Topic 1 | Identification of Non-Filers of Income Tax Return
• Legal Update:
o The Income tax office has announced a new system on its web-portal to identify non-filers (specified persons) of income tax return.
o This new system will be a quick and easy way to for the companies in identifying the non-filers of income tax return.
o The defaulters will be identified and a higher rate of tax deduction or tax collection will be made in making payment to non-filers.
o Higher rate of tax deduction / collection will be twice the prescribed rate or 5%, whichever is higher.
o This is in line with the announcement made in the Union Budget 2021.
• Date of Approval – 22 June 2021 | Press Release
• Effective Date of Implementation – 1 July 2021
• Legal Framework:
o Section 206AB of the Income Tax Act, 1961
o Section 206CCA of the Income Tax Act, 1961
• Government Authority – Central Board of Direct Taxes (CBDT), Ministry of Finance, Government of India
• Web-link – CBDT Circular
Topic 2 | Implementation of Withholding tax (TDS) on Purchase of Goods
• Legal Update:
o Section 194Q of the Income Tax Act is recently introduced in the Union Budget 2021
o The buyer or purchaser of the goods is required to deduct TDS @ 0.1% (5% if no PAN is available) on the purchase value while making payment to resident (domestic) seller.
o Import of goods are not covered under this rule.
o Who is obligated to deduct TDS?
– A buyer whose turnover exceeds INR 100 Million in the immediately preceding financial year.
o When is buyer liable to deduct TDS?
– A buyer responsible for making payment to a resident seller for purchase of goods is liable to deduct TDS when the value of goods purchased from such resident seller in the previous year exceeds INR 5 Million.
– The TDS will be deducted over and above the threshold of INR 5 Million.
– The threshold limit of INR 5 million shall be computed from 1 April 2021. However, the TDS liability will accrued from 1 July 2021.
o Non compliance of the provision will result in disallowance of expense to the extent of 30%.
o Section 194Q shall override section 206C(1H) and hence in such a case only the buyer is needed to deduct TDS and the seller need not required to deduct TDS under section 206C (1H).
• Effective Date of Implementation – 1 July 2021
• Legal Framework – Section 194Q of the Income Tax Act, 1961
• Government Authority – Central Board of Direct Taxes (CBDT), Ministry of Finance, Government of India
Company Law Update
Topic 1 | Relaxation in conducting Shareholders’ meeting (EGMs) through VC or OVAM or through Postal Ballot
• Legal Update – Relaxation extended upto 31 December 2021 from 30 June 2021
• Date of Approval – 23 June 2021
• Legal Framework:
o Section 100 of Companies Act, 2013
o Section 110 of Companies Act, 2013
• Government Authority – Ministry of Corporate Affairs (MCA), Government of India
• Web-link – MCA Circular
Topic 2 | Removal of limitations in conducting online / virtual meeting of board of directors for certain agenda items
• Legal Update – Following agenda items for the meeting of board of directors are allowed to be conducted through online / virtual mode instead of compulsory physical mode:
o Approval of the annual financial statements
o Approval of the report of Board of directors
o Approval of the prospectus
o Meetings of Audit Committee for consideration of financial statements
o Approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover
• Date of Approval – 15 June 2021
• Legal Framework:
o The Companies Act, 2013
o Companies (Meetings of Board and its Powers) Rules, 2014
• Government Authority – Ministry of Corporate Affairs (MCA), Government of India
• Web-link – MCA Circular
Topic 3 | Revision in the rules of the Indian Accounting Standards (IND AS)
• Legal Update:
o Applicable to large companies covered under IND AS
o IND AS are converged with International Financial Reporting Standards (IFRS)
o This notification includes amendments in 21 standards
o Under the revised rules, entities are required to make additional disclosures related to interest rate benchmark reform.
o These additional disclosures will help users of financial statements to understand the effect of interest rate benchmark reform on a company’s financial instruments and risk management
• Date of Approval – 18 June 2021
• Legal Framework:
o The Companies Act, 2013
o The Companies (Indian Accounting Standards) Rules, 2015
• Government Authority – Ministry of Corporate Affairs (MCA), Government of India
• Web-link – MCA Notification
Foreign Trade Policy
Reminder | Mandatory Update of Import Export Code (IEC)
• Legal Update:
o DGFT has mandated all Importer Exporter Code (IEC) holders to update their IEC Code every year between April and June.
o The IEC not updated within the prescribed period would be de-activated.
• Date of Notice – 06 May 2021
• Legal Framework:
o The Foreign Trade (Development & Regulation) Act, 1992
• Government Authority – Director General of Foreign Trade (DGFT), Ministry of Commerce & Industry, Government of India• Web-link – DGFT Notice
