(Matter on Direct Taxes has been contributed by the Direct Taxes Committee of the ICAI) I. NOTIFICATIONS 1. New Form No. 29B (Report u/s 115JB computing the book profits of the company) notified and Report of audit u/s. 115JC required to be filed electronically- Notification No. 80/2017, dated 18-08-2017 Section 115JB(1) provides that in case of a company, if the tax payable on the total income as computed under the Income-tax Act, is less than 18.5% of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee the relevant previous year shall be 18.5% of its book profit. Further, Section 115JB(4) provides that every company to which this provision is applicable, shall furnish a report in the prescribed Form (i.e. Form No. 29B) from an accountant as defined in the Explanation below Section 288(2), certifying that the book profit has been computed in accordance with the provisions of this section along with the return of income filed under Section 139(1) or along with the return of income furnished in response to a notice under Section 142(1)(i). Accordingly, vide this Notification, Form No. 29B has been substituted w.e.f. 18.8.2017. The Annexure to newly substituted Form No. 29B has now been divided into three parts as follows: (i) Part A General Applicable to all Companies (ii) Part B Details of the amount required to be increased or decreased in accordance with Section 115JB(2A) [Applicable only where the financial statements of the company are drawn up in compliance with the Indian Accounting Standards specified in Annexure to the Companies (Indian Accounting Standards) Rules, 2015 the previous year or any part thereof] (iii) Part C Details of the amount required to be increased or decreased in accordance with Section 115JB(2C) [Applicable only where the financial statements of the company are drawn Circulars/Notifications Given below are the important Circulars and Notifications issued by the CBDT, CBEC, FEMA and MCA during the last month inmation and use of members. Readers are requested to use the citation/website or weblink to access the full text of desired circular/ notification. You are requested to please submit your feedback and suggestions on the column at eboard@icai.in DIRECT TAXES up in compliance with the Indian Accounting Standards specified in Annexure to the Companies (Indian Accounting Standards) Rules, 2015 the previous year or any part thereof]. Part C is to be filled up the year of convergence and each of the following four previous years only. Part B and Part C in the Annexure to new Form No. 29B are in line with the requirements in new sub-section (2A) and (2C) inserted in Section 115JB by the Finance Act 2017. In Part A, inmation regarding the Financial year adopted by the company under the Companies Act, 2013 needs to be specified now. Further, references have been made to the statement of profit and loss prepared in accordance with the provisions of Schedule III to the Companies Act, 2013 and profit as per the said statement in the place of profit and loss account prepared in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 and net profit according to the said profit and loss account, respectively. For more details regarding the newly substituted Form No. 29B, this Notification may be referred. Further, vide this Notification, Rule 12 of the Income-tax Rules, 1962 has also been amended w.e.f. 18.08.2017. It has now been made mandatory to electronically file Form No. 29C (Report under Section 115JC of the Income-tax Act, 1961 computing Adjusted Total Income and Alternate Minimum Tax of the person other than a company). 2. Protocol amending the agreement between the Government of the Republic of India and the Government of the Socialist Republic of Vietnam the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income- Notification No. 82/2017, dated 30-08-2017 In exercise of the powers conferred by Section 90 of the Income-tax Act, 1961, the Central Government has directed that all the provisions of the agreement and protocol between the Government of the Republic of India and the Government of the Socialist Republic of Vietnam the avoidance of double taxation and the prevention of fiscal evasion 589 www.icai.org THE CHARTERED ACCOUNTANT OCTOBER 2017 113
590 with respect to taxes on income, which was signed in Vietnam on 03.09.2016, shall be given effect to in the Union of India with effect from 21.02.2017, being the date of entry into ce of the said Protocol. The Double Taxation Avoidance Agreement (DTAA) between India and Vietnam was initially signed in 1994. Article 27 on the 'Exchange of Inmation' in India-Vietnam DTAA has now been replaced to meet internationally accepted standards, and new Article 27A on 'Assistance in the Collection of taxes' has been inserted. 3. TDS on interest on deposits made under Capital Gains Accounts Scheme, 1988 where depositor has deceased-notification No. 8/2017, dated 13-09-2017 It has been brought to the notice of CBDT that in cases of deceased depositor who has made deposits under the Capital Gains Accounts Scheme, 1988; the banks are deducting TDS on the interest earned on such deposits in the hands of the deceased depositor and issuing TDS certificates in the name of the deceased depositor, which is not in accordance with the law. Ideally in such type of situations, the TDS certificate on the interest income and upto the period of death of the depositor is required to be issued on the PAN of the deceased depositor and the period after death of the depositor is required to be issued on the PAN of the legal heir. Under Rule 31A(5) of the Income-tax Rules, 1962, the DGIT (Systems) is authorised to specify the procedures, mats and standards the purposes of furnishing and verification of the statements or claim refund in Form 26B and shall be responsible the day-to-day administration in relation to furnishing and verification of the statements or claim refund in Form 26B in the manner so specified. In exercise of the powers delegated by the CBDT under Rule 31A(5), the PDGIT (Systems) has specified that in case of deposits under the Capital Gains Accounts Scheme, 1988 where the depositor has deceased: (i) TDS on the interest income accrued and upto the period of death of the depositor is required to be deducted and reported against PAN of the depositor, and (ii) TDS on the interest income accrued the period after death of the depositor is required to be deducted and reported against PAN of the legal heir, unless a declaration is filed under Rule 37BA(2) to that effect. The complete text of the above Notifications can be downloaded from the link below: http://www. incometaxindia.gov.in/pages/communications/ notifications.aspx II. PRESS RELEASES/INSTRUCTIONS/OFFICE MEMO- RANDUM 1. CBDT extends date (a) Linking of Aadhaar with PAN and (b) Due date filing Income Tax Returns and Tax Audit Reports Orders, dated 31-08-2017 To facilitate ease of compliance by the taxpayers, CBDT has extended the date in the following cases:- i. Aadhaar was to be linked with PAN by 31.08.2017. The date linking Aadhaar with PAN has been extended till 31.12.2017; ii. The due-date filing Income Tax Returns and various reports of audit prescribed under the Income-tax Act, 1961 has been extended from 30.09.2017 to 31.10.2017 all taxpayers who were liable to file their Income Tax Returns by 30 th September, 2017. 2. Indian Pricing Agreement regime moves ward with signing of four APAs by CBDT in August, 2017 Press Release, dated 04-09-2017 The CBDT has entered into 4 more APAs during August, 2017. Out of these 4 Agreements, 3 are Unilateral and 1 is Bilateral. The Bilateral APA is international transactions between an Indian company and a UK-based company. This is the 8 th Bilateral APA with the United Kingdom and 13 th overall (the other 5 being with Japan). With the signing of these 4 Agreements, the total number of APAs entered into by CBDT has reached 175. This includes 162 Unilateral APAs and 13 Bilateral APAs. In the current financial year, a total of 23 APAs (2 Bilateral and 21 Unilateral) have been signed till date. The 4 APAs entered into during August, 2017 pertain to various sectors of the economy like Telecom, Banking, Manufacturing and Education. The international transactions covered in these agreements include payment of Royalty, Provision of IT Enabled Services, Provision of Software Development Services, Provision of Manpower Services, Import of Raw Materials, Export of Finished Goods, Provision of Engineering Design Services, etc. The APA provisions were introduced in the Income-tax Act in 2012 and the Rollback provisions were introduced in 2014. The APA 114 THE CHARTERED ACCOUNTANT OCTOBER 2017 www.icai.org
591 scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance. Since its inception, the APA scheme has been well-accepted by taxpayers and that has resulted in more than 800 applications (both Unilateral and Bilateral) being filed so far in five years. The progress of the APA scheme strengthens the Government s resolve of fostering a non-adversarial tax regime. The Indian APA programme has been appreciated nationally and internationally being able to address complex transfer pricing issues in a fair and transparent manner. 3. Order under Section 245-O(6) of the Income-tax Act, 1961 Order, dated 13-09-2017 In exercise of the powers conferred by Section 245- O(6), the In-charge Chairman, Authority Ruling hereby directs that the es mentioned in Column (2) of the schedule hereunder having their location at the places specified in the corresponding entries in Column (3) of the said schedule, shall exercise powers and perm functions in respect of the applicant specified in the corresponding Column (4) of the said schedule. SCHEDULE S. Name of Location Territorial Jurisdiction of No. the (1) (2) (3) (4) 1. Authority Rulings Principal 2. Authority Rulings NCR New Delhi New Delhi (a) Applicant residing or carrying on business or personally working gain in the Union Territory Delhi. (b) Non-resident applicant who do not have any address communication or any liaison office in India. Applicant residing or carrying on business or personally working gain in the States of Arunachal Pradesh, Assam, Bihar, Haryana, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Manipur, Mizoram, Meghalaya, Nagaland, Odisha, Punjab, Rajasthan, Sikkim, Tripura, Uttar Pradesh, Uttarakhand, West Bengal and Union Territories of Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli. S. No. Name of Location Territorial Jurisdiction of the (1) (2) (3) (4) 3. Authority Rulings Mumbai Mumbai Applicant residing or carrying on business or personally working gain in the States of Andhra Pradesh, Chhattisgarh, Goa, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Tamil Nadu, Telangana and Union Territories of Daman and Diu, Lakshadweep, Puducherry. 4. Applicant not mentioned above shall fall under the jurisdiction of the Principal at New Delhi. This Order shall come into effect from 03.10.2017. INDIRECT TAXES (Matter on Indirect Taxes has been contributed by the Indirect Taxes Committee of the ICAI) CUSTOMS 1. E-payment of Customs duty made mandatory w.e.f. 01.09.2017 importers registered under AEO programme and importers paying customs duty of R10,000/- or more per Bill of Entry Central Government vide Notification No. 80/2017-CUSTOMS (N.T.), dated 17 th August, 2017 has w.e.f. 1 st September 2017 specified following classes of importers who shall pay Custom Duty electronically: 1. Importers registered under Authorised Economic Operator Programme. The AEO programme seeks to provide tangible benefits in the m of faster customs clearances and simplified customs procedures to those business entities who offer a high degree of security guarantees in respect of their role in the supply chain. 2. Importers paying custom duty of R10,000/- or more per Bill of Entry. Prior to aesaid Notification, Central Government vide Notification No. 83/2012 - Customs, (N T), dated: September 17, 2012 made e-payment of Customs Duty mandatory importers under Accredited Clients Programme and those paying more than R1 lakh duty per Bill of Entry. With aesaid amendment, the government intends to cover maximum importers making e-payment mandatorily in case of payment of duty exceeding R10,000. [Notification No. 80/2017 dated 17 th August 2017 -Customs] www.icai.org THE CHARTERED ACCOUNTANT OCTOBER 2017 115
592 2. Procedure electronic sealing of containers Central Government had previously issued Circular No. 26/2017-Customs dated 1 st July, 2017 which provided a simplified procedure stuffing and sealing of export goods in containers under self-sealing procedure where exporter shall seal the container with the tamper proof electronic-seal of standard specification. Further to aesaid circular, the Central Government vide Circular No. 36/2017 dated 28 th August 2017-Customs has now prescribed the detailed procedure to be followed w.e.f. 1 st October 2017 while electronic sealing of containers by exporters under self-sealing procedure which interalia include: a) All those exporters who are already operating under the self-sealing procedure need not approach the jurisdiction Customs authorities the self-sealing permission. b) the exporter will be obligated to declare the physical serial number of the e-seal at the time of filing the online integrated shipping bill or in the case of manual shipping bill bee the container is dispatched the designated port/ ICD/LCS. c) Exporters shall directly procure RFID seals from vendors, conming to the standard specification of the Seal. d) Inmation related to Application, Record Keeping and Data Retrieval System need not be mounted "in the electronic seal" but tagged to the seal using a 'web/mobile application' to be provided by the vendor of the RFID seals. Data once uploaded by the exporter should not be capable of being overwritten or edited. The detailed procedure provided by the Circular is available at www.cbec.gov.in. [Circular No. 36/2017 dated 28 th August 2017- Customs] 3. Guidelines provisional release of Seized Imported Goods pending adjudication Section 110A of the Customs Act, 1962 states that "Any goods, documents or things seized under Section 110, may, pending the order of the adjudicating authority, be released to the owner on taking a bond from him in the proper m with such security and conditions as the adjudicating authority may require". In order to ensure unimity and to streamline the divergent procedures being followed grant of provisional release of imported goods which are seized under Section 110 of the Customs Act, 1962, Central Government vide Circular No. 35/2017-Customs dated 16 th August 2017 has issued guidelines provisional release of seized imported goods. Seized imported goods may be released provisionally by the competent authority upon request of the owner of the seized goods, subject to executing bond of the full value/estimated value of the seized goods. Further, in addition to bond, Authority will take a bank guarantee or security deposit to cover the following: a) the entire amount of duty/differential duty leviable on the seized goods being provisionally released; b) amount of fine that may be levied in lieu of confiscation under Section 125 of the Customs Act, 1962 at the time of adjudication of the case. The nature of the seized goods, the duty and charges payable on the said goods, their market price and the estimated margin of profit needs to be considered here. c) amount of penalties that may be levied under the Customs Act, 1962, as applicable, at the time of adjudication of the case. Further, where security is furnished by way of Bank Guarantee, the Bank Guarantee should contain a clause binding the issuing bank to keep it renewed and valid till final adjudication of the case, or in the event of non-renewal of Bank Guarantee as above, the guaranteed amount be credited to the Government account by the bank on its own. However provisional release will not be allowed in the following cases: i. Goods prohibited under Customs Act or any other Act the time being in ce. ii. Goods that do not fulfil the statutory compliance requirement/obligations in terms of any act, rules or regulations. iii. Goods specified in or notified under Section 123 of Customs Act,1962. iv. Where the competent authority, reasons to be recorded in writing believes that provisional release may not be in public interest. In addition to above, following observations may be kept in mind allowing provisional release of goods by adjudicating authority while exercising discretionary power: i. By specifying the relevance and reason, the adjudicating authority may deny provisional release of any goods which are liable to confiscation under Section 111 or Section 113 as they would fall under the definition of prohibited goods, in terms of Section 2(33) of the Customs 116 THE CHARTERED ACCOUNTANT OCTOBER 2017 www.icai.org
593 Act, 1962. (Malabar Diamond Gallery Pvt. Ltd. vs. Additional Director General, DRI -1664-HC- MAD-CUS, Chennai & Ors.) ii. It is important to note that each case turns on its peculiar facts and there can never be blanket rule that in all cases of mis-declaration 100% of duty must be asked to be deposited or that if the importer is asked to do so then he cannot be asked to furnish bank guarantee. The power under Section 110A involves exercise of discretion and the scope of judicial review is to examine if the discretion has been rightly exercised subject to the recognised legal limits. (Mala Petrochemical & Polymers vs. The Addl. Director General, DRI & Anr. and WP(C) No. 4123/2017) [Circular No. 35/2017-Customs dated 16 th August 2017] FEMA (Matter on FEMA has been contributed by CA. Manoj Shah, Mumbai and CA. Hinesh Doshi, Mumbai) (A.) Consolidated FDI Policy 2017: DIPP (Dept. of Industrial Policy & Promotion) has come out with FDI Policy Circular of 2017 and it has taken effect from 28 th August, 2017. Some of the noteworthy features of new FDI policy (as compared to previous policy) are as under: New instrument by the name Convertible Note (CN) can be issued by a Startup Company. Startup Company can receive money under this instrument initially as debt, which is repayable at the option of the holder or which is convertible into equity shares within a period not exceeding five years from the date of issue. Though initially CN shall be in the nature of debt, the policy doesn t have any reference to rate of interest etc., and hence it seems that such note cannot be in the nature of interest bearing loan. The issue of such CN has to be an amount of R25 lacs or more in a single tranche. Issue of shares against such CN has to be in accordance with Schedule 1 of Notification No. 20 (FDI Schedule) of FEMA. i.e. pricing and valuation norms needs to be adhered to. The reporting guidelines shall be prescribed by RBI. RBI shall also prescribe pricing guidelines transfer of such CN from Non Resident to Resident as well as to Non Resident. In the absence of FIPB, the investment in sectors under Government approval route shall now be considered by respective Administrative Ministry/Department. In case of doubt with respect to concerned Ministry/Department, DIPP shall identify the Administrative Ministry or Department where the applications will be processed. Reporting of downstream investments has to be carried out on Foreign Investment Facilitation Portal in the m available at www. fifp.gov.in (instead of FIPB) within 30 days of such investment, even if capital instruments have not been allotted along with the modality of investment in new/existing ventures (with/ without expansion programme) Guidelines e-filing of applications, filing of amendment applications and instructions to applicants are available at Foreign Investment Facilitation Portal- www.fifp.gov.in. CORPORATE LAWS (Matter on Corporate Laws has been contributed by CA. Rahul Joglekar) MCA (www.mca.gov.in) MCA Circular No. 10/2017 dated 13 th September 2017 Clarification regarding obligation with the Indian Accounting Standards (Ind AS) and Rule 4 of Companies (Indian Accounting Standards) Rules, 2015- Payment banks, small finance banks which are subsidiaries of Corporates MCA has clarified that the holding company in respect of subsidiaries which are payment banks or small finance banks shall follow IndAS as per the corporate sector roadmap. The subsidiaries which are payment banks or small finance banks shall follow the banking sector roadmap stipulated by RBI. For complete text of the notification, please refer the link: http://www.mca.gov.in/ministry/ pdf/companiesindianaccountingstandards GSR365E_14092017.pdf MCA Notification No. SO 2751(E) dated 24 th August 2017 Commencement of sub-sections (8) to (10) of Section 212 of Companies Act, 2013 The Government has notified 24 th day of August, 2017 as the date on which the provisions of sub- Sections (8), (9) and sub-section (10) of Section 212 of the said Act shall come into ce. These provisions deal with various provisions related to the Serious Fraud Investigation Office (SFIO). For complete text of the notification, please refer the link: http://www.mca.gov.in/ministry/pdf/ Commencementnotification_25082017.pdf. www.icai.org THE CHARTERED ACCOUNTANT OCTOBER 2017 117 You measure the size of the accomplishment by the obstacles you had to overcome to reach your goals. - Booker T. Washington