date of implementation of the e-invoice system.
2 Notification No. 60/2020- Central Tax dated 30th July 2020 Substituted Form GST INV-01.
3 Notification No. 61/2020- Central Tax dated 30th July 2020 Amended the exemption category.

 

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Changes in Tax Collected at Source (TCS) Statement

Changes in Tax Collected at Source (TCS) Statement

CBDT introduced the changes in Tax Collected at Source statement (Form 27EQ ) vide notification no. 54/2020 on 24th July 2020. Amendments have been made in Rules 31AA, 37BC, 37CA, and 37-I of the Income Tax Rules, 1962 via the notification.

Related Provisions of TCS

  • Section 206C of the Income Tax Act, 1961 deals with TCS (“Tax Collection At Sourceâ€) provisions. It requires every seller to collect TCS from the buyer on the amount received from such a buyer in case of certain goods and services. The seller has to remit the amount collected to the credit of the Government. The section also requires sellers to furnish a statement of the amounts collected and deposited in the prescribed form and within the prescribed time limit. 
  • Further, Rule 31AA of the Income Tax Rule, 1962 require the sellers to furnish quarterly statement of the tax collected at source in Form 27EQ within the following due dates:
Quarter of the financial year ended Due date
30th June 15th July
30th September 15th October
31st December 15th January
31st March 15th May

Latest Amendments in Finance Act, 2020

Finance Act, 2020 brought in certain amendments in section 206C and extended the scope of TCS provisions. The Act brought the following transactions in the ambit of tax collection at source provisions:

Remittances of amounts outside India under the Liberalised Remittance Scheme (LRS) of RBI: Section 206C(1G)

Authorized dealers who receive any amounts for remittance out of India from persons making remittances outside of India under LRS of RBI amounting to or in excess of Rs. 7 lakhs in a financial year shall collect TCS on the amounts received to them for such remittance. The authorized dealers shall collect tax @ 5% of the amount in excess of Rs. 7 lakhs remitted by a person during a financial year.

Further, the rate shall be 0.5% in a case where a person remits remitted out of India an amount which is a loan that has been obtained from a financial institution as prescribed in section 80E for the purposes of pursuing any education. 

Overseas tour program packages: Section 206C(1G)

The sellers of the overseas tour packages shall collect TCS on any amount received from the buyers of the tour packages @ 5%. There is no threshold prescribed in the case of overseas tour program packages. The seller shall collect tax on any amount received by the seller from a person on account of overseas tour packages. 

For amounts being remitted outside India by the buyer in relation to overseas tour packages, either the authorized dealer or the seller of the package shall collect TCS. The section also provides certain classes of buyers for which the provisions contained in the section shall not apply. 

Sale of goods of the value exceeding Rs. 50 lakhs: Section 206C(1H) 

The amendments proposed that tax collection at source shall be made applicable to the sale of goods as well. Although, only those sellers whose total sales, gross receipts, or turnover from the business during the financial year immediately preceding the financial year exceeds Rs. 10 crores shall collect TCS. Thus, it is important to note that the section covers only sellers involved in a business and not professionals.

Such sellers shall collect TCS from the buyers on the amounts received from them on account of the sale of goods to them in excess of Rs. 50 lakhs in the financial year. The sellers shall collect tax @ 0.1% on the amounts received in excess of Rs. 50 lakhs from the buyer. The rate shall be 1% in case the buyer fails to furnish the PAN or the Aadhaar. The section provides an exemption from TCS provisions in case of import and export of goods and for certain buyers.

Amendments in Income Tax Rules Via Notification

The Income Tax department has made the following amendments through this notification.

Amendment in Rule 31AA: Sub-clauses “(vi)†and “vii†added

Sub-clause “vi” Implication

The implication of the sub-clause “vi†is that the seller, being an authorized agent or the seller of overseas tour program shall furnish the details of TCS not collected from the amount received from the buyer in the following cases:

  • The amount received by the authorized dealer for remittance out of India from the person making such remittances is less than Rs. 7 lakhs during the financial year and the person remits such amount for purposes other than the purchase of an overseas tour package program.
  • The amount received by the authorized dealer for remittance out of India by a person for the purpose of purchase of overseas tour package program and the seller of the program has collected the tax on such amount.
  • The buyer is liable to deduct TDS under any other provisions of the Act and such tax has been deducted.
  • The buyer is the Central Government, a State Government, an embassy a High Commission, a legation, a commission, a consulate, the trade representation of a foreign State, a local authority as defined in the Explanation to clause (20) of section 10 or any other person as the Central Government has prescribed by way of notification.
Sub-clause “vii” Implication

The implication of the sub-clause “viiâ€Â  is that the seller of goods shall furnish details of such transactions on which the seller doesn’t collect tax from the buyer on account of the following reasons:

  • The buyer is liable to deduct TDS under any other provisions of the Act on the amounts paid to the seller for the purchase of goods and the buyer has deducted tax.
  • The buyer of the goods is the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State, or a local authority as defined in the Explanation to clause (20) of section 10, or a person importing goods into India or any other person as the Central Government may specify by notification.

Amendment in Rule 37BC

Rule 37BC suggests that a deductor shall not deduct tax at a higher rate in the absence of PAN of the deductee if the deductee furnishes certain details to the deductor. This is applicable only where the deductee is a non-resident or a foreign company. Thus, the rule provides relaxation from the deduction of tax at a higher rate as prescribed in Section 206AA when the deductee doesn’t furnish PAN. 

Earlier the payments in the nature of interest, royalty, fees for technical services, and payments on the transfer of any capital asset were only covered. Now dividend payments are also included in the list. This change has been brought due to the fact that dividends are no more exempt from tax.

Amendment in Rule 37CA

Rule 37CA contains provisions regarding the time and mode of payment of TCS by the sellers under section 206C. Earlier references were made to tax collected at source under sub-section (1) and (1C) only of the section 206C. Since the amendments have extended the scope of section 206C, the rule has been modified to remove these references. As a result, the rules now cover tax collected at source under section 206C.

Amendment in Rule 37-I

Rule 37-I contains provisions regarding granting credit for the tax collected at source to the buyer. The rule states that the credit of the tax collected at source during the financial year shall be available to the buyer in the year in which the relevant income is assessable to tax. The notification has amended the rule to the effect that the buyer shall get credit for the tax collected at source in the year in which a person collects tax under sub-clauses (IF), (IG), and (IH).

Further, a new annexure of the TCS statement has been notified in place of the existing one.   

Conclusion

The changes introduced in the TCS statement are in line with the changes introduced in the TCS provisions by the Finance Act, 2020. To download the full text of the notification, you can click here .

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Procedure and Criteria for Export of Diagnostic Kits

Procedure and Criteria for Export of Diagnostic Kits

The Directorate General of Foreign Trade (DGFT) has specified the procedure and criteria for the export of Diagnostic Kits vide Trade Notice No. 20/2020-2021. With this notification, the DGFT has amended the Export Policy of Diagnostic Kits, Laboratory Reagents and Diagnostic Apparatus and placed their exports in the Restricted Export Item (Non-SCOMET) category from free earlier. Hence the exporter needs to obtain an export authorization from the Government for shipments of Diagnostic Kits.

DGFT also announced that export quota for Diagnostic Kits has been fixed and shipment will be allowed only based on the export quota. The exporter can apply for export authorization/license online through the New DGFT Platform under Non-SCOMET Restricted items sections. The present article briefs the Procedure to obtain an export license for the export of Diagnostic Kits.

Important Announcement for Exporter

The Trade Notice on 30th July 2020 has outlined the detailed Procedure and Criteria for submission and approval of applications for the export of Diagnostic Kits.

  • The DGFT has announced that the Diagnostic Kits is put it in the restricted category, making it mandatory for exporters to get a license from DGFT for export of the product.
  • As per the trade notice, the DGFT also announced that export quota for Diagnostic Kits has been fixed and shipment will be allowed only based on the export quota.
  • The exporter can apply for export authorization as Non-SCOMET Restricted items and exports are not required to forward any hard copy of the application via email or post to DGFT.
  • Exporters who have already filed an online application for the export of diagnostic kits need not apply again. However, they need to submit the required documents through export-dgft@nic.in mentioning the file number in the subject of the mail.

Export of Diagnostic Kits

DGFT with a Notification on 4th April 2020 had revised the Export Policy of Diagnostic Kits from Free to Restricted and Further with Notifications on 10th June 2020 export on the following was revised under the Export Policy 2018.

The export policy of Diagnostics kits, laboratory reagents is revised by amending the DGFT Notification No.59 dated 04.04.2020 is as follows:

Sl.No ITC HS Code Description
207 G Ex322
  • VTM Kits and reagents
  • RNA extraction kits and reagent
  •  RT-PCR kits and reagents

The export policy of following diagnostics instruments, apparatus, and reagents is amended to Restricted.

  • 15 ml falcon tube or cryovials
  • Swab sterile synthetic fibre swabs (Nylon, polyester, Rayon or Dacron)
  • Silicon columns
  • Poly adenylic Acid or Carrier RNA
  • Proteinase K
  • Magnetic stand
  • Beads
  • Probes (specific for COVID 19 testing)
  • Primers (specific for COVID 19 testing)
  • Taq Polymerase enzyme
  • Reverse transcriptase enzyme
  • Deoxy nucleotide triphosphates

Note All other diagnostics kits, reagents, instruments, and apparatus falling under the HS codes above freely exportable subject to the submission of an undertaking to the prescribed custom authorities duly signed by the authorized signatory on the company letterhead.

Export Quota for Diagnostic Kits

The DGFT is fixed exported export quota for following Diagnostic Kits:

Sl.No

Diagnostic Kits

Export Quota

1 VTM Kits 238 Lakh
2 RNA Extraction Kits 149 Lakh
3 RT-PCR Kits – Single tube 34 Lakh
4 RT-PCR Kits – double tube        40 Lakh
5 RT-PCR Kits – triple tube

40 Lakh

Prescribed Date for Application Submission

The application filed for the export of Diagnostic Kits (VTM/RNA Extraction kits/RT-PCR Kits) from 5th – 8th August 2020 will only is considered for the issue of export authorization. All applications for the export of Diagnostic Kits will be examined as per the Handbook Procedure.

The validity of Export Authorization/License

The validity of Export Authorization/License for the export of Diagnostic Kits is 3 months from the date of the issue.

Eligibility Criteria to Obtain Export License

The firm applies for the export license should be the manufacture of VTM/RNA Extraction kits/RT-PCR Kits.

Documents Required for Export License

The exporter needs to furnish the following documents to obtain export authorization for the shipment of Diagnostic Kits

  • Copy of Purchase order
  • Copy of the Import Export Code of the Firm
  • Undertaking duly signed by the authorized signatory in company letterhead to be submitted by the manufacturer certifying that as on date, all domestic commitments have been fulfilled.

Note: All documents must be duly self – attested by the authorized person of the firm.

Procedure to get the license for Export of Diagnostic Kits

The exporter can obtain the Export Authorization of Non-SCOMET Restricted items by applying DGFT‘s ECOM application module. After a successful login using the ECOM application module through Digital Certificate on the DGFT website, the ECOM Reference number will be displayed.

After furnishing the following details, the exporter needs to upload all supporting documents.

  • Shipment Details
  • Details of Products to be exported
  • Details of foreign Buyer or Consignee

Once the DGFT accepted the license request, the export authorization for the shipment of Diagnostic Kits will be issued.

Click here to know more about Procedure to Obtain Export Authorization of Non-SCOMET Restricted items

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Simplified Auto Registration on ICEGATE

Simplified Auto Registration on ICEGATE

ICEGATE is the official web portal developed by the Government. It offers various facilities to the importers and exporters. However, the normal ICEGATE registration requires a digital signature, PAN verification, and additional approval.

In order to simplify the ICEGATE registration and attract more importer/ exporter to obtain registration on ICEGATE, a new simplified auto registration facility is made available. As per the simplified procedure, the registration on ICEGATE can be obtained without Digital Signature Certificate and without uploading any additional documents.

The present article covers the procedure for auto registration on ICEGATE and the downside of auto registration on ICEGATE.

Procedure for auto registration on ICEGATE

The easy auto registration procedure on ICEGATE is narrated hereunder-

STEP 1 – Visit site https://www.icegate.gov.in/index.html .

STEP 2 – Click on ‘Click Here’ under Simplified Registration.

STEP 3 – Provide the following information-

  • Enter IEC (Import Export Code number).
  • Enter GSTIN (Goods and Service Tax Identification Number).
  • Enter Password (please note a temporary password will be sent from ICEGATE).
  • Enter the Captcha and click Submit.

STEP 4 – List of information and points to be taken care while providing the information are tabulated hereunder-

Information to be provided Points to be taken care while providing the information
Enter Your unique ICEGATE ID

·        ICEGATE ID should not exceed 25 characters.

·        ICEGATE ID should not contain blank space.

·        ICEGATE ID can contain alpha-numeric characters.

·        ICEGATE ID should not contain special characters.

Enter Email ID ·        The email ID should not exceed 50 characters.
Enter new password ·        The password should contain a combination of number, special character, and different cases.
Confirm the password

STEP 5 – Enter Mobile OTP (OTP will be sent on the registered mobile number) and Enter Email OTP (OTP will be sent on the registered email ID).

STEP 6 – Click Finish.

Once the above six steps are clear, the importer/ exporter can log in with the ICEGATE ID and password.

Further, it should be noted here that the importer/ exporter has the option to change the pre-registered email ID and mobile number. The same can be done before clicking Finish at Step 6. After mobile and email OTP verification, the importer/ exporter willing to change the mobile number or email ID should click on the ‘Click here’ option provided below the Finish button.

The downside of auto registration on ICEGATE

Even though the auto registration facility is quite paperless and straightforward, the same comes with a drawback. The importer/ exporter registered via the auto registration facility is not permitted to file the customs documents.

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SEBI- Settlement Scheme 2020

SEBI- Settlement Scheme 2020

On 27th July 2020, the Securities and Exchange Board of India introduced a Settlement Scheme 2020 for entities that executed trade reversals in the stock options segment of the Bombay Stock Exchange (i.e. BSE) for the specific period 1st April 2014 to 30th September 2015.

The entity against whom the proceedings are initiated/ pending is eligible to avail the benefit of the scheme. The new scheme so introduced is being briefly explained in the current article.

Background for the introduction of Settlement Scheme 2020

An analysis of the stock options section of the Bombay Stock Exchange was undertaken. Based on the study, it was noticed that during the period 1st April 2014 to 30th September 2015, by trade reversal in stock options, several entities constantly made a significant loss, whereas other entities constantly made a significant profit.

It appeared that the trading activities of such entities were abnormal. Since the significant losses were reversed with the same counterparties on the same day or the next day. SEBI had initiated adjudication proceedings against several such entities. However, recently, the Settlement Scheme 2020 is introduced as a one-time option for such entities to free themselves from such adjudication proceedings.

Noticeably, the Settlement Scheme providing the opportunity to settle the proceedings without having the stigma of penalty orders would undoubtedly help the affected entities to save their reputation from getting exposed.

Highlights of Settlement Scheme 2020

The features of the Settlement Scheme 2020 are summarized hereunder-

  1. Eligibility condition for availing the scheme-
  • The Scheme is available for those entities who have performed the trade reversals on the stock options segment of BSE,
  • The above transaction should have been undertaken during the period 1st April 2014 to 30th September 2015, and
  • The proceeding should have been pending against the entities.
  1. The time period for availing the benefit of the scheme-

The eligible entities can apply under the period from 1st August 2020 to 31st October 2020.

  1. Applicable fees for applying in the scheme-

The entity filing a settlement application under the scheme is required pay following fees-

Type of applicant Applicable fees
Individuals INR 15,000
Body corporates INR 25,000
  1. Suggestive settlement amount-

The board has considered following three objective parameters to arrive at suggestive settlement amount-

  • Artificial volume,
  • The number of non-genuine trades, and
  • The number of contracts resulting in the creation of artificial volume or non-genuine trades

Additionally, a consolidated settlement factor of 0.55 in all the cases (wherein, the entity has executed trade reversals) would apply to suggestive settlement amount.

Other important points

  • The entity is required to pay the settlement amount via an online platform, as available on the SEBI’s website.
  • The entities covered within the scheme, but, don’t avail the benefit of the settlement scheme 2020 shall be liable for action as per provisions of section 15-I of the Securities and Exchange Board of India Act, 1992.

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ReSTART Package for MSME

ReSTART Package for MSME

Amidst the financial crisis being faced by the industries due to the ongoing pandemic, the Government of Andhra Pradesh has launched a revival package called ‘ReSTART Package. The key objective of this package is to strengthen the Micro, Small & Medium Enterprises (MSME) sector and enable them to ReSTART their operations. This package provides certain financial benefits to the MSME and large units located in Andhra Pradesh. The current article briefly describes the ReSTART Package for MSME.

Objective of ReSTART Package for MSME

The initiative is aimed at putting the Micro, Small & Medium Enterprises (MSME) sector back on track and to provide employment to the locals, the Government of Andhra Pradesh launched this revival package.

Special Fund

As part of the ReSTART package, the Government has released Rs. 450 crore towards the first instalment. Besides, a special fund of Rs.200 crore released to provide input capital loans to the firms at low-interest rates.

Features of ReSTART Package

Using this ReSTART Package, almost 1 lakh Industries including MSME in the state will provide 10 lakh employment benefits. To provide the necessary support, the Government has extended the following package across industrial sectors.

Empowerment SC/ST/Women Entrepreneurs

This ReSTART Package will provide a fillip to special Category entrepreneur including SC, ST, and Women Entrepreneurs

Releasing of pending incentives sanctioned from 2014-2015

The government also notified that pending incentives released from 2014- 2015 for all MSME units, amounting to NRI capitals Rs.904.89 crore will be released

Waiver of fixed/demand charges

Andhra Pradesh Government will waive the fixed or demand charges against contracted maximum demand for MSME manufacturing and allied units for 3 months

Deferment of fixed/Demand Charges

The government will defer fixed/demand charges against contracted maximum demand for 3 months to Large and Mega Industries without interest or panel charges

Low-Interest working capital loans

As part of the ReSTART Package, the Government will provide Rs.200 crore working capital fund for loans to Micro and Small Enterprise. As part of this initiative, 2-10 lakh MSME will get the benefit. The interest rate for this loan is captured at very low 6 to 8% and the entrepreneur needs to repay the loan amount within 3 years including moratorium through Andhra Pradesh State Financial Corporation.

Preferential market access to MSEs

To improve the marketability of MSME, Government is providing preferential market access to Micro and Small Enterprise in all government procurements.

As part of this initiative, procurement of 25% of the annual requirements of all goods or services by value from MSEs, of which 4% reserved for SC/ST entrepreneur and 3% for women entrepreneurs.

Collateral- free automatic loans for MSME

MSMEs which have been badly hit due to COVID 19 needs additional funding to meet operational liabilities and restart the business. Considering this, the Government of Andhra Pradesh is providing Collateral- free automatic loans for MSME. MSME can get an emergency credit line to MSMEs from banks and NBFC’s upto 20% of the entire outstanding credit as on 29.02.2020

  • MSME Borrowers with up to Rs.25 crore outstanding and Rs.100 crore turnover eligible
  • Loans to have four-year tenure with a moratorium on 12 months of principal repayment
  • Interest to be capped
  • 100% credit guarantee cover to banks and NBFC’s on principle and interest.
  • The scheme can be availed till 31st OCT 2020
  • No guarantee fee, no fresh collaterals for such loans

Subordinate Debt for Stressed MSE

As part of the ReSTART Package, Government also providing Subordinate Debt for Stressed MSME:

Functioning MSME’s which are NPA or stressed will be eligible for this scheme, the Supporting under this scheme is provided through credit guarantee trust for Micro or Small Enterprises (CGTMSE). Credit guarantee trust for Micro or Small Enterprises will provide partial credit support guarantee to banks. Subordinate debt will be issued to promoters of MSME’s by banks equal to 15% of the existing stake in the firm subject to a maximum of Rs.75 lakh

Eligibility Criteria for ReSTART Package

The eligibility criteria to obtain the ReSTART Package are as follows:

  • All MSME which was functional just before the lockdown i.e. before February 2020 and previously will be eligible to avail the benefits under ReSTART
  • Large / Mega Units which were functional before the lockdown i.e. before February 2020 and previously also eligible to avail the benefits under ReSTART
  • Seasonal units which or operational during such specific seasons during the financial year 2019-20 will also be eligible.
  • The manufacturing and allied units under the above category will be eligible.

Mandatory Documents for ReSTART Package

The documents required to obtain the ReSTART Package is as follows:

  • IEM Part-B (For Large / Mega Units)
  • UAM /EM Part II Acknowledgement for MSMEs
  • Power Consumption Bills for the last four months (Oct’19 to Jan’20
  • GST certificate (where applicable)
  • PAN card
  • AADHAR card

Processing Fee

The eligible entities are not required to pay any fee for applying of ReSTART package.

ReSTART PACKAGE – Application for Eligibility Certificate

The entrepreneur needs to access the official website of Industries ReSTART Package , Department of Industries, Government of Andhra Pradesh.

ReSTART Package for MSME - Home Page
ReSTART Package for MSME – Home Page

Entrepreneur – Login

Existing Entrepreneur can select ‘YES’ against the Question and log in using existing SDP User ID and Password.

ReSTART Package for MSME - Home Page2
ReSTART Package for MSME – Home Page2

New Entrepreneur needs to select ‘NO’ against the Question, the link will redirect to Registration Provide all details in the Single Desk Registration. After successful registration, login credentials will be sent to the registered mobile number and log in using SDP credentials.

ReSTART Package for MSME - User Registration
ReSTART Package for MSME – User Registration

After login to the portal, click on the “Add industry details†and provide the following details:

Enterprise details

Furnish the enterprise details such as the basic details of the entrepreneur like (Pan, Aadhaar, E-mail, Phone number, etc.)

Sector & Investment details

Provide the industry details like (Investment, Sector, GST no, Location the industry, etc.)

Power details

The Power details – category, Service connection number, and Source of Power and Fixed demand charges. Upload the power bills of the latest four months and enter the fixed demand charges for the contracted maximum demand per month

Bank details

The bank details such as IFC code, Bank Name, Branch details and Type of account

After furnishing all details, review the details filled in earlier steps and click on the declaration to Submit. Enter the OTP received on the mobile number and email ID

Get Unique Id and Acknowledgement Letter

A unique id (Parishram Aadhaar ID) and Acknowledgment Letter will be generated for tracking purposes.

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Foreign Exchange Management Act, 1999

Foreign Exchange Management Act, 1999

The legal framework for administering foreign exchange transactions in India is provided by the Foreign Exchange Management Act, 1999. In the winter session of the Parliament on 4 August, 1998, the Foreign Exchange Management Act was presented. There are several purposes of the Foreign Exchange Management Act. To rectify and put together, the statutes related to foreign exchange is one of the important purposes of the FEMA Act. The Foreign Exchange Management Act aims at promoting foreign payments and trade in India. Another vital purpose of the Foreign Exchange Management Act is to improve and maintain the foreign exchange market in India. The Foreign Exchange Management Act also makes the offence related to foreign exchange civil offence. This Act came into force on 1 June 2000. This Act extends to the whole of India. Since its enforcement, this Act has been amended ninety-three times. This Act entitled a new foreign exchange management system congruent with the transpiring structure of the World Trade Organization. It has also cleared the way to the enactment of the Prevention of Money Laundering Act 2002, which came into force on 1 July 2005.

History

Before the Foreign Exchange Management Act was enacted, there was the inadequacy of the statutes related to the management of foreign exchange in India. Hence the Foreign Exchange Regulation Act was passed by the Indian Parliament in 1973, and it came into force on 1 January 1974. But the Foreign Exchange Regulation Act was not able to satisfy the post-liberalization policies. Passed in 1973, in the situation of critical shortage of Foreign Exchange in India, Foreign Exchange Regulation Act has remained in force for controversial twenty-seven years’ period during that period, many directors of the Corporate world of the country were led to the leniency of the Enforcement Directorate (E.D.). Hence, on 1 June 2000, the Foreign Exchange Regulation Act was repealed. Foreign Exchange Management Act 1999 replaced the Foreign Exchange Regulation Act 1973.

Objectives of FEMA

As discussed, the Foreign Exchange Management Act (FEMA) is an official Act that consolidates and amends the laws that regulate foreign exchange in India. The FEMA act’s primary objective is ‘facilitating external trade and payments and promoting the orderly development and maintenance of foreign exchange market in India.’ Enacted by the winter session of Parliament of India in the year 1998, FEMA came into regulation for replacing the Foreign Exchange Regulation Act (FERA) of 1973.

Features of the FEMA

Main features of FEMA are as follows:

  • FEMA is more clear in its applicability since this Act specifies the areas that require specific permissions to be taken from the RBI or Government of India upon acquiring or holding of foreign exchange.
  • This Act also provides the power to the Reserve Bank of India to specify the classes of capital account transactions in consultation with the central government and limitation to which the exchange is permissible for the transactions.
  • FEMA provides full liberty to the residents of India, who were resident outside India earlier, to hold or transfer or own any foreign security or immovable property which is situated outside country and acquired when he was resident.
  • Since FEMA comes under civil law hence the contraventions under the Act, provide for imprisonment only in exceptional cases.
  • This Act does not extend to an Indian citizen who is residing outside India.
  • FEMA also provides powers to the Central Government for the regulation of the flow of payments to and from a person residing outside the country.
  • All financial transactions related to foreign exchange or securities cannot be implemented without the sanction of this Act. Execution of all transactions through “Authorized Persons” only is mandatory under this Act.
  • Under FEMA, the Government of India can also restrict the authorized individual from undertaking foreign exchange deals from the current account, in the general interest of the public.
  • This Act empowers the Reserve Bank of India to impose restrictions on transactions via capital Account even if it is executed from an authorized individual.
  • According to this Act, Citizens residing in India, have the permission to regulate foreign security transactions, foreign exchange, or the right to own or hold immovable property in a foreign country in case currency, security or property was owned or acquired, when the individual was residing outside the country or when they have inherited the property from individual residing outside the country.
  • FEMA classifies the foreign exchange transactions in two categories, that is current account transactions and capital account transactions.
  • Current Account Transactions: Every transaction entered on by resident, outside India, which does not amend his assets or liabilities, are classified as current account transactions. Example: expenses related to foreign education or travel etc.
  • Capital Account Transactions: Capital Account Transactions means the transactions which are taken on by a resident of India in such mode that his assets or liabilities situated outside India are amended (either increased or decreased). Example: investment in foreign securities, acquiring immovable property outside India, etc.

Structure of the Foreign Exchange Management Act

  • The Head Office of the Foreign Exchange Management Act is located in New Delhi. It also is known as Enforcement Directorate and is headed by Director.
  • It has five zonal offices located in Delhi, Chennai, Kolkata, Mumbai, and Jalandhar, each of which is headed by Deputy Director.
  • Each of the five zones is further divided into seven sub-zonal offices, which is headed by Assistant Directors and also five field units, each of which is headed by Chief Enforcement Officers.

Guidelines and Regulations for outward remittances

It is noteworthy that all forex-related offences are regarded as civil offences by the FEMA, whereas FERA is regarded as a criminal offence. The other important facts are:

  • It does not apply to Indian citizens residing outside India. The same eligibility depends on the number of days a person has resided in India during the previous financial year. It needs 182 days or more to be called as a resident under FEMA.
  • Under FEMA, for checking the residency, an agency, a branch or an office can also be considered as a person.
  • The central government is authorized by FEMA to impose restrictions and also to supervise few things, forex and foreign security deals, payments made to or received from a person residing outside India.
  • The FEMA is imposed on the areas around acquisition/holding of forex, requiring approval from the government or the Reserve Bank of India (RBI).
  • A capital account and a current account are the two categories under which foreign exchange transactions are being divided, as per law.
  • A capital account transactions altered the assets and liabilities outside India or inside India but of a person resident outside India. Thus, any transaction that changed overseas assets and liabilities for an Indian resident in a foreign country, or vice versa, was classified as a capital account transaction. Any other transaction fell into the current account category.

Difference between FERA and FEMA

It is clear from the name of the Act that the emphasis under Foreign Exchange Regulation Act was on ‘exchange regulation’ or exchange control, but under Foreign Exchange Management Act, the emphasis is on ‘exchange management’. Under the Foreign Exchange Regulation Act, it was mandatory to acquire permission from Reserve Bank of India, in regards to many regulations under the Act. However, Foreign Exchange Management Act brought a significant change in this matter, and no regulation of the Foreign Exchange Management Act provides for acquiring the Reserve Bank’s permission, except in Section 3, which is related to dealing in foreign exchange, etc. Also, the Foreign Exchange Management Act made all the criminal offences as civil offences. The offences under Foreign Exchange Regulation Act were mainly criminal offences punishable for imprisonment, whereas in Foreign Exchange Management Act seeks to make offences relating to foreign exchange civil offences.

Under the other laws, everything is permitted till it is not prohibited, but under the Foreign Exchange Regulation Act nothing was permitted unless specifically permitted. The FERA provided for imprisonment for very minor offence also. Under other laws, a person is presumed innocent unless and until proven guilty, whereas, under the FERA, a person was presumed guilty unless proven innocent.

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Trademark assignment

Trademark assignment

Like any other property/ asset, the owner of the trademark (i.e., the assignor) has the right to sell, license, or transfer the same. The transfer of trademark is possible through the Trademark Assignment Agreement or Trademark Licensing.

The current article explains the term trademark assignment along with its advantage, types of trademark assignment, pre-requisites, and procedure of trademark assignment.

Understanding the term trademark assignment 

The term trademark assignment is defined under section 37 of the Trademark Act, 1999. As per the definition, the trademark assignment means transferring the owner’s right, interest, and title in a trademark and a brand mark.

In simple words, the process of transferring the right and ownership of the trademark to any other person is known as a trademark assignment.

Some of the advantages of the trademark assignment (concerning both the owner and the buyer) are listed hereunder-

  • The trademark assignment enables the owner of the trademark to encash the value of his brand.
  • With the help of a trademark assignment, the assignee can obtain the rights of an already established brand.
  • The assignment of the trademark supports both the assignor and the assignee to expand their respective business.
  • In case of any dispute, the trademark assignment agreement would enable the assignor or the assignee to establish the legal right.

Types of trademark assignment

There are four types of trademark assignments-

  1. Partial assignment,
  2. Complete assignment,
  3. An assignment with Goodwill, and
  4. An assignment without Goodwill/ Gross assignment.

All the four types of trademark assignments are briefly explained hereunder-

  1. Partial assignment-

Under the partial assignment, the assignor transfers only limited ownership with regard to specific products/ services.

  1. Complete assignment-

Under the complete assignment, entire rights with respect to the registered trademark are transferred by the assignor to the assignee.

  1. An assignment with Goodwill-

Under ‘assignment with Goodwill’, the assignor of the trademark transfers the rights of the trademark as well as the value of the trademark to the assignee.

  1. Gross assignment or Assignment without Goodwill-

Under such type of trademark assignment, while transferring the trademark, the assignor will restrict the buyer’s right. The assignor here restricts the buyer from using a brand of the product which is already being used by the assignor. In nut-shell, the goodwill attached to the brand is not transferred to the assignee.

Pre-requisites and procedure for trademark assignment

The list of pre-requisites for the trademark assignment is-

  • The trademark assignment must be in writing.
  • The assignment must have the following two identifying parties-
    • An assignor (owner of the trademark); and
    • An assignee (buyer of the trademark).
  • The assignor must have the intention and consent for the trademark assignment.
  • The trademark assignment must be for proper adequate consideration.
  • Following is the list of documents required for trademark assignment-
    • Trademark assignment agreement,
    • Trademark certificate,
    • NOC from the assignor,
    • Identified documents from the assignor and assignee.

The procedure for applying for a trademark assignment is narrated hereunder-

  1. Filing an application for trademark assignment in Form TM-24 or Form TM-23 (in case of joint request). Such an application can be filed by either the assignor or the assignee or both.
  2. Filing of Form TM-P.
  3. Filing of all the requisite documents relating to trademark assignment with the Registrar of the trademark. The filing needs to be done within a period of six months from the date of acquisition of proprietorship.
  4. The registrar of the trademark will specify the advertisement of the trademark assignment.
  5. Based on the registrar’s specification, the applicant is required to make an advertisement for the trademark assignment.
  6. The applicant is required to submit the copy of the advertisement and copy of the registrar’s direction in the office of the registrar.

On being satisfied, the registrar will approve the application. Accordingly, the registrar will register the name of the assignee as the proprietor of the trademark.

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Consumer Protection (E-Commerce) Rules, 2020

Consumer Protection (E-Commerce) Rules, 2020

On 23rd July 2020, the Government has notified the Consumer Protection (E-Commerce) Rules, 2020. The rule basically aims to prevent the unfair trade practice in an E-commerce business, direct selling, and protect the interest and rights of the consumers. The current article briefly highlights the Consumer Protection (E-Commerce) Rules, 2020 (hereinbelow referred to as the Rules).

Applicability and non-applicability of the Rules

The Rules shall apply to the following-

  1. All goods and services bought/ sold via an electronic or digital network,
  2. All the e-commerce models (which also includes marketplace models and inventory models),
  3. All e-commerce retails.
  4. All the forms of unfair trade practices prevailing in the e-commerce models.
  5. All the e-commerce entities not established in India but offering goods/ services to the consumers of India.

The Rules shall not apply to any activity of a natural person, which is being carried out in a personal capacity (i.e., the same is not part of a professional or commercial business).

List of dos’ and don’ts of an e-commerce entity

Rule 4 of the Consumer Protection (E-Commerce) Rules, 2020 defines the list of dos’ and don’ts of an e-commerce entity, which are tabulated hereunder-

Dos’ Don’ts
An e-commerce entity should be incorporated as a company under the appropriate law. An e-commerce entity should not adopt any unfair trade practices.
An e-commerce entity should appoint a nodal contact person or a senior designated functionary. The appointed person should be an Indian resident and ensure compliance with the provisions of the Consumer Protection Act and the rules made thereunder. An e-commerce entity should not impose cancellation charges on any consumer cancelling the purchase unless the charges are also borne by the entity.

An e-commerce entity should clearly display the following information on its platform-

·        Legal name,

·        Address of the headquarter and all its branches,

·        Name and address of the website, and

·        Contact details (i.e., e-mail ID, landline number, mobile number, fax, etc.) of the Customer Care and grievance officer.

An e-commerce entity should not discriminate between the consumers of the same class or make any arbitrary (random) classification of consumers affecting their rights.
An e-commerce entity should establish an adequate grievance redressal mechanism. An e-commerce entity should not manipulate the price of the goods/ services to gain unreasonable profit by imposing an unjustified price on the consumers.
An e-commerce entity selling the imported goods/ services should mention the name and detail of the importer. _

List of dos’ and don’ts of sellers on the marketplace

The dos’ and don’ts of the seller offering goods/ services via marketplace e-commerce entity are tabulated hereunder-

Dos’ Don’ts
The seller should have a prior written contract with the e-commerce entity. The seller should not adopt any unfair trade practices.
The seller should appoint a grievance officer. The seller should not falsely represent itself as a consumer and post reviews about the goods/ services. Further, the seller should not misrepresent the features or quality of the goods/ services.

The seller should provide the following information to the e-commerce entity to be displayed on its platform/ website-

·        Contractual information as required to be displayed by law.

·        The total price of goods/ services together with the breakup of the same.

·        Details of goods/ services offered for sale (including details of the country of origin).

·        Name, contact number, and details of grievance officer.

·        Details regarding terms of exchange, refund, and return policies, etc.

·        Details regarding the delivery and shipment of goods/ services.

·        Details regarding guarantees/ warranties, if any, applicable to the goods/ services.

If the goods/ services are not of the characteristics/ features as advertised or defective, the seller should not refuse to take back the goods or withdraw/ discontinue the service.

List of dos’ and don’ts of an inventory e-commerce entity

An inventory e-commerce entity is defined under rule 2(f) of the Consumer Protection (E-Commerce) Rules, 2020. It means an e-commerce entity that owns the inventory of goods/ services and sells such goods/ services directly to the consumers. The dos’ and don’ts of such inventory e-commerce entity is tabulated hereunder-

Dos’ Don’ts

An inventory e-commerce entity shall clearly provide the following information-

·        Contractual information to be displayed as per law.

·        Mandatory notices and information as per law.

·        The total price of goods/ services together with the breakup of the same.

·        Information regarding return policy, refund, warranty and guarantee, exchange, delivery, and shipment, available mode of payments, cost of return shipping, etc.

An inventory e-commerce entity should not falsely represent itself as a consumer and post reviews about the goods/ services. Further, the inventory e-commerce entity should not misrepresent the features or quality of the goods/ services.
An inventory e-commerce entity should ensure that the advertisement of goods/ services is based on actual characteristics, access and usage conditions of the goods/ services. If the goods/ services are not of the characteristics/ features as advertised or defective, the inventory e-commerce entity should not refuse to take back the goods or withdraw/ discontinue the service.

Consumer Protection (E-Commerce) Rules, 2020

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Amended Section 194N – TDS On Cash Withdrawals

Amended Section 194N – TDS On Cash Withdrawals

In an aggressive move to boost a cashless economy in India, the Finance Minister, Ms. Nirmala Sitharaman announced Section 194N under the Income Tax Act, 1961 at the Union Budget 2019. Under its provisions, a TDS rate of 2% will be deducted at source on annual cash withdrawals over Rs 1 crore with effect from 1st September 2019 with respect to banks, cooperative societies and post office accounts.

Objective of Section 194N passed by the Union Budget 2019

The Govt. of India took this step-

  • to discourage huge cash withdrawals
  • promote digital payments
  • keep track of cash flow in the nation
  • arrest the creation of unaccounted wealth and
  • gradually phase out black money from India

Section 194N Of The Income Tax Act 1961 Amended Vide Clause 84 Of Finance Act 2020

The Finance Bill 2020 passed by Both Houses of Parliament made a few amendments to the existing scope of Section 194N on 27th March 2020 with the President of India’s assent. The Bill stiffened TDS provisions for those who have not been filing their income tax returns in the previous years.

It reads as follows-

Clause 84 of Finance Act 2020

For section 194N of the Income-tax Act, the following section shall be substituted with effect from the 1st day of July, 2020, namely

Every person, being, — (i) a banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act);

(ii) a co-operative society engaged in carrying on the business of banking; or

(iii) a post office, who is responsible for paying any sum, being the amount or the aggregate of amounts, as the case may be, in cash exceeding one crore rupees during the previous year, to any person (herein referred to as the recipient) from one or more accounts maintained by the recipient with it shall, at the time of payment of such sum, deduct an amount equal to two per cent. of such sum, as income-tax:

Provided that in case of a recipient who has not filed the returns of income for all of the three assessment years relevant to the three previous years, for which the time limit of file return of income under sub-section (1) of section 139 has expired, immediately preceding the previous year in which the payment of the sum is made to him, the provision of this section shall apply with the modification that—

(i) the sum shall be the amount or the aggregate of amounts, as the case may be, in cash exceeding twenty lakh rupees during the previous year; and

(ii) the deduction shall be—

(a) an amount equal to two per cent. of the sum where the amount or aggregate of amounts, as the case may be, being paid in cash exceeds twenty lakh rupees during the previous year but does not exceed one crore rupees; or

(b) an amount equal to five per cent. of the sum where the amount or aggregate of amounts, as the case may be, being paid in cash exceeds one crore rupees during the previous year:

 

Guide To The Latest Amendments To Section 194N of The Income Tax Act, 1961

TDS has been expanded on cash withdrawals in recent amendment to Section 194N of the Income Tax Act, 1961. A TDS rate of 2% will be deducted if the assessee has not filed income tax for 3 years. TDS of 2% applies to cash withdrawal over Rs 20 Lakhs but less than Rs 1 Crore, in a financial year. For cash withdrawals over Rs 1 Crore, TDS of 5% will be charged.  If the assessee has filed income tax for the specific financial year, there will be no TDS reduction. However, if the assessee has withdrawn cash amounts of more than Rs 1 Crore, there will be a 2% TDS reduction on the amount.

Examples-

Case 1 – A has withdrawn Rs 99.50,000 from a bank in a year. He later withdraws Rs, 2,00,000 in March. The TDS will be applicable on Rs 1,50,000 (the excess cash over Rs 1 Crore). The net payment the recipient will receive will be Rs 1,97,000.

Case 2– If A withdraws Rs 1,00,00, 000 from his bank in a year and later issues a bearer cheque to B, his friend for Rs 5,00,000 payable in cash, no TDS will be deducted in this case. Though the total amount withdrawn is over Rs 1 Crore, here the recipient and the holder do not have the same bank account.

Note: All types of bank accounts maintained by an individual in a bank come under the Rs 1 Crore threshold limits. For instance, if A has a current and a savings bank account in the same bank, the threshold limit of Rs 1 crore will be applied on the aggregate cash withdrawals from both his accounts.

Case 3- If A holds an account in different branches of the same bank across the country, the threshold limit of Rs 1 Crore will be applied on the aggregate of cash withdrawals from these branches under the same bank.

Case 4– If A holds multiple accounts in different banks and makes a cash withdrawal of more than 1 crore from different banks, TDS will not be applicable to him.

Salient Points of Amended Section 194N

  • This section applies to cash withdrawals from banks including cooperative banks and post office accounts.
  • The threshold limit of Rs 1 Crore will apply bank- wise and not branch- wise. This is possible due to core banking solutions currently implemented by banks.
  • TDS on cash withdrawals applies if the aggregate amount of withdrawals in a financial year is more than Rs 1 Crore from one or more bank accounts. In simple terms, this means, the aggregate of cash withdrawals from a person’s savings, current, cash credit, overdraft accounts etc. will be used for determining the threshold limits of Rs 20 Lakhs or 1 Crore in a financial year respectively.
  • The objective for cash withdrawals i.e. for business or personal reasons is not relevant u/s 194N.
  • TDS rates will apply on excess cash withdrawal limits. This means if a person withdraws cash more than Rs 20 lakhs or Rs 1 Crore, as the case may be, the TDS rate will be deducted on the excess cash withdrawn and not on the total cash withdrawal.
  • The TDS deduction rate is 2% and 5% respectively for specific cases where the assessee has not filed tax returns in previous years.

The Amended Section 194N Under TDS (FY 2020-21) will be applicable from 1st July 2020.

Provisions of Amended Section 194N apply to-

  • An Individual
  • A Hindu Undivided Family or HUF
  • A Local Authority
  • A Company
  • Partnership Firm/LLP
  • Body of Individuals (BOIs) or Association of Persons (AOPs)

The payers covered under Section 194N are –

  1. Private and Public Sector Banks
  2. A Post Office
  3. A co-operative bank

Exclusions Under Section 194N-

 Pros of Amended Section 194N

  • Huge cash withdrawals will reduce. Digital transactions and payments will increase.
  • Will aid the Tax Department to access data easily and investigate further into huge cash transactions.
  • TDS liabilities will deter individuals from carrying out huge cash withdrawals.
  • A proper automated system will be established for promoting digital payments and a cashless economy.

Challenges of Amended Section 194N

The new amended section 194N currently faces the following hurdles-

  • A robust TDS deduction automated system needs to be introduced for every transaction to identify accounts where cash withdrawals exceed Rs 1 Crore.
  • Proper installation of this automated mechanism should be conducted by banks and other financial establishments. The biggest challenge are ATMs where execution of the above mechanism is difficult for banks and other financial departments. An automated mechanism should be installed in ATMs where cash withdrawals above Rs 1 crore can be easily identified and TDS deducted.

Conclusion

The Indian Government is frequently introducing monetary reforms to accomplish the goals of a cashless economy. Subsequent to demonetization, the introduction of Section 194N and its latest amendment is a move to promote digital payments and eradicate cash transactions gradually from the country.

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