MCA eases norms for related party transactions
Notification No. [F. No. 1/32/2013-CL-V-Part], Dated 18.11.2019
The Ministry of Corporate Affairs (MCA) has amended the Companies (Meetings of Board and its Powers) Rules, 2014 wherein Rule 15 has been amended in order to ease doing of business by the companies. The MCA has done away with the monetary requirement (100 crore or 50 crore as the case may be) for obtaining prior approval of shareholder for related party transaction. Now, the limit has been limited to “10% of the turnover of the Company”. Therefore, the company only has to check the turnover criteria for compliance related matter.

MCA launches online compliance monitoring system ‘MCA-CMS’ for issuing show-cause notices

The Ministry of Corporate Affairs (MCA) has launched ‘MCACMS’ Portal for issuing show cause notices electronically for non – compliances under Companies Act, 2013 and submitting replies from companies, directors with their clarifications and submissions. Based on the replies or submissions, the Register of Companies, Ministry of Corporate Affairs shall initiate penal actions for violations referred to in the show cause notices.

It is pertinent to note that when company or its directors fail to reply Show cause notices, it will be presumed that the company has nothing to say in the matter. After lapse of 15 days MCA shall initiate penal action for violation of sections referred in show case notice. The MCA will take legal action against company or director.

With this advent of new mechanism, the compliance scrutiny process will work smoothly and it also will ensure that nobody is required to visit RoC for submissions. The entire adjudication process will work online.

Document Identification Number (DIN) mandatory on specified communications issued by CBIC officers to taxpayers

CBIC has directed that search authorization, summons, arrest memo, inspection notices and letters issued during enquiry by any officers of CBIC to taxpayers or any other person, shall not be issued without computer generated Document Identification Number (DIN) on or after November 8, 2019. Any specified document issued without DIN shall be treated as invalid. [Circular No. 122/41/2019-Central Tax dated November 5, 2019]

Disqualified directors are on MCA’s radar

The Ministry of Corporate Affairs is in process of identification and flagging of directors disqualified under Cos. Act for their default of non-filing of financial statement or annual return for continuous period of 3 years. In this regard all the directors are hereby cautioned to file the pending returns and to do necessary compliances as per provisions of law, otherwise action will be initiated against them.

Assistant Commissioner to vacate attachment of assessee’s bank accounts as such action was without authority of law

Bhattad Industries (P.) Ltd. v. Union of India – [2019] 110 taxmann.com 264 (Bombay)

The Assistant Commissioner directed the assessee’s bankers to freeze the assessee’s accounts with them. The assessee filed writ. Grievance of the assessee was that the action of freezing the two bank accounts was arbitrary and high handed for the reason that no show cause notice in respect of any alleged violation of the Act was issued till date.

It was further submitted that the freezing of the accounts was in defiance of and contrary to GST Act, which allows the provisional attachment of bank accounts to protect the Revenue only by an order in writing by the Commissioner. In this case, no such order had been passed. Therefore, the action of freezing the bank accounts was without jurisdiction.

The revenue very fairly stated that no order was available on file which indicated that there was no application of mind by the Assistant Commissioner before the assessee’s bank accounts were frozen/attached. Therefore, Assistant Commissioner was directed to immediately vacate the freezing/attachment of bank accounts and inform the two banks concerned to vacate the attachment/freezing of the bank accounts.

Economic slowdown hits Income Tax collections
The economic slowdown continues to impact Income Tax collections across the country with many states faring poorly. As per the latest figures, the all-India collections made by Income Tax department (from April 1 up to Nov. 23) for financial year 2019-2020 stand at a little over Rs 5.44 lakh crore, registering an all-India growth of 0.6%.

No GST returns, no E-way bills! Centre to crack down on non-filers

Concerned with the dipping monthly collections of Goods and Services Tax (GST), the government and indirect tax department are now planning stricter measures against non-compliant taxpayers.

According to sources, the tax department is now planning to block the facility to generate e-way bill for taxpayers who do not file two consecutive GSTR-3B returns with effect from 17 November 2019. Once the taxpayer has filed one of the pending returns, the facility to generate e-way bill will be automatically restored.

GSTR-3B is monthly return that every registered GST payer has to file. It contains details of sales and purchases made by a business.

Sources told Business Today that the required connectivity between GST Network (GSTN) and the e-way bill system and development of an application to block and unblock facility has been developed and tested between two systems.

While a decision to this effect was taken by the GST Council in April, the reason for the ‘extreme’ step could be to check leakages of taxes. Non-filing of returns is still high and the tax department thinks this is a major cause for falling GST collections.

“With a continuous dip in revenue for the last few months, this is a step towards curtailment of tax leakage. Businesses need to ensure disciplined filing of GSTR-3B to avoid business disruption,” says Anita Rastogi, partner, indirect taxes, PwC.

According to the indirect tax department, as of 8 November 2019, 21.99 lakh taxpayers have been found to have not filed GSTR-3B returns of August and September 2019.

These defaulters now face possible blocking of the facility to generate e-way bill from 17 November. The department, however, is planning to send alert messages to such taxpayers if they come to e-way bill website, and ask them to file their returns by the 17 November.

The problem though is that integration testing of backend applications of few states with GST System is not yet completed. Unless the facility to unblock the e-way generation facility is developed, the department cannot go ahead with blocking the facility.

Rajat Mohan, a partner in chartered accountancy firm AMRG & Associates, said that deferment of implementation of tax provisions on the premise that technology is not ready indicates that the tax authorities are still not ready to identify and capture the culprits (evading tax) on a real-time basis.

In September 2019, the GST collection fell by 5.3% to Rs 95,450 crore as compared to a year-ago period. In August, the GST collections fell to Rs 92,000 crore, which was lower than the previous year collection by over 4%. With the average monthly collections so far this year at around Rs 98,000 crore, way below the required Rs 1.20 lakh crore, the government is looking at a large shortfall in GST collection.

With five more months to go in this financial year, the latest move is probably a last-ditch attempt by the government to revive GST collections.

-Business Today

Falling revenue: Govt yields to recalcitrant taxpayers, key GST returns diluted
The goods and services tax collections are falling — the rate of annual growth was negative in both September and October — but that doesn’t seem to make the authorities any stricter in enforcing compliance and closing the avenues for evasion. On Thursday, the government not only extended yet again the due dates for filing Form GSTR-9 (annual return) and Form GSTR-9C (reconciliation statement) by one and three months, respectively, to December 31 and March 31, but also undermined the utility of these returns by virtually removing its crucial anti-evasion features. As the GSTR-9 and GSTR-9C forms have now been ‘simplified’, taxpayers won’t require to provide the split of input tax credit availed on inputs, input services and capital goods. Also, they won’t need to provide HSN-level information of outputs or inputs, etc, for 2017-18 and 2018-19. The changes are attributed to the government’s recognition of the ‘challenges’ faced by taxpayers in furnishing these details, but experts point out that with the latest relaxations, the authorities would find it difficult to match the invoices of buyers and suppliers to check evasion, even after the annual returns are filed.

CBIC extends due date of filing GSTR-9 & GSTR-9C for F.Y. 2017-18 & F.Y. 2018-19

Order No. 08/2019-Central Tax, dated November 14, 2019

CBIC has extended the due dates of filing annual return in Form GSTR-9 & reconciliation statement in Form GSTR-9C for F.Y. 2017-18 to December 31, 2019 and for F.Y. 2018-19 to March 31, 2020.

Due date of filing GSTR-1 for registered persons in J & K for the period July-Sep, 2019 extended

Notification No. 52/2019-Central Tax and Notification No. 53/2019-Central Tax, dated November 14, 2019

For registered persons having principal place of business in the State of Jammu and Kashmir, CBIC has extended the due date of filing GSTR-1 for the quarter July, 2019 to September, 2019 till November 30, 2019 and for registered persons filing GSTR-1 monthly, due date for each of the months from July, 2019 to September, 2019 has been extended till November 15, 2019.

Due date of filing GSTR-3B & GSTR-7 for registered persons in J & K for the period July-Sep, 2019 extended

Notification No. 54/2019-Central Tax and Notification No. 55/2019-Central Tax, dated November 14, 2019

For registered persons having principal place of business in the State of Jammu and Kashmir, CBIC has extended the due date of filing GSTR-3B for the months July, 2019 to September, 2019 till November 20, 2019 and for registered persons who are required to file GSTR-7 due date for the months from July, 2019 to September, 2019 has been extended till November 15, 2019.

Income Tax task force report suggests complete rejig of tax slabs, saving govt Rs 55,000 crore

The government could boost its revenues by more than Rs 55,000 crore if it implements a task force report that calls for a complete rejig of income tax slabs and capital gains tax regime, two persons familiar with the content of the report said. “There could be an overall gain in revenues if the recommendations are implemented in full,” one of the persons said. The government has begun examining the report of the task force on direct taxes, and it is expected that some its recommendations may find place in the upcoming budget. The report, which is yet to be made public, has suggested a radical shift to taxation approach by suggesting no prosecution or reopening of assessment for people who declare and pay higher income tax for a past period of up to six years with interest and 50 per cent penalty. “It has been seen that taxpayers do not pay higher tax for a past period for fear of reopening of assessment and prosecution,” said the second person cited earlier.

Digital tax on MNCs: India seeks changes in OECD math

India has sought changes in the Organisation for Economic Cooperation and Development (OECD) proposal on digital taxation, saying it would deny the country its proper share of taxes from multinationals such as Google, Facebook, Uber and Netflix, which generate substantial revenues locally. The government has proposed a more balanced principle for the taxation of such companies based on place of revenue generation. “We want a fair share in revenues that accrue to the company from the country,” said a government official aware of the development. India has submitted its concerns to the body. The OECD had on October 9 released a draft on taxing digital companies for public comment. Discussions on the proposal are to be held on November 21-22. All countries have to agree for the rules to be enforced.

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