BMC Advisors. MCA Update SEBI Update RBI Update. Income Tax Update IPR Update Service Tax. Excise Update Custom Update GST Update.

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1 Issue: April 2018 Vol. 4 No. 3 BMC Advisors Corporate Laws and Intellectual Property Rights Consultants MCA Update SEBI Update RBI Update Income Tax Update IPR Update Service Tax Excise Update Custom Update GST Update DGFT Update 1

2 WEEKLY UPDATES APRIL 09 TH, APRIL 15 TH,

3 INDEX MCA UPDATE Companies (Share Capital and Debentures) Amendment Rules, Notification for Amendment in Schedule I of the Companies Act, SEBI UPDATE Measures to strengthen Algorithmic Trading and Co-location / Proximity Hosting framework 7-9 Clarification on clubbing of investment limits of foreign Government/ foreign Government related entities Know Your Client Requirements for Foreign Portfolio Investors (FPIs) Review of Framework for Stocks in Derivatives Segment Performance disclosure post consolidation/ Merger of Schemes 19 Investments by FPIs in Government and Corporate debt securities Guidelines for issuance of debt securities by Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) RBI UPDATE Revised General Notification for sale of Government of India Dated Securities 24 Revised General Notification for Sale of Government of India Treasury Bills/ Cash Management 25 Bill by Auction Interest rates for Small Savings Schemes 26 Liberalised Remittance Scheme (LRS) for Resident Individuals daily reporting of transactions 27 Cassette - Swaps in ATMs 28 Sovereign Gold Bond Scheme Series I Sovereign Gold Bond Scheme Series-I, Operational Guidelines INCOME TAX UPDATE Income tax (Fourth Amendment) Rules, Income-tax (5th Amendment) Rules, IPR UPDATE JPO/ IPR Training Program For FY CUSTOM UPDATE Seeks to increase tariff rate of basic customs duty (BCD) on tariff items covered under tariff sub head ie. Whey and modified Whey, whether or not concentrated or containing added sugar or other sweetening matter, and under tariff item ie. Other Whey from present 30% to 40% by invoking section 8A (1) of the Customs Tariff Act, 1975 Seeks to amend notification No. 50/2017 Customs dated so as to maintain effective rate of BCD on Whey, concentrated, evaporated or condensed, liquid or semi-solid ( ) and Other Whey ( ) at 30% Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver GST UPDATE Clarifying the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances Clarifying the procedure for recovery of arrears under the existing law and reversal of inadmissible input tax credit Clarifying the issues arising in refund to UIN

4 MCA UPDATES [To published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, G.S.R. (E).- In exercise of the powers conferred by sub-sections (I) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Share Capital and Debentures) Rules, 2014, namely:- I. Short title and commencement. - (I) These rules may be called the Companies (Share Capital and Debentures) Amendment Rules, (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Companies (Share Capital and Debentures) Rules, 2014, in rule 5, for sub-rule (3) of, the following sub-rule shall be substituted, namely:- "(3) Every certificate shall specify the shares to which it relates and the amount paid-up thereon and shall be signed by two directors or by a director and the company secretary, wherever the company has appointed company secretary: Provided that in case the company has a common seal it shall be affixed in the presence of persons required to sign the certificate. Explanation. - For the purposes of this sub-rule, it is hereby clarified that,- (a) in case of an One Person Company, it shall be sufficient if the certificate is signed by a director and the company secretary or any other person authorised by the Board for the purpose. (b) a director shall be deemed to have signed the share certificate if his signature is printed thereon as facsimile signature by means of any machine, equipment or other mechanical means such as engraving in metal or lithography or digitally signed, but not by means of rubber stamp, provided that the director shall be personally responsible for permitting the affixation of his signature thus and the safe custody of any machine, equipment or other material used for the purpose. [F. No. 01/04/2013-CL-V-Part III] K.V.R Murty, Joint Secretary Note:- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, subsection (i) vide number G.S.R. 265(E), dated 31st March, 2014 and subsequently amended vide notifications as detailed below:- Sl. No. Notification number Date 1 G.S.R. 413 (E) G.S.R. 210 (E) G.S.R. 439 (E) G.S.R. 841 (E)

5 5 G.S.R. 290 (E) G.S.R. 358 (E) G.S.R. 704 (E) G.S.R. 791 (E)

6 [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS Notification New Delhi: GSR. _ (E).- In exercise of the powers conferred by sub-section (1) of section 467 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following alteration to the Schedule I of the said Act, namely:- 2. In the Companies Act, 2013, in Schedule I, - (i) in Table F, in paragraph II, - (a) in sub-paragraph (2), for item (ii), the following item shall be substituted, namely:- "Every certificate shall specify the shares to which it relates and the amount paid-up thereon and shall be signed by two directors or by a director and the company secretary, wherever the company has appointed a company secretary: Provided that in case the company has a common seal it shall be affixed in the presence of the persons required to sign the certificate. Explanation.- For the purposes of this item, it is hereby clarified that in case of an One Person Company, it shall be sufficient if the certificate is signed by a director and the company secretary, wherever the company has appointed a company secretary, or any other person authorised by the Board for the purpose." ; (b) in sub-paragraph (79), after item (ii), the following explanation shall be inserted, namely:- "Explanation- : For the purposes of this sub-paragraph it is hereby clarified that on and from the commencement of the Companies (Amendment) Act, 2015 (21 of 2015), i.e. with effect from the 29th May, 2015, company may not be required to have the seal by virtue of registration under the Act and if a company does not have the seal, the provisions of this sub-paragraph shall not be applicable." (ii) in Table H, in paragraph II, in sub-paragraph (30), after item (ii) but before the 'Note', the following explanation shall be inserted, namely:- "Explanation- For the purposes of this sub-paragraph it is hereby clarified that on and from the commencement of the Companies (Amendment) Act, 2015 (21 of 2015), i.e. with effect from the 29th May, 2015, company may not be required to have the seal by virtue of registration under the Act and if a company does not have the seal, the provisions of this sub-paragraph shall not be applicable." [F.N 11/08/2012-CL V-Vol XVII] K.V.R Murty Joint Secretary to the Government of India 6

7 SEBI UPDATES CIRCULAR SEBI/HO/MRD/DP/CIR/P/2018/62 April 09, 2018 To All Stock exchanges (except Commodity Derivatives Exchanges), Dear Sir / Madam, Sub: Measures to strengthen Algorithmic Trading and Co-location / Proximity Hosting framework SEBI, vide circular CIR/MRD/DP/09/2012 dated March 30, 2012 and circular CIR/MRD/DP/16/2013 dated May 21, 2013 put in place the broad guidelines for algorithmic trading in the securities market. Further, SEBI, vide circular CIR/MRD/DP/07/2015 dated May 13, 2015 and circular SEBI/HO/MRD/DP/CIR/P/2016/129 dated December 01, 2016 laid down guidelines to ensure fair and equitable access to the Co-location/proximity hosting facility offered by stock exchanges. 2. In order to address the concerns relating to algorithmic trading and colocation / proximity hosting facility offered by stock exchanges and to provide a level playing field between Algorithmic/ Co-located trading and manual trading, SEBI issued a discussion paper on August 5, 2016 requesting market participants to provide their views on the efficacy and need to introduce further mechanisms to address the aforementioned concerns. 3. In light of the public comments received and in consultation with Technical Advisory Committee (TAC) of SEBI and Secondary Market Advisory Committee (SMAC) of SEBI, it has been decided to introduce the following measures in connection with algorithmic trading and co-location / proximity hosting framework facility offered by stock exchanges. Managed Co-location Service 4. In order to facilitate small and medium sized Members, who otherwise find it difficult to avail colocation facility, due to various reasons including but not limited to high cost, lack of expertise in maintenance and troubleshooting, etc. to avail co-location facility, stock exchanges shall introduce Managed Co-location Services. Under this facility, space/rack in co-location facility shall be allotted to eligible vendors by the stock exchange along with provision for receiving market data for further dissemination of the same to their client members and the facility to place orders (algorithmic / non-algorithmic) by the client members from such facility. 5. The vendors shall provide the technical knowhow, hardware, software and other associated expertise as services to trading members and shall be responsible for upkeep and maintenance of all infrastructure in the racks provided to them. 6. Stock exchanges shall supervise and monitor such facilities on a continuous basis. While allowing such services, stock exchanges shall continue to abide by the provisions of SEBI circular CIR/MRD/DP/07/2015 dated May 13, 2015 and circular SEBI/HO/MRD/DP/CIR/P/2016/129 dated December 01, 2016, including remaining responsible and accountable for actions of vendors providing Managed Co-location Services and ensuring integrity, security and privacy of data, being handled at the facility. 7. Further, in order to have fair competition, stock exchanges are advised to ensure that multiple vendors are permitted for providing Managed Co-location Services at their co-location facility. 7

8 Measurement of Latency for Co-location and Proximity Hosting 8. Clause 3.9 of SEBI circular CIR/MRD/DP/07/2015 dated May 13, 2015, mandated stock exchanges to publish suitable quarterly reports on their websites on latencies observed at the exchange. 9. Currently, latency is measured by the Stock Exchange as the time taken to complete the round trip from the Core Router (Core Router is the place where both Colo-location orders and Non-colocation orders meet) to the matching engine and back. In order to bring in greater transparency, stock exchanges shall additionally publish minimum, maximum and mean latencies and latencies at 50th and 99th percentile. 10. Stock Exchanges shall also publish reference latency, which is the time taken for an order message to travel between a reference rack in the Colocation facility and the Core Router. Free of Charge Tick-by-Tick Data feed (TBT Feed) 11. Tick-by-Tick (TBT) data feed offered by stock exchanges provides a detailed view of the entire orderbook, which includes details relating to addition, modification and cancellation of orders and trades on a real-time basis. 12. In order to create a more level playing field among the different types of market participants, Stock Exchanges shall provide TBT Feeds to all the trading members, free of cost, subject to trading members creating the necessary infrastructure for receiving and processing it. 13. After assessing the needs of the market participants, stock exchanges may increase the depth of snapshot of 5 best bid and ask quotes currently being provided by them. Penalty on Order to Trade Ratio (OTR) 14. In order to ensure orderly trading in the market, vide circulars no. CIR/MRD/DP/ 09 /2012 dated March 30, 2012 and CIR/MRD/DP/ 16 /2013 dated May 21, 2013, stock exchanges were advised to put in place effective economic disincentives for high daily order-to-trade ratio (OTR) of algo orders placed by trading members. In order to encourage algo traders to place more orders closer to the last traded price (LTP), the following modification shall be carried out in the existing OTR framework: a. Instead of orders placed within ±1%, orders placed within ±0.75% of the LTP shall be exempted from the framework for imposing penalty for high OTR. b. Orders placed in the cash segment and orders placed under the liquidity enhancement schemes shall also be brought under the OTR framework. Unique Identifier for Algorithms / Tagging of Algorithms 15. Clause 6 (vi) of SEBI circular CIR/MRD/DP09/2012 dated March 30, 2012, prescribed that all algorithmic orders be tagged with a unique identifier provided by the stock exchange in order to establish audit trail. 16. In order to ensure enhanced surveillance, stock exchanges shall now allot a unique identifier to each algorithm approved by them. Stock exchanges shall ensure that every algorithm order reaching on exchange platform is tagged with the unique identifier allotted to the respective algorithm and that such unique identifier tags are part of the data set sent / shared with SEBI for surveillance purpose. Testing Requirement for Software and Algorithms 17. SEBI, vide Circular no. CIR/MRD/DP/24/2013 dated August 19, 2013, inter alia, prescribed the testing procedure to be followed by market participants before deployment of software and algorithms. In order to 8

9 further streamline and strengthen the process of testing of software and algorithms, stock exchanges may provide a simulated market environment for testing of software including algos. Such a facility may be made available over and beyond the current framework of mock trading prescribed by SEBI. 18. Stock exchanges shall ensure that the tagging of each order each algorithm with its unique identifier is completed by September 30, 2018, while the other provisions of the circular shall be complied with at the earliest but not later than June 30, Stock Exchanges are directed to: a. take necessary steps to put in place systems for implementation of the circular, including necessary amendments to the relevant bye-laws, rules and regulations; b. bring the provisions of this circular to the notice of the stock brokers /clearing members and also disseminate the same on their website; c. communicate to SEBI the status of implementation of the provisions of this circular through monthly development report. 20. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 21. This circular is available on SEBI website at at Legal Framework Circulars. Yours faithfully, Susanta Kumar Das Deputy General Manager susantad@sebi.gov.in 9

10 CIRCULAR SEBI/HO/IMD/FPIC/CIR/P/2018/66 April 10, 2018 To, 1. All Foreign Portfolio Investors ("FPIs") through their Designated Depository Participants ("DDPs")/ Custodian of Securities. 2. The Depositories (NSDL and CDSL) Sir/ Madam, Subject: Clarification on clubbing of investment limits of foreign Government/ foreign Government related entities 1. SEBI has been monitoring investment by foreign Governments and their related entities viz. foreign central banks, sovereign wealth funds and foreign Governmental agencies registered as foreign portfolio investors (hereinafter referred to as FPIs) in India. Since various stakeholders have been seeking guidance on clubbing of investment limits to be applied to foreign Government/ its related entities, the following clarifications are issued: a. What is the investment limit for foreign Government/ foreign Government related entities registered as Foreign Portfolio Investors (FPI)? Reply: The purchase of equity shares of each company by a single FPI or an investor group shall be below ten percent of the total paid up capital of the company. [Ref. Regulation 21(7) of FPI Regulations]. b. What is an investor group? Reply: In case, same set of beneficial owners are constituents of two or more FPIs and such investor(s) have a common beneficial ownership of more than 50% in those FPIs, all such FPIs will be treated as forming part of an investor group and the investment limits of all such entities shall be clubbed at the investment limit as applicable to a single foreign portfolio investor. [Ref. Regulation 23(3) of FPI Regulations and FAQ 58]. c. How to ascertain whether an FPI is forming part of any investor group? Reply: The designated depository participant engaged by an applicant seeking registration as FPI shall ascertain at the time of granting registration and whenever applicable, whether the applicant forms part of any investor group. [Ref. Regulation 32(2)(a) of FPI Regulations]. Further, at para 2.2 in the Form A of first schedule, the applicant seeking registration as FPI is required to furnish information regarding foreign investor group. Accordingly, it is the prime responsibility and obligation of the FPI to disclose the information with regard to investor group. d. How is the beneficial ownership of foreign Government entities/ its related entities determined for the purpose of clubbing of investment limit? Reply: The beneficial owner (BO) of foreign Government entities/ its related entities shall be determined in accordance with Rule 9 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (hereinafter referred to as PMLA Rules).The said PMLA Rules provide for identification of BO on the basis of two methodologies namely (a) controlling ownership interest (also termed as ownership or entitlement) and (b) control in respect of entities having company or trust structure. In respect of partnership firms and unincorporated associations, ownership or entitlement is basis for identification of BO. 10

11 e. Whether two or more foreign Government related entities from the same jurisdiction will individually be permitted to acquire equity shares in an Indian company up to the prescribed limit of 10%? Reply: In case the same set of beneficial owner(s) invest through multiple entities, such entities shall be treated as part of same investor group and the investment limits of all such entities shall be clubbed as applicable to a single FPI. [Ref. Regulation 23(3) of FPI Regulations]. Accordingly, the combined holding of all foreign Government/ its related entities from the same jurisdiction shall be below ten percent of the total paid up capital of the company. However, in cases where Government of India enters into agreements or treaties with other sovereign Governments and where such agreements or treaties specifically recognize certain entities to be distinct and separate, SEBI may, during the validity of such agreements or treaties, recognize them as such, subject to conditions as may be specified by it. [Ref. Regulation 21(9) of FPI Regulations]. f. How will the investment by a Foreign Government Agency be treated? Reply: Foreign Government Agency is an arm/ department/ body corporate of Government or is set up by a statute or is majority (i.e. 50% or more) owned by the Government of a foreign country and has been included under Category I Foreign portfolio investors. [Ref. Regulation 5(a) of FPI Regulations]. The investment by foreign Government agencies shall be clubbed with the investment by the foreign Government/ its related entities for the purpose of calculation of 10% limit for FPI investments in a single company, if they form part of an investor group. g. Whether any investment by World bank group entity viz. IBRD, IDA, MIGA and IFC should be clubbed with the investment from a foreign Government having ownership in such World bank group entity? Reply: Government of India, vide letter No. 10/06/2010-ECB dated January 06, 2016 has exempted World Bank Group viz. IBRD, IDA, MIGA and IFC from clubbing of the investment limits for the purpose of application of 10% limit for FPI investments in a single company. h. Where Provinces/States of some countries with federal structure have set up their separate investment funds with distinct beneficial ownership constituted with objectives suitable for their respective provinces, such funds not only have separate source of financing but also have no management, administrative or statutory commonality. Kindly inform whether investments by these foreign Government entities shall be clubbed? Reply: The investment by foreign Government/ its related entities from provinces/ states of countries with federal structure shall not be clubbed if the said foreign entities have different BO identified in accordance with PMLA Rules. i. How will the foreign Government/ its related entities know the available limit for investment, to avoid breach of the limit? Reply: The custodian of securities reports the holdings of FPIs/ investor groups to depositories who monitor the investment limits. As such, NSDL is in ready possession of aggregate holdings of FPIs/ investor groups in any particular scrip. [Ref. Regulation 26(2)(d) of FPI Regulations].To this effect, SEBI, vide communication dated November 02, 2017 has already advised DDPs/ custodians of securities to approach NSDL to get information regarding aggregate percentage holdings of the group entities on whose behalf they are acting in any particular company before making investment decisions. SEBI has no objection to the said arrangement for sharing of data. j. What if the investment by foreign Government/ its related entities cause breach of the permissible limit? Reply: The FPIs investing in breach of the prescribed limit shall divest their holdings within 5 trading days from the date of settlement of the trades causing the breach. Alternatively, the investment by such FPIs shall 11

12 be considered as investment under Foreign Direct Investment (FDI) at the FPI s option. However, the FPIs need to immediately inform of such option to SEBI & RBI, since they cannot hold equity investments in a particular company under FPI and FDI route, simultaneously. 2. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 3. A copy of this circular is available at the links Legal Framework Circulars and Info for F.P.I on our website The DDPs/ Custodians are requested to bring the contents of this circular to the notice of their FPI clients. Yours faithfully, (Achal Singh) Deputy General Manager Tel. No

13 CIR/IMD/FPIC/CIR/P/2018/64 April 10, 2018 To, 1. All Foreign Portfolio Investors ("FPIs") through their Designated Depository Participants ("DDPs")/ Custodian of Securities. 2. Designated Depository Participants ("DDPs")/ Custodian of Securities. 3. All Recognized Stock Exchanges 4. The Depositories (NSDL and CDSL) 5. Stock Brokers through Recognized Stock Exchanges 6. Depository Participants through Depositories 7. Mutual Funds 8. Association of Mutual Funds in India 9. Portfolio Managers 10. KYC Registrations Agencies (KRAs) 11. Alternative Investment Funds (AIFs) Sir/ Madam, Subject: Know Your Client Requirements for Foreign Portfolio Investors (FPIs) 1. This has reference to SEBI circular No CIR/MIRSD/11/2012 dated September 05, 2012 and subsequent SEBI circular No. CIR/MIRSD/07/2013 dated September 12, 2013 whereby risk based documentation requirements were prescribed for Know Your Client (KYC) requirements of eligible foreign investors classified as category I, II and III investing under Portfolio Investment Scheme (PIS) route. KYC of FPIs is accordingly being done. 2. Upon a review, it has been decided to make the following changes:- (a) Identification and verification of Beneficial Owners (i) Beneficial Owner (BO) is the natural person(s) who ultimately owns or controls an FPI and should be identified in accordance with Rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 (hereinafter referred as PMLA Rules). (ii) Accordingly, BOs of FPIs having structure of company or trust should be identified on controlling ownership interest (also termed as ownership or entitlement) and control basis. The BOs in case of partnership firm and unincorporated association of individuals should be identified on ownership or entitlement basis. (iii) The materiality threshold for identification of BOs of FPIs on controlling ownership interest (or ownership/ entitlement) basis shall be same as prescribed in PMLA Rules i.e. 25% in case of company and 15% in case of partnership firm, trust & unincorporated association of persons. (iv) In respect of FPIs coming from high risk jurisdictions as referred in SEBI Master Circular No. CIR/ISD/AML/2010 dated December 31, 2010 the intermediaries may apply lower materiality threshold of 10% for identification of BO and also ensure KYC documentation as applicable for category III FPIs. All the intermediaries are again directed to ensure compliance with the requirements contained in the Master circular dated December 31, (v) The materiality threshold (referred at (iii) & (iv) above) to identify the beneficial owner should be first applied at the level of FPI and next look through principle shall be applied to identify the beneficial owner 13

14 of the material shareholder/ owner entity. Only beneficial owner with holdings equal & above the materiality thresholds in the FPI need to be identified through the aforesaid look through principle. (vi) Where no material shareholder/owner entity is identified in the FPI using the materiality threshold (referred at (iii) & (iv) above) for controlling ownership interest basis and also on control basis (for companies and trusts), BO shall be the senior managing official of the FPI. (vii) In case of companies/ trusts represented by service providers like lawyers/ accountants, FPIs should provide information of the real owners/ effective controllers of those companies / trusts. (viii) If the BO exercises controls through means like voting rights, agreements, arrangement etc., that should also be specified. It is clarified that BO should not be a nominee of another person. (ix) BO should not be a person mentioned in United Nations Security Council s Sanctions List notified from time to time; (x) BO should not be from jurisdiction, which is identified in the public statement of Financial Action Task Force (FATF) as: a) a jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply; or b) a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the FATF to address the deficiencies. (b) Format for reporting of BOs Category II & III FPIs are required to maintain a list of BOs. In order to bring consistency, it has been decided that Category II & III FPIs should provide list of their BOs in following format:- Sl. No. 1 2 Name & Address of the Beneficial Owner (Natural Person) Date of Birth Tax Residency Jurisdiction Nationality Whether acting alone or together through one or more natural persons as group, with their name & address BO Group s percentag e Shareholdi ng / Capital / Profit ownership in the FPIs Tax Residency Number/ Social Security Number/ Passport Number of BO (Please provide any) This List should be certified by FPI. FPI should also certify that there are no other BOs other than those referred in list. The existing FPIs should provide the list of BOs (in aforementioned format) within six months from the date of this circular. (c) Indians as BO of FPIs 14

15 In reply to FAQ 91, it has been clarified that NRI/PIO is not eligible to make investments as an FPI. Accordingly, a company which is majority owned by one or more NRI/PIOs shall not be allowed to make investments as an FPI. However, if such company is appropriately regulated it may be given registration as Category II FPI for the purpose of acting as investment manager for other FPIs. This position is the same as in FII regime where companies promoted by NRIs were registered as non investing FIIs. In order to bring further clarity, it is informed that Non Resident Indians (NRIs) / Overseas Citizen of India (OCI) cannot be BO of FPIs. However, if an FPI is Category II Investment manager of other FPIs & is noninvesting entity, it may be promoted by NRIs/ OCIs. It is also clarified that Resident Indian cannot be a BO of FPI. Existing FPI structures not in conformity with the above requirements henceforth should not create fresh position at the end of expiry of derivative contract of April Further, these FPIs are given time of six months from the date of this circular to change their structure or close their existing position in Indian securities market. (d) Bearer share structure (i) It should be ensured that FPIs or the investors identified on basis of threshold for identification of BO in accordance with PMLA Rules in the FPIs have not issued any bearer shares, or (ii) If the legal constitution of FPIs or their investors identified on basis of threshold for identification of BO in accordance with PMLA Rules and/or applicable home jurisdiction regulations permit issue of bearer shares, then FPIs should certify that they have not issued and do not maintain any outstanding bearer shares. Also, FPIs should certify that they will not issue bearer shares. In case existing FPIs or their investors identified on basis of threshold for identification of BO in accordance with PMLA Rules do not conform to the above requirements, they shall ensure compliance within six months of the date of this circular. (e) KYC review As per SEBI circular dated September 12, 2013, eligible foreign investors shall be subject to KYC review as and when there is any change in material information / disclosure. It is however decided that there should be comprehensive KYC review of FPIs on a periodical basis. The KYC review (including change in BOs / their holdings) should be done based on risk categorization of FPIs. In case of high risk clients (including those coming from high risk jurisdictions) it should be done on yearly basis. In case of all other clients, the KYC review should be conducted every 3 years preferably at the time of continuance of FPI registration. (f) KYC documentation for Category III FPI The stakeholders have requested for clarifications on KYC documentations for category III FPIs. Sl. Query Present Status Reply No. 1 There is uncertainty around SEBI has prescribed Financial Audited Annual financial the specific financials Data as mandatory for Category statement or a certificate from required for Category III III FPIs only. auditor certifying networth FPIs. Kindly clarify the During discussions with DDPs it is may be obtained from specific documents that are acceptable for the financial gathered that there is no clarity on nature of financial data needed. Category III FPIs.. 15

16 data and whether there is need for these to be audited. In case of new funds/ companies/ family offices, the audited financial statement of promoter person may be obtained. 2. Whether prospectus and information memorandum are acceptable in lieu of an official constitutional document. SEBI circular prescribes the requirement of Constitutional document for all category of FPIs. Yes (g) Exempted documents to be provided during investigations/ enquiry (i) SEBI vide circular dated September 12, 2013 has exempted FPIs from furnishing certain supporting KYC documents depending on risk involved. It has been decided that in respect of exempted documents, FPIs concerned should submit an undertaking to DDP/ Custodians that upon demand by Regulators/ Law Enforcement Agencies, the relevant documents would be provided. (ii) Further, SEBI vide circular dated September 12, 2013 has exempted Category III FPIs from submission of proof of address of BOs, Senior Management and Authorised Signatories. Since Category III FPIs are high risk investors, it is decided that declaration on letter head be provided by them. In respect of (i) and (ii) above, the existing FPIs should provide these documents within six months from the date of this circular. 3. In view of manner of identifying Beneficial Ownership of FPIs having been specified in this circular, it is decided that clubbing of investment limit for FPIs shall also be on said basis. All existing FPIs whose clubbed investment in equity shares of a company is in breach of the provisions of Regulation 21(7) in view of this circular are hereby given time of six months from the date of this circular to ensure compliance. In respect of any future breach of clubbing limit, there shall be two options:- (a) The said investments shall be treated as Foreign Direct Investment from the date of breach, or, (b) FPI in breach shall have to divest its holding within five trading days from the date of settlement of the trades to bring its shareholding below 10% of the paid up capital of the company. 4. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 and Sub-rule 14(i) of Rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 5. A copy of this circular is available at the links Legal Framework Circulars and Info for F.P.I on SEBI website The DDPs/Custodians are requested to bring the contents of this circular to the notice of their FPI clients. Yours faithfully, ACHAL SINGH Deputy General Manager Tel No.: achals@sebi.gov.in 16

17 CIRCULAR SEBI/HO/MRD/DP/CIR/P/2018/67 April 11, 2018 To, All Stock Exchanges (except Commodity Derivatives Exchanges), Dear Sir/Madam, Sub: Review of Framework for Stocks in Derivatives Segment 1. Please refer to SEBI circular CIR/DNPD/3/2012 dated July 23, 2012 captioned Revision of Eligibility Criteria for Stocks in Derivatives Segment and circular CIR/DNPD/4/2010 dated July 15, 2010 captioned Physical Settlement of Stock Derivatives. 2. Discussion Paper/public consultation on Growth and Development of Derivative Market in India With a view to improve market integrity and provide better alignment of cash and derivatives segment, SEBI published discussion papers on July 12, 2017 and September 7, 2017 requesting stakeholders to provide their comments/views thereon. In light of the comments received and assessment thereof, discussion with the stock exchanges and market participants and further discussion in the meeting of Secondary Market Advisory Committee (SMAC) of SEBI held on March 07, 2018, it has been decided to take the following measures in connection with the eligibility criteria, exit criteria and settlement of stock derivatives as given hereunder: Physical settlement of stock derivatives 3. In line with the recommendations made by the L.C Gupta committee regarding physical settlement of stock derivatives and discussion in SMAC regarding the functioning of the Securities Lending and Borrowing mechanism (SLBM), it has been decided that physical settlement of stock derivatives shall be made mandatory in a phased/calibrated manner. Enhanced eligibility criteria for introduction of stocks in Derivatives Segment ( Enhanced criteria ) 4. A stock, on which option and future contracts are proposed to be introduced, shall conform to the following broad eligibility criteria: - (i) The stock shall be chosen from amongst the top 500 stocks in terms of average daily market capitalization and average daily traded value in the previous six months on a rolling basis', (ii) The stock s median quarter-sigma order size over the last six months, on a rolling basis, shall not be less than 25 Lakh, (iii) The market wide position limit in the stock shall not be less than 500 crore on a rolling basis, and (iv) Average daily delivery value in the cash market shall not be less than 10 crore in the previous six months on a rolling basis. Above criteria are to be met for a continuous period of six months. 5. Derivatives on stocks (new/existing) which meet the enhanced eligibility criteria (given at para 4 above) shall be cash settled until further notification, however such stocks, if they fail to satisfy any of the enhanced eligibility criteria for a continuous period of three months, shall move from cash settlement to physical settlement. After moving to physical settlement, if such stocks do not meet any of the eligibility criteria (specified vide circular CIR/DNPD/3/2012 dated July 23, 2012) for a continuous period of three months, then they shall exit from derivatives segment. 6. Stocks which are currently in derivatives segment and meet the eligibility criteria (specified vide circular CIR/DNPD/3/2012 dated July 23, 2012) but do not meet the enhanced criteria shall be physically settled. Such stocks, however, shall exit from derivatives segment in case; 17

18 (a) They fail to meet any of the eligibility criteria (specified vide circular CIR/DNPD/3/2012 dated July 23, 2012) for a continuous period of three months, or (b) They fail to meet any of the enhanced eligibility criteria after a period of one year from the date of this circular. 7. After a period of one year from the date of this circular, only those stocks which meet the enhanced eligibility criteria shall remain in derivatives segment. 8. The risk management framework, settlement mechanism and other procedures of the cash segment shall be applicable when a stock derivatives devolves into physical settlement. 9. Stock which meet the enhanced eligibility criteria shall also move to physical settlement albeit in a phased/calibrated manner. 10. The other provisions regarding single stock derivatives shall remain as specified in SEBI circulars CIR/DNPD/3/2012 dated July 23, 2012 and CIR/DNPD/4/2010 dated July 15, Exchanges are directed to put in place proper systems and procedures for smooth implementation of physical settlement and take necessary action to give effect to this circular. No new contract shall be issued on stocks that may exit the derivatives segment, however, the existing unexpired contracts may be permitted to trade till expiry and new strikes may also be introduced in the existing contract months. 12. Stock Exchanges are directed to: a. take necessary steps to put in place systems for implementation of the circular, including necessary amendments to the relevant bye-laws, rules and regulations; b. bring the provisions of this circular to the notice of the stock brokers/clearing members and also disseminate the same on their website; c. communicate to SEBI the status of implementation of the provisions of this circular through monthly development report. 13. This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 14. The circular shall come into force from the date of the circular. 15. This circular is available on SEBI website at at Legal Framework Circulars. Yours faithfully, Amit Tandon Deputy General Manager amitt@sebi.gov.in 18

19 CIRCULAR SEBI/HO/IMD/DF3/CIR/P/2018/69 April 12, 2018 All Mutual Funds/ Asset Management Companies (AMCs)/ Trustee Companies/ Boards of Trustees of Mutual Funds Sir/Madam Subject: Performance disclosure post consolidation/ Merger of Schemes 1. Reference is drawn to Schedule VI under Regulation 30 of SEBI (Mutual Funds) Regulations, 1996 and SEBI circular dated March 15, 2017 which govern the depiction of past performance of schemes. 2. Currently, there are no specific guidelines governing the depiction of performance of the surviving scheme, pursuant to merger of schemes. Further, it is observed that Mutual Funds adopt varied practices, such as disclosing the weighted average performance or performance of surviving schemes, while making such disclosures. 3. In order to standardize the disclosure of performance of schemes post-merger, the issue was discussed in Mutual Fund Advisory Committee (MFAC) and based on the recommendations, it has been decided to disclose the performance, post-merger of schemes as given below: i) When two schemes, for example, Scheme A (Transferor Scheme) & Scheme B (Transferee Scheme), having similar features, get merged and the merged scheme i.e., surviving scheme also has the same features, the weighted average performance of both the schemes needs to be disclosed. ii) When Scheme A (Transferor Scheme) gets merged into Scheme B (Transferee Scheme) and the features of Scheme B are retained, the performance of the scheme whose features are retained needs to be disclosed. iii) When Scheme A (Transferor Scheme) gets merged into Scheme B (Transferee Scheme) and the features of Scheme A (Transferor scheme) are retained, the performance of the scheme whose features are retained needs to be disclosed. iv) When Scheme A (Transferor Scheme) gets merged with Scheme B (Transferee Scheme) and a new scheme, Scheme C emerges after such consolidation or merger of schemes, the past performance need not be provided. 4. In addition to disclosing the performance of the scheme as mentioned in para 3 above, past performance of such scheme(s) whose features are not retained post-merger may also be made available on request with adequate disclaimer. 5. This circular shall be applicable with effect from May 01, This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. Yours faithfully, DEENA VENU SARANGADHARAN Deputy General Manager Tel no.: deenar@sebi.gov.in 19

20 CIRCULAR SEBI/IMD/FPIC/CIR/P/2018/70 April 12, 2018 All Foreign Portfolio Investors through their designated Custodians of Securities The Depositories (NSDL and CDSL) Sir / Madam, Subject: Investments by FPIs in Government and Corporate debt securities 1. RBI in its Fourth Bi-monthly Policy Statement for the year , dated September 29, 2015 had announced a Medium Term Framework (MTF) for FPI limits in Government securities in consultation with the Government of India. Accordingly, SEBI had issued circulars CIR/IMD/FPIC/8/2015 dated October 06, 2015, IMD/FPIC/CIR/P/2016/45 dated March 29, 2016 and IMD/FPIC/CIR/P/2016/107 dated October 03, 2016, IMD/FPIC/CIR/P/2017/30 dated April 03, 2017, IMD/FPIC/CIR/P/2017/74 dated July 04, 2017, IMD/FPIC/CIR/P/2017/113 dated October 04, 2017 and IMD/FPIC/CIR/P/2017/129 dated December 20, 2017 regarding the allocation and monitoring of FPI debt investment limits in Government securities. 2. Vide circular SEBI/HO/IMD/FPIC/CIR/P/2017/112 dated September 29, 2017, a sub-limit for investment by Long Term FPIs in the infrastructure sector was created within the Corporate Debt Investment Limits (CDIL). 3. In accordance with the A.P. (DIR Series) Circular No. 22 dated April 06, 2018 issued by RBI, it has been decided to revise the CDIL and the limit for investment by FPIs in Government Securities and State Development Loans (SDL), for the Financial Year , as follows: a. Limit for FPIs in Central Government securities shall be enhanced to INR 207,300 cr on April 12, 2018 and INR 223,300 cr on October 01, 2018 respectively from the existing limit of INR 191,300 cr. b. Limit for Long Term FPIs (Sovereign Wealth Funds (SWFs), Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks) in Central Government securities shall be enhanced to INR 78,700 cr on April 12, 2018 and INR 92,300 cr on October 01, 2018 respectively from the existing limit of INR 65,100 cr. c. The debt limit category of State Development Loans (SDL) shall be revised as follows: i. SDL-General shall be enhanced to INR 34,800 cr on April 12, 2018 and INR 38,100 cr on October 01, 2018 respectively from the existing limit of INR 31,500 cr ii. SDL-Long Term shall be revised to INR 7,100 cr d. In partial modification to Para 4 of the SEBI circular SEBI/HO/IMD/FPIC/CIR/P/2017/112 dated September 29, 2017, the sub-limit for investment by Long Term FPIs in the infrastructure sector shall be done away with and the existing investment and free limits shall be merged into the CDIL. Further, all the existing sub-categories under the category of corporate bonds will be discontinued and there would be a single limit for FPI investment in all types of corporate bonds. e. The CDIL shall be enhanced to INR 266,700 cr on April 12, 2018 and INR 289,100 cr on October 01, 2018 respectively from the existing limit of INR 244,323 cr. 4. Accordingly, with effect from April 12, 2018, the revised FPI debt limits shall be as follows: 20

21 Type of Instrument Upper Cap as on April 11, 2018 (INR cr) Revised Upper Cap with effect from April 12, 2018 (INR cr) Government Debt 191, , ,300 General Government Debt 65,100 78,700 92,300 Long Term SDL General 31,500 34,800 38,100 SDL Long Term 13,600 7,100 7,100 Total Government 301, , ,800 Debt CDIL 244, , ,100 Revised Upper Cap with effect from October 01, 2018 (INR cr) 5. Investment of coupons by FPIs in Government securities, which was hitherto outside the investment limit, will now be reckoned within the Government Debt General limit. FPIs may, however, continue to invest the coupons without any constraint, as they do now. Only at the time of periodic re-setting of limits, coupon investments would be added to the amount of utilization. Accordingly, the stock of coupon investment of Rs. 4,760 crore as on March 31, 2018, shall be added to the actual utilization under Government Debt - General. 6. All other existing conditions with regard to allocation and monitoring of debt limits shall continue to apply. 7. A separate notification will be issued announcing coupon reinvestment arrangements in respect of SDL and corporate debt and other changes affecting operational aspects of FPI investments in debt. This circular shall come into effect immediately. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, A copy of this circular is available at the web page Circulars on our website Custodians are requested to bring the contents of this circular to the notice of their FPI clients. Yours faithfully, ACHAL SINGH Deputy General Manager Tel No.: achals@sebi.gov.in 21

22 CIRCULAR SEBI/HO/DDHS/DDHS/CIR/P/2018/71 April 13, 2018 To All Real Estate Investment Trusts (REITs) All Infrastructure Investment Trusts (InvITs) All Parties to REITs/InvITs All Stock Exchanges (other than Commodity Exchanges) All Merchant Bankers Dear Sir/Madam, Sub: Guidelines for issuance of debt securities by Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) 1. SEBI (Real Estate Investment Trusts) Regulations, 2014 ( REIT Regulations ) and SEBI (Infrastructure Investment Trusts) Regulations, 2014 ( InvIT Regulations ) were amended vide notifications dated December 15, The said amendments, inter-alia, clarified that REITs and InvITs can issue debt securities. 2. For issuance of debt securities, REITs/InvITs shall follow provisions of SEBI (Issue and Listing of Debt Securities Regulations), 2008 ( ILDS Regulations ) in the following manner: Regulation 4 (5) and Regulation 16 (1) of SEBI ILDS Regulations, 2008 shall not be applicable for issuance of debt securities by REITs/InvITs The compliances required to be made with respect to Companies Act, 2013 or any filing to be made to Registrar of Companies in terms of the ILDS Regulations, shall not apply to REITs/InvITs for issuance of debt securities unless specifically provided in this circular All other provisions of ILDS Regulations shall apply to REITs/InvITs subject to there being no conflict with REIT Regulations and/or InvIT Regulations or circulars issued thereunder. In case of conflict, provisions of REIT Regulations and/or InvIT Regulations or circulars issued thereunder shall prevail over ILDS Regulations. 3. For the issuance of debt securities REITs/InvITs shall appoint one or more debenture trustee registered with SEBI under Securities and Exchange Board of India (Debenture Trustees) Regulations, Provided that a trustee to the REIT/InvIT shall not be eligible to be appointed as debenture trustee to such issue of debt securities. 4. Any secured debt securities issued by REITs/InvITs shall be secured by the creation of a charge on the assets of the REIT/InvIT or holdco or SPV, having a value which is sufficient for the repayment of the amount of such debt securities and interest thereon. 5. In addition to the disclosures and compliances prescribed under Circular CIR/IMD/DF/146/2016 dated December 29, 2016 and Circular CIR/IMD/DF/127/2016 dated November 29, 2016, as applicable, REITs/InvITs which have issued debt securities shall be required to comply with following continuous disclosure requirements: Regulations 50, 51, 54, 55, 56, 57, 58, 59 and 60 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ( LODR Regulations ) and any other provisions of the aforesaid regulations as may be applicable to REITs/InvITs. 22

23 5.2. In addition to Financial disclosures made by REITs and InvITs in terms of circular dated December 29, 2016 and November 29, 2016 the following requirements shall apply: Additional line items that shall be disclosed by REITs/InvITs which have issued/listed their debt securities are as follows:- (a) Asset cover available; (b) debt-equity ratio; (c) debt service coverage ratio; (d) interest service coverage ratio; (e) net worth; Modified opinion(s) in audit reports having a bearing on the interest payment or redemption or principal repayment capacity of the REITs/InvITs shall be appropriately and adequately addressed by the board of the manager while publishing the accounts for the said period REITs/InvITs shall submit to the stock exchange on a half yearly basis along with the half yearly financial results, a statement indicating material deviations, if any, in the use of proceeds of issue of debt securities from the objects stated in the offer document. 6. With reference to ILDS Regulations and LODR Regulation and circulars issued thereunder, the reference to the following terms made therein, should, for the purpose of this circular, be construed as follows, unless otherwise required:- Reference to Articles of Association/ Memorandum of Association Board of directors Directors of the company Shares Shareholder Shareholding pattern Share capital To be construed as Trust Deed Board of Director/Governing Body of the Manager Directors of the manager Units Unit holder Unit holding pattern Unit capital 7. This Circular is issued in exercise of powers conferred under Section 11(1) of Securities and Exchange Board of India Act, 1992 read with Regulation 33 of REIT Regulations and Regulation 33 of InvIT Regulations. 8. This Circular is available on SEBI website at under the categories Legal Framework and under the drop down Circulars. Yours faithfully, Richa G. Agarwal Deputy General Manager Investment Management Department Tel No id - richag@sebi.gov.in 23

24 RBI/ /157 RBI UPDATES Revised General Notification for sale of Government of India Dated Securities Ref.No.IDMD.2592/ / All participants in the Government Securities market. Madam/Sir, Revised General Notification for sale of Government of India Dated Securities April 09, 2018 A reference is invited to our circular IDMD.1800/ / dated October 10, 2008, forwarding therewith a copy of the General Notification F. No. 4(13)-W&M/2008 dated October 8, 2008 issued by the Government of India for issue of Government of India dated securities. 2. Government of India have now issued the General Notification F.No.4(2)-W&M/2018 dated March 27, 2018 for issue of Government Securities in supersession of the earlier General Notification F.No.4(2)- W&M/97 dated as amended from time to time, a copy of which is enclosed. Yours faithfully, (Latha Vishwanath) General Manager 24

25 Revised General Notification for Sale of Government of India Treasury Bills/ Cash Management Bill by Auction RBI/ /158 Ref.No.IDMD.2593/ / April 09, 2018 All participants in the Government Securities market. Madam/Sir, Revised General Notification for Sale of Government of India Treasury Bills/ Cash Management Bill by Auction The terms and conditions for Sale of Government of India Treasury Bills by auction were notified by the Government of India vide Government Notification Nos. F.4(14)-W&M/86 dated 18th November, 1986; F.2(17)-W&M/92 dated 1st January, 1993; F.2(17)-W&M/92 dated 4thJuly, 1994; F.2(1)-W&M/97 dated 20th May, 1997; F.2(1)-W&M/97(i) dated 20th May, 1997; F.2(12)-W&M/97 dated 31st March 1998; F.No.2(12)- W&M/97 dated 19th April 2016 and F.No.4(8)-W&M/2015 dated 26th May, Government of India have now issued the General Notification F.No.4(2)-W&M/2018 dated March 27, 2018 along with the Amendment NotificationNo.F.4(2)-W&M/2018 dated April 05, 2018, for Sale of Government of India Treasury Bills/ Cash Management Bill by Auction in supersession of Government Notification No. F.4(14)-W&M/86 dated 18th November, 1986, as amended from time to time, a copy of which is enclosed. Yours faithfully, (Latha Vishwanath) General Manager 25

26 RBI/ /160 DGBA.GBD. 2573/ / April 12, 2018 The Chairman/Chief Executive Officer Agency Banks handling Small Saving Schemes Interest rates for Small Savings Schemes Dear Sir Interest rates for Small Savings Schemes Please refer to our circular DGBA.GBD.1781/ / dated January 11, 2018 on the above subject. The Government of India, has vide their Office Memorandum (OM) No.F.No.01/04/2016 NS dated March 28, 2018 has stated that the interest rates on Small Savings Schemes for the first quarter of financial year starting 1st April, 2018 shall remain unchanged from those notified for the fourth quarter of FY The contents of this circular may be brought to the notice of the branches of your bank operating Government Small Saving Schemes for necessary action. These should also be displayed on the notice boards of your branches for information of the subscribers to these Schemes. Yours faithfully (Harsha Vardhan) Manager 26

27 Liberalised Remittance Scheme (LRS) for Resident Individuals daily reporting of transactions RBI/ /161 A.P. (DIR Series) Circular No. 23 April 12, 2018 To All Category - I Authorised Dealer Banks Madam / Sir Liberalised Remittance Scheme (LRS) for Resident Individuals daily reporting of transactions Please refer to the announcement made in para 10 of Part II of the First Bi Monthly Monetary Policy Statement dated April 05, Currently, transactions under Liberalised Remittance Scheme (LRS) are being permitted by AD banks based on the declaration made by the remitter. The monitoring of adherence to the limit is confined to obtaining such a declaration without independent verification, in the absence of a reliable source of information. 3. In order to improve monitoring and also to ensure compliance with the LRS limits, it has been decided to put in place a daily reporting system by AD banks of transactions undertaken by individuals under LRS, which will be accessible to all the other ADs. 4. Accordingly, from the date of issue of this circular, all AD Category-I banks are required to upload daily transaction-wise information undertaken by them under LRS at the close of business of the next working day. In case no data is to be furnished, AD banks shall upload a Nil report. AD banks can upload the LRS data as CSV file (comma delimited), by accessing XBRL site through the URL as hitherto. 5. The directions contained in this circular have been issued under Sections 10(4), 11(1) and 11(2) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law. Yours faithfully, (R K Moolchandani) Chief General Manager 27

28 Cassette - Swaps in ATMs RBI/ /162 DCM (Plg.) No. 3641/ / The Chairman and Managing Director/ Chief Executive Officer All Banks April 12, 2018 Dear Sir, Cassette - Swaps in ATMs As stated in para 15 of the monetary policy statement dated October 04, 2016, the Bank had constituted a Committee on Currency Movement (CCM) [Chair: Shri D.K. Mohanty, Executive Director] to review the entire gamut of security of the treasure in transit. The recommendations of the Committee have been examined and in order to mitigate risks involved in open cash replenishment/ top-up, it is advised that banks may consider using lockable cassettes in their ATMs which shall be swapped at the time of cash replenishment. 2. The above may be implemented in a phased manner covering at least one third ATMs operated by the banks every year, such that all ATMs achieve cassette swap by March 31, The banks are required to furnish a quarterly report in the enclosed format to the Issue Department of the Regional Office under whose jurisdiction their Head Office is situated, within 15 days of the close of every quarter commencing June 30, 2018 by . Yours faithfully, (Aviral Jain) General Manager 28

29 RBI/ /163 IDMD.CDD.No.2651/ / April 13, 2018 Sovereign Gold Bond Scheme Series I The Chairman & Managing Director All Scheduled Commercial Banks, (Excluding RRBs) Designated Post Offices Stock Holding Corporation of India Ltd.( SHCIL) National Stock Exchange of India Ltd. & Bombay Stock Exchange Ltd. Dear Sir/Madam, Sovereign Gold Bond Scheme Series I Government of India has vide its Notification F.No.4(8)-W&M/2018 dated April 13, 2018 announced that the Sovereign Gold Bond Scheme Series -I ( the Bonds ) will be open for subscription from April 16, 2018 to April 20, The Government of India may, with prior notice, close the Scheme before the specified period. The terms and conditions of the issuance of the Bonds shall be as follows: 1. Eligibility for Investment: The Bonds under this Scheme may be held by a person resident in India, being an individual, in his capacity as such individual, or on behalf of minor child, or jointly with any other individual. The bond may also be held by a Trust, HUFs, Charitable Institution and University. Person resident in India is defined under section 2(v) read with section 2(u) of the Foreign Exchange Management Act, Form of Security The Bonds shall be issued in the form of Government of India Stock in accordance with section 3 of the Government Securities Act, The investors will be issued a Holding Certificate (Form C). The Bonds shall be eligible for conversion into de-mat form. 3. Date of Issue Date of issuance shall be May 04, Denomination The Bonds shall be denominated in units of one gram of gold and multiples thereof. Minimum investment in the Bonds shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April March), provided that (i) in case of joint holding, the above limits shall be applicable to the first applicant only; (ii) annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market; and 29

30 (iii) the ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions. 5. Issue Price The nominal value of the Bonds shall be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewelers Association Limited for the last 3 working days of the week preceding the subscription period. The issue price of the Gold Bonds will be 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode. 6. Interest The Bonds shall bear interest from the date of issue at the rate of 2.50 percent (fixed rate) per annum on the nominal value. Interest shall be paid in half-yearly rests and the last interest shall be payable on maturity along with the principal. 7. Receiving Offices Scheduled Commercial Banks (excluding RRBs), designated Post Offices (as may be notified), Stock Holding Corporation of India Ltd (SHCIL) and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Ltd. are authorized to receive applications for the Bonds either directly or through agents. 8. Payment Options Payment shall be accepted in Indian Rupees through cash up to a maximum of 20,000/- or Demand Drafts or Cheque or Electronic banking. Where payment is made through cheque or demand draft, the same shall be drawn in favour of receiving office. 9. Redemption i) The Bonds shall be repayable on the expiration of eight years from May 04, 2018, the date of issue of Bonds. Pre-mature redemption of the Bond is permitted from fifth year of the date of issue on the interest payment dates. ii) The redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of the previous 3 working days, published by the India Bullion and Jewelers Association Limited. 10. Repayment RBI/depository shall inform the investor of the date of maturity of the Bond one month before its maturity. 11. Eligibility for Statutory Liquidity Ratio (SLR) Bonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone shall be counted towards Statutory Liquidity Ratio. 12. Loan against Bonds The Bonds may be used as collateral for loans. The Loan to Value ratio will be as applicable to ordinary gold loan mandated by the RBI from time to time. The lien on the Bonds shall be marked in the depository by the 30

31 authorized banks. The loan against SGBs would be subject to decision of the bank/financing agency, and cannot be inferred as a matter of right. 13. Tax Treatment Interest on the Bonds shall be taxable as per the provisions of the Income-tax Act, The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond 14. Applications Subscription for the Bonds may be made in the prescribed application form (Form A ) or in any other form as near as thereto stating clearly the grams of gold and the full name and address of the applicant. The receiving office shall issue an acknowledgment receipt in Form B to the applicant. 15. Nomination Nomination and its cancellation shall be made in Form D and Form E, respectively, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, An individual Non - resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that: (i) the Non-Resident investor shall need to hold the security till early redemption or till maturity; and (ii) the interest and maturity proceeds of the investment shall not be repatriable. 16. Transferability The Bonds shall be transferable by execution of an Instrument of transfer as in Form F, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, Tradability of bonds The Bonds shall be eligible for trading from such date as may be notified by the Reserve Bank of India. 18. Commission for distribution Commission for distribution shall be paid at the rate of Rupee one per hundred of the total subscription received by the receiving offices on the applications received and receiving offices shall share at least 50% of the commission so received with the agents or sub-agents for the business procured through them. 19. All other terms and conditions specified in the notification of Government of India in the Ministry of Finance (Department of Economic Affairs) vide number F. No.4 (2) W&M/2018, dated 27th March 2018 shall apply to the Bonds. 20. Operational guidelines relating to Sovereign Gold Bonds are issued vide circular IDMD.CDD.No.2652/ / dated April 13, Yours faithfully, (Shyni Sunil) Deputy General Manager 31

32 Sovereign Gold Bond Scheme Series-I, Operational Guidelines RBI/ /164 IDMD.CDD.No.2652/ / The Chairman & Managing Director All Scheduled Commercial Banks (Excluding RRBs) Designated Post Offices Stock Holding Corporation of India ltd.(shcil) National Stock Exchange of India Ltd. & Bombay Stock Exchange Ltd. April Dear Sir/Madam, Sovereign Gold Bond Scheme Series-I, Operational Guidelines This has reference to the GoI notification F.No.4(8)-W&M/2018 and RBI circular IDMD.CDD.No.2651/ / dated April on the Sovereign Gold Bonds,. FAQs in this regard have been placed on our website ( Operational guidelines with regard to this scheme are given below: 1. Application Application forms from investors will be received at branches during normal banking hours from April 16, 2018 to April 20, Receiving Offices need to ensure that the application is complete in all respects as incomplete applications are liable to be rejected. Relevant additional details may be obtained from the applicants, where necessary. The Receiving Offices may make arrangements to enable the investors to apply online, in the interest of better customer service 2. Joint holding and nomination Multiple joint holders and nominees (of first holder) are permitted. Necessary details may be obtained from the applicants as per practice. An individual Non - resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that: (i) the Non-Resident investor shall need to hold the security till early redemption or till maturity; and (ii) the interest and maturity proceeds of the investment shall not be repatriable. 3. Know-Your-Customer (KYC) requirements Know-Your-Customer (KYC) norms shall be the same as that for purchase of physical form of gold. Identification documents such as passport, Permanent Account Number (PAN) Card, Voter's Identity Card, Aadhaar card shall be required. In case of minors only, the bank account number may also be considered as valid for KYC verification. KYC will be done by the banks/shcil offices/post Offices/designated stock exchanges/agents. It may be ascertained from the investor, if he/she has made a previous investment in SGBs or IINSC-C and hence in possession of an Investor ID. If so, the investments may be made under the unique Investor ID only. 4. Interest on application money Applicants will be paid interest at prevailing savings bank rate from the date of realization of payment to the settlement date, ie. the period for which they are out of funds. In case the applicant s bank account is not with the receiving bank, the interest has to be credited by electronic fund transfer to the account details provided by the applicant 32

33 5. Cancellation Cancellation of application is permitted till the closure of the issue, i.e. April 20, Part cancellation of submitted request for purchase of gold bonds is not permitted. No interest on application money needs to be paid if the application is cancelled. 6. Lien marking As the bonds are government securities, lien marking, etc. will be as per the extant legal provisions of Government Securities Act, 2006 and rules framed there under. 7. Agency arrangement Receiving Offices may engage NBFCs, NSC agents and others to collect application forms on their behalf. Banks may enter into arrangements or tie-ups with such entities. Commission for distribution shall be paid at the rate of Rupee one per hundred of the total subscription received by the receiving offices on the applications received and receiving offices shall share at least 50% of the commission so received with the agents or sub-agents for the business procured through them. 8. Processing through RBI s e-kuber system Sovereign Gold Bonds will be available for subscription at the Receiving Offices through RBI s e- Kuber system. The e-kuber system can be accessed either through INFINET or Internet. The Receiving Offices need to enter the data or carry out bulk upload for the subscriptions received by them. They may ensure accuracy of entry of data to prevent occurrence of any inadvertent errors. An immediate confirmation will be provided to them for receipt of application. In addition, a confirmation scroll will be provided for file uploads to enable the Receiving Offices to update their database. On the date of allotment, Certificates of Holding will be generated for all the subscriptions in the name of the sole/principal holder. The Receiving Offices can download the same and take printouts. The Certificates of Holding will also be sent through to the investors who have provided their address. The securities will be credited in their de-mat accounts by the depositories, in due course, subject to matching of particulars furnished in the application with the depositories records. 9. Printing Certificates of Holding Holding Certificate needs to be printed in colour on A4 size 100 GSM paper. 10. Servicing and follow up Receiving Offices will own the customer and provide necessary services with regards to this bond e.g. update contact details, receive requests for premature encashment, etc. Receiving Offices will be required to preserve applications till the bonds are matured and are repaid. 11. Tradability The Bonds shall be eligible for trading on a date notified by the Reserve Bank of India. (It may be noted that only bonds held in demat form with depositories can be traded in stock exchanges) 12. Contact details Any queries/clarifications may be ed to the following: (a) Sovereign Gold Bond related: Please click here to send . (b) IT related: Please click here to send . Yours faithfully, (Shyni Sunil) Deputy General Manager 33

34 INCOME TAX UPDATES MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 9th April, 2018 Income-tax G.S.R. 352(E). In exercise of the powers conferred by section 139A read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely: 1. Short, title and commencement. (1) These rules may be called the Income tax (Fourth Amendment) Rules, (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Income-tax Rules, 1962, in Appendix II, in Form number 49A and Form number 49AA, for column number 4 and entries relating thereto, the following item shall be substituted, namely:- 4. Gender (for individual applicants only) Male Female Transgender (please tick as applicable). [Notification No. 18/2018/F.No /40/2016-TPL] Dr. T. S. MAPWAL, Under Secy. Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (ii) vide notification number S.O. 969 (E), dated the 26th March, 1962 and last amended vide notification number S.O. 1517(E), dated the 06th April,

35 MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 11th April, 2018 INCOME-TAX S.O.1558.(E). In exercise of the powers conferred by section 295 read with section 9A of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:- 1. (1) These rules may be called the Income-tax (5th Amendment) Rules, (2) They shall come into force from the date of their publication in the Official Gazette. 2. In the Income-tax Rules, 1962, in rule 10VA, in sub-rule (2), for the words and brackets Member (Incometax), Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, North Block, New Delhi, the words, the Member, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, North Block, New Delhi having supervision and control over the work of Foreign Tax and Tax Research (FT&TR) Division shall be substituted. [Notification No. 19/2018/ F. No. 142/15/2015-TPL] NIRAJ KUMAR, Under Secy. (Tax Policy and Legislation) Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Subsection (ii) vide number S.O. 969 (E) dated 26th March, 1962 and was last amended by notification G.S.R. No.352(E) dated 9th April,

36 IPR UPDATES Office Circular The JPO/IPR Training Program for FY 2018 The office of the CGPDTM has received a request from Japan Institute for Promoting Invention and Innovation (JIPII) and the Association for Overseas Technical Cooperation and Sustainable Partnerships (AOTS) through Ministry of Commerce and Industry, Department of Industrial Policy and Promotion Seeking nomination of suitable candidates for the following five programs being organized by Japan Patent Office (JPO) for the financial year For full circular, please refer below mentioned link: IPR_Training_program.pdf 36

37 CUSTOM UPDATES [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB- SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) Notification No. 43/2018 Customs New Delhi, the 10th April, 2018 G.S.R. (E). - Whereas the Central Government on being satisfied that the import duty leviable on goods falling under heading 0404 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), should be increased and that circumstances exist which render it necessary to take immediate action. Now, therefore, in exercise of the powers conferred by sub-section (1) of section 8A of the said Customs Tariff Act, the Central Government, hereby directs that the First Schedule to the said Customs Tariff Act, shall be amended in the following manner, namely:- In the First Schedule to the said Customs Tariff Act, in Section I, in Chapter 4, against tariff items , , and , for the entries in column (4), the entries "40%" shall be substituted. [F.No.354/107/2018-TRU] (Mohit Tewari) Under Secretary to the Government of India 37

38 [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY PART II, SECTION 3, SUB- SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (Department of Revenue) Notification No. 44/2018-Customs New Delhi, the 10th April, 2018 G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) and sub-section (12) of section 3 of the Customs Tariff Act, 1975 (51 of 1975), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India, Ministry of Finance (Department of Revenue), No. 50/2017-Customs, dated the 30th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide, number G.S.R. 785(E), dated the 30th June, 2017, namely:- In the said notification, in the Table, after serial number 7 and the entries relating thereto, the following serial numbers and entries shall be inserted, namely:- (1) (2) (3) (4) (5) (6) 7 A Whey, 30% - - concentrated, evaporated or condensed, liquid or semi-solid 7 B All goods 30% - -. [F.No. 354/107/2018- TRU] (Mohit Tewari) Under Secretary to the Government of India Note: The principal notification No.50/2017-Customs, dated the 30th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 785(E), dated the 30th June, 2017 and last amended vide notification No. 40/2018-Customs, dated the 2nd April, 2018, published vide number G.S.R. 328 (E), dated the 2nd April,

39 [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART-II, SECTION-3, SUB- SECTION (ii)] Government of India Ministry of Finance (Department of Revenue) (Central Board of Indirect Taxes and Customs) Notification No. 32/2018-CUSTOMS (N.T.) New Delhi, 13th April, Chaitra, 1940 (SAKA) S.O. (E). In exercise of the powers conferred by sub-section (2) of section 14 of the Customs Act, 1962 (52 of 1962), the Central Board of Excise & Customs, being satisfied that it is necessary and expedient so to do, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2001-Customs (N.T.), dated the 3rd August, 2001, published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii), vide number S. O. 748 (E), dated the 3rd August, 2001, namely:- In the said notification, for TABLE-1, TABLE-2, and TABLE-3 the following Tables shall be substituted namely: - Sl. No. Chapter/ heading/ subheading/tariff item TABLE-1 Description of goods (1) (2) (3) (4) Crude Palm Oil RBD Palm Oil Others Palm Oil Crude Palmolein RBD Palmolein Others Palmolein Crude Soya bean Oil Brass Scrap (all grades) Poppy seeds 2485 Tariff value (US $Per Metric Tonne) TABLE-2 Sl. No. Chapter/ heading/ subheading/tariff item Description of goods Tariff value (US $) (1) (2) (3) (4) 1 71 or 98 Gold, in any form, in 432 per 10 grams respect of which the benefit of entries at serial number 356 and 358 of the Notification No. 50/2017- Customs dated is availed 2 71 or 98 Silver, in any form, in respect of which the benefit of entries at serial number 537 per kilogram 39

40 Sl. No. Chapter/ heading/ subheading/tariff item 357 and 359 of the Notification No. 50/2017- Customs dated is availed TABLE-3 Description of goods (1) (2) (3) (4) Areca nuts 3946 Tariff value (US $ Per Metric Tonne) [F. No. 467/01/2018 -Cus-V] (Dr. Sreeparvathy S.L.) Under Secretary to the Govt. of India Note: - The principal notification was published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii), vide Notification No. 36/2001 Customs (N.T.), dated the 3rd August, 2001, vide number S. O. 748 (E), dated the 3rd August, 2001 and was last amended vide Notification No. 26/2018-Customs (N.T.), dated the 28th March, 2018, e-published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii), vide number S. O (E), dated 28th March,

41 GST UPDATES Circular No. 41/15/2018-GST CBEC-20/16/03/2017-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing **** New Delhi, Dated the 13th April, 2018 To, The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All)/The Principal Directors General/ Directors General (All) Madam/Sir, Subject: Procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances Reg. Sub-section (1) of section 68 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act ) stipulates that the person in charge of a conveyance carrying any consignment of goods of value exceeding a specified amount shall carry with him the documents and devices prescribed in this behalf. Sub-section (2) of the said section states that the details of documents required to be carried by the person in charge of the conveyance shall be validated in such manner as may be prescribed. Subsection (3) of the said section provides that where any conveyance referred to in sub-section (1) of the said section is intercepted by the proper officer at any place, he may require the person in charge of the conveyance to produce the documents for verification, and the said person shall be liable to produce the documents and also allow the inspection of goods. 1.1 Rules 138 to 138D of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the CGST Rules ) lay down, in detail, the provisions relating to e-way bills. As per the said provisions, in case of transportation of goods by road, an e-way bill is required to be generated before the commencement of movement of the consignment. Rule 138A of the CGST rules prescribes that the person in charge of a conveyance shall carry the invoice or bill of supply or delivery challan, as the case may be; and in case of transportation of goods by road, he shall also carry a copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped to a Radio Frequency Identification Device embedded on to the conveyance in such manner as may be notified by the Commissioner. 1.2 Section 129 of the CGST Act provides for detention, seizure and release of goods and conveyances in transit while section 130 of the CGST Act provides for the confiscation of goods or conveyances and imposition of penalty. 2. In this regard, various references have been received regarding the procedure to be followed in case of interception of conveyances for inspection of goods in movement and detention, seizure and release and confiscation of such goods and conveyances. In order to ensure uniformity in the implementation of the provisions of the CGST Act across all the field formations, the Board, in exercise of the powers conferred under section 168 (1) of the CGST Act, hereby issues the following instructions: (a) The jurisdictional Commissioner or an officer authorised by him for this purpose shall, by an order, designate an officer/officers as the proper officer/officers to conduct interception and inspection of conveyances and goods in the jurisdictional area specified in such order. 41

42 (b) The proper officer, empowered to intercept and inspect a conveyance, may intercept any conveyance for verification of documents and/or inspection of goods. On being intercepted, the person in charge of the conveyance shall produce the documents related to the goods and the conveyance. The proper officer shall verify such documents and where, prima facie, no discrepancies are found, the conveyance shall be allowed to move further. An e-way bill number may be available with the person in charge of the conveyance or in the form of a printout, sms or it may be written on an invoice. All these forms of having an e-way bill are valid. Wherever a facility exists to verify the e-way bill electronically, the same shall be so verified, either by logging on to or the Mobile App or through SMS by sending EWBVER <EWB_NO> to the mobile number (For e.g. EWBVER ). (c) For the purposes of verification of the e-way bill, interception and inspection of the conveyance and/or goods, the proper officer under rule 138B of the CGST Rules shall be the officer who has been assigned the functions under sub-section (3) of section 68 of the CGST Act vide Circular No. 3/3/2017 GST, dated (d) Where the person in charge of the conveyance fails to produce any prescribed document or where the proper officer intends to undertake an inspection, he shall record a statement of the person in charge of the conveyance in FORM GST MOV- 01. In addition, the proper officer shall issue an order for physical verification/inspection of the conveyance, goods and documents in FORM GST MOV-02, requiring the person in charge of the conveyance to station the conveyance at the place mentioned in such order and allow the inspection of the goods. The proper officer shall, within twenty four hours of the aforementioned issuance of FORM GST MOV-02, prepare a report in Part A of FORM GST EWB-03 and upload the same on the common portal. (e) Within a period of three working days from the date of issue of the order in FORM GST MOV-02, the proper officer shall conclude the inspection proceedings, either by himself or through any other proper officer authorised in this behalf. Where circumstances warrant such time to be extended, he shall obtain a written permission in FORM GST MOV-03 from the Commissioner or an officer authorized by him, for extension of time beyond three working days and a copy of the order of extension shall be served on the person in charge of the conveyance. (f) On completion of the physical verification/inspection of the conveyance and the goods in movement, the proper officer shall prepare a report of such physical verification in FORM GST MOV-04 and serve a copy of the said report to the person in charge of the goods and conveyance. The proper officer shall also record, on the common portal, the final report of the inspection in Part B of FORM GST EWB-03 within three days of such physical verification/inspection. (g) Where no discrepancies are found after the inspection of the goods and conveyance, the proper officer shall issue forthwith a release order in FORM GST MOV-05 and allow the conveyance to move further. Where the proper officer is of the opinion that the goods and conveyance need to be detained under section 129 of the CGST Act, he shall issue an order of detention in FORM GST MOV-06 and a notice in FORM GST MOV-07 in accordance with the provisions of sub-section (3) of section 129 of the CGST Act, specifying the tax and penalty payable. The said notice shall be served on the person in charge of the conveyance. (h) Where the owner of the goods or any person authorized by him comes forward to make the payment of tax and penalty as applicable under clause (a) of sub-section (1) of section 129 of the CGST Act, or where the owner of the goods does not come forward to make the payment of tax and penalty as applicable under clause (b) of sub-section (1) of the said section, the proper officer shall, after the amount of tax and penalty has been paid in accordance with the provisions of the CGST Act and the CGST Rules, release the goods and conveyance by an order in FORM GST MOV-05. Further, the order in FORM GST MOV-09 shall be uploaded on the common portal and the demand accruing from the proceedings shall be added in the electronic liability register and the payment made shall be credited to such electronic liability register by debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. 42

43 (i) Where the owner of the goods, or the person authorized by him, or any person other than the owner of the goods comes forward to get the goods and the conveyance released by furnishing a security under clause (c) of sub-section (1) of section 129 of the CGST Act, the goods and the conveyance shall be released, by an order in FORM GST MOV-05, after obtaining a bond in FORM GST MOV-08 along with a security in the form of bank guarantee equal to the amount payable under clause (a) or clause (b) of sub-section (1) of section 129 of the CGST Act. The finalisation of the proceedings under section 129 of the CGST Act shall be taken up on priority by the officer concerned and the security provided may be adjusted against the demand arising from such proceedings. (j) Where any objections are filed against the proposed amount of tax and penalty payable, the proper officer shall consider such objections and thereafter, pass a speaking order in FORM GST MOV-09, quantifying the tax and penalty payable. On payment of such tax and penalty, the goods and conveyance shall be released forthwith by an order in FORM GST MOV-05. The order in FORM GST MOV- 09 shall be uploaded on the common portal and the demand accruing from the order shall be added in the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. (k) In case the proposed tax and penalty are not paid within seven days from the date of the issue of the order of detention in FORM GST MOV-06, action under section 130 of the CGST Act shall be initiated by serving a notice in FORM GST MOV-10, proposing confiscation of the goods and conveyance and imposition of penalty. (l) Where the proper officer is of the opinion that such movement of goods is being effected to evade payment of tax, he may directly invoke section 130 of the CGST Act by issuing a notice proposing to confiscate the goods and conveyance in FORM GST MOV-10. In the said notice, the quantum of tax and penalty leviable under section 130 of the CGST Act read with section 122 of the CGST Act, and the fine in lieu of confiscation leviable under sub-section (2) of section 130 of the CGST Act shall be specified. Where the conveyance is used for the carriage of goods or passengers for hire, the owner of the conveyance shall also be issued a notice under the third proviso to sub-section (2) of section 130 of the CGST Act, proposing to impose a fine equal to the tax payable on the goods being transported in lieu of confiscation of the conveyance. (m) No order for confiscation of goods or conveyance, or for imposition of penalty, shall be issued without giving the person an opportunity of being heard. (n) An order of confiscation of goods shall be passed in FORM GST MOV-11, after taking into consideration the objections filed by the person in charge of the goods (owner or his representative), and the same shall be served on the person concerned. Once the order of confiscation is passed, the title of such goods shall stand transferred to the Central Government. In the said order, a suitable time not exceeding three months shall be offered to make the payment of tax, penalty and fine imposed in lieu of confiscation and get the goods released. The order in FORM GST MOV-11 shall be uploaded on the common portal and the demand accruing from the order shall be added in the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. Once an order of confiscation of goods is passed in FORM GST MOV-11, the order in FORM GST MOV-09 passed earlier with respect to the said goods shall be withdrawn. (o) An order of confiscation of conveyance shall be passed in FORM GST MOV-11, after taking into consideration the objections filed by the person in charge of the conveyance and the same shall be served on the person concerned. Once the order of confiscation is passed, the title of such conveyance shall stand transferred to the Central Government. In the order passed above, a suitable time not exceeding three months shall be offered to make the payment of penalty and fines imposed in lieu of confiscation and get the conveyance released. The order in FORM GST MOV-11 shall be uploaded on the common portal 43

44 and the demand accruing from the order shall be added in the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. (p) The order referred to in clauses (n) and (o) above may be passed as a common order in the said FORM GST MOV-11. (q) In case neither the owner of the goods nor any person other than the owner of the goods comes forward to make the payment of tax, penalty and fine imposed and get the goods or conveyance released within the time specified in FORM GST MOV-11, the proper officer shall auction the goods and/or conveyance by a public auction and remit the sale proceeds to the account of the Central Government. (r) Suitable modifications in the time allowed for the service of notice or order for auction or disposal shall be done in case of perishable and/or hazardous goods. (s) Whenever an order or proceedings under the CGST Act is passed by the proper officer, a corresponding order or proceedings shall be passed by him under the respective State or Union Territory GST Act and if applicable, under the Goods and Services Tax (Compensations to States) Act, Further, sub-sections (3) and (4) of section 79 of the CGST Act/respective State GST Acts may be referred to in case of recovery of arrears of central tax/state tax/union territory tax. (t) The procedure narrated above shall be applicable mutatis mutandis for an order or proceeding under the IGST Act, (u) Demand of any tax, penalty, fine or other charges shall be added in the electronic liability ledger of the person concerned. Where no electronic liability ledger is available in case of an unregistered person, a temporary ID shall be created by the proper officer on the common portal and the liability shall be created therein. He shall also credit the payments made towards such demands of tax, penalty or fine and other charges by debiting the electronic cash ledger of the concerned person. (v) A summary of every order in FORM GST MOV-09 and FORM GST MOV-11 shall be uploaded electronically in FORM GST-DRC-07 on the common portal. 3. The format of FORMS GST MOV-01 to GST MOV-11 are annexed to this Circular. 4. It is requested that suitable standing orders and trade notices may be issued to publicise the contents of this Circular. 5. Difficulties, if any, in implementation of the above instructions may be brought to the notice of the Board at an early date. For forms, please refer below link: (Upender Gupta) Commissioner (GST) 44

45 Circular No. 42/16/2018-GST CBEC-20/16/03/2017-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing **** New Delhi, Dated the 13th April, 2018 To The Principal Chief Commissioners/Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Directors General/ Directors General (All) Sub: Clarification regarding procedure for recovery of arrears under the existing law and reversal of inadmissible input tax credit-reg. Madam/ Sir, Kind attention is invited to the provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act) relating to the recovery of arrears of central excise duty /service tax and CENVAT credit thereof, CENVAT credit carried forward erroneously and related interest, penalty or late fee payable arising as a result of the proceedings of assessment, adjudication, appeal etc. initiated before, on or after the appointed date under the provisions of the existing law. In this regard, representations have been received seeking clarification on the procedure for recovery of such arrears in the GST regime. 2. The issues have been examined and to ensure uniformity in the implementation of the provisions of the law across the field formations, the Board, in exercise of its powers conferred under section 168 (1) of the Central Goods and Services Tax Act, 2017, (hereinafter referred to as the CGST Act ) hereby specifies the procedure to be followed for recovery of arrears arising out of proceedings under the existing law. 3. Legal provisions relating to the recovery of arrears of central excise duty and service tax and CENVAT credit thereof arising out of proceedings under the existing law (Central Excise Act, 1944 and Chapter V of the Finance Act, 1994) i) Recovery of arrears of wrongly availed CENVAT Credit: In case where any proceeding of appeal, review or reference relating to a claim for CENVAT credit had been initiated, whether before, on or after the appointed day, under the existing law, any amount of such credit becomes recoverable, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under the CGST Act [Section 142(6)(b) of the CGST Act refers]. ii) Recovery of CENVAT Credit carried forward wrongly: CENVAT credit of central excise duty/service tax availed under the existing law may be carried forward in terms of transitional provisions as per section 140 of the CGST Act subject to the conditions prescribed therein. Any credit which is not admissible in terms of section 140 of the CGST Act shall not be allowed to be transitioned or carried forward and the same shall be recovered as an arrear of tax under section 79 of the CGST Act. iii) Recovery of arrears of central excise duty and service tax: a. Where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes 45

46 recoverable, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under the CGST Act [Section 142(8)(a)of the CGST Act refers]. b. If due to any proceedings of appeal, review or reference relating to output duty or tax liability initiated, whether before, on or after the appointed day, under the existing law, any amount of output duty or tax becomes recoverable, the same shall, unless recovered under the existing law,be recovered as an arrear of tax under the CGST Act [Section 142(7)(a)of the CGST Act refers]. iv) Recovery of arrears due to revision of return under the existing law: Where any return, furnished under the existing law, is revised after the appointed day and if, pursuant to such revision, any amount is found to be recoverable or any amount of CENVAT credit is found to be inadmissible, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under the CGST Act [Section 142(9)(a)of the CGST Act refers]. 4. In view of the above legal provisions, recovery of central excise duty/ service tax and CENVAT credit thereof arising out of the proceedings under the existing law, unless recovered under the existing law, and that of inadmissible transitional credit, is required to be made as an arrear of tax under the CGST Act. The following procedure is hereby prescribed for the recovery of arrears: 4.1 Recovery of central excise duty, service tax or wrongly availed CENVAT credit thereof under the existing law and inadmissible transitional credit: (a) The CENVAT credit of central excise duty or service tax wrongly carried forward as transitional credit shall be recovered as central tax liability to be paid through the utilization of amounts available in the electronic credit ledger or electronic cash ledger of the registered person, and the same shall be recorded in Part II of the Electronic Liability Register (FORM GST PMT-01). (b) The arrears of central excise duty, service tax or wrongly availed CENVAT credit thereof under the existing law arising out of any of the situations discussed in para 3 above, shall, unless recovered under the existing law, be recovered as central tax liability to be paid through the utilization of amounts available in the electronic credit ledger or electronic cash ledger of the registered person, and the same shall be recorded in Part II of the Electronic Liability Register (FORM GST PMT-01). 4.2 Recovery of interest, penalty and late fee payable: (a) The arrears of interest, penalty and late fee in relation to CENVAT credit wrongly carried forward, arising out of any of the situations discussed in para 3 above, shall be recovered as interest, penalty and late fee of central tax to be paid through the utilization of the amount available in electronic cash ledger of the registered person and the same shall be recorded in Part II of the Electronic Liability Register (FORM GST PMT-01). (b) The arrears of interest, penalty and late fee in relation to arrears of central excise duty, service tax or wrongly availed CENVAT credit thereof under the existing law arising out of any of the situations discussed in para 3 above, shall, unless recovered under the existing law, be recovered as interest, penalty and late fee of central tax to be paid through the utilization of the amount available in the electronic cash ledger of the registered person and the same shall be recorded in Part II of the Electronic Liability Register (FORM GST PMT-01). 4.3 Payment of central excise duty & service tax on account of returns filed for the past period: The registered person may file Central Excise / Service Tax return for the period prior to 1st July, 2017 by logging onto and make payment relating to the same through EASIEST portal (cbec-easiest.gov.in), as per the practice prevalent for the period prior to the introduction of GST. However, with effect from 1st of April, 2018, the return filing shall continue on but the payment shall be made through the ICEGATE portal. As the registered person shall be automatically taken to the payment portal on filing of the return, the user interface remains the same for him. 46

47 4.4 Recovery of arrears from assessees under the existing law in cases where such assessees are not registered under the CGST Act, 2017: Such arrears shall be recovered in cash, under the provisions of the existing law and the payment of the same shall be made as per the procedure mentioned in para 4.3 supra. 5. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. 6. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board. (Upender Gupta) Commissioner (GST) 47

48 F. No. 349/48/2017-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing 48 Circular No. 43/17/2018-GST New Delhi, Dated the 13th April, 2018 To, The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All) The Principal Director Generals/ Director Generals (All) Madam / Sir, Subject: Queries regarding processing of refund applications for UIN agencies The Board vide Circular No. 36/10/2017 dated 13th March, 2018 clarified and specified the detailed procedure for UIN refunds. After issuance of the Circular, a number of queries and representations have been received regarding the processing of refund to agencies which have been allotted UINs. In order to clarify some of the issues and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred under section 168 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act ) hereby clarifies the following issues: 2. Providing statement of invoices while submitting the refund application: 2.1. The procedure for filing a refund application has been outlined under rule 95 of the Central Goods and Services Tax Rules,2017 (hereinafter referred to as the CGST Rules ) which provides for filing of refund on a quarterly basis in FORM RFD-10 along with a statement of inward invoices in FORM GSTR- 11. It has come to the notice of the Board that the print version of FORM GSTR-11 generated by the system does not have invoice-wise details. Therefore, it is clarified that till the system generated FORM GSTR-11 does not have invoice-level details, UIN agencies are requested to manually furnish a statement containing the details of all the invoices on which refund has been claimed, along with refund application Further, the officers are advised not to request for original or hard copy of the invoices unless necessary. 3. No mention of UINs on Invoices: 3.1. It has been represented that many suppliers did not record the UINs on the invoices of supplies of goods or services to UIN agencies. It is hereby clarified that the recording of UIN on the invoice is a necessary condition under rule 46 of the CGST Rules, If suppliers / vendors are not recording the UINs, action may be initiated against them under the provisions of the CGST Act, Further, in cases where, UIN has not been recorded on the invoices pertaining to refund claim for the quarters of July September 2017, October December 2017 and January March 2018, a one-time waiver is being given by the Government, subject to the condition that copies of such invoices will be submitted to the jurisdictional officers and will be attested by the authorized representative of the UIN agency. Field officers are advised that the terms of Notification No. 16/2017-Central Tax (Rate) dated 28th June 2017 and corresponding notifications under the Integrated Goods and Services Tax Act, 2017, Union Territory Goods and Services Tax Act, 2017 and respective State Goods and Services Tax Acts should be satisfied while processing such refund claims.

49 4. It is requested that suitable trade notices may be issued to publicize the contents of this circular. 5. Difficulty, if any, in implementation of the above instructions may please be brought to the notice of the Board. (Upender Gupta) Commissioner (GST) 49

50 (Corporate Laws and Intellectual Property Rights Consultants) Delhi I Mumbai I Pune I Kanpur Corporate Office: 63/12, First Floor, Main Rama Road, New Delhi Ph: /17, Mob: brijesh@bmcadvisors.in, brijesh@brijeshmathur.com Website: 50