MCA21 Version 3.0 to be Launched

The Ministry of Corporate Affairs (MCA) will launch the data
analytics-driven MCA21 Version 3.0 by October 2021 in the financial year
2021-22.

1)The MCA21 Version 3.0 system is the Mission Mode e-Governance project
of India.
2)The Ministry of Corporate Affairs highlights that the project will
comprise of the additional modules for e-Adjudication, e-Consultation,
and Compliance Management.
3)It is a technology-driven project that will be launched with the aim
of,
i) Promoting Ease of Doing Business,
ii) Strengthening the enforcement,
iii) Facilitating the seamless integration and
iv) Exchanging the data among the regulators and
v) Enhancing the user experience.
4)Project will also comprise of the Micro-services architecture along
with high scalability and capabilities for advanced analytics.
5)The MCA21 V3 project further aims to transform the corporate
regulatory environment in India.
6)Project is aided by the latest technologies such as Artificial
Intelligence.
7)Major components of the projects include e-scrutiny, e-adjudication,
MCA Lab, e-Consultation and Compliance Management System (CMS).
8)This project will be operated by L&T InfoTech.
9)It will also comprise of the interactive user dashboards, chatbot
enabled helpdesk and the mobile apps.

100% restriction to avail ‘ITC’, if no GSTR-1 is filled by the supplier

It is submitted that a new clause (aa) to sub-section (2) of section 16
of The Central Goods and Services Tax, Act, 2017 (CGST Act, 2017) is
being inserted in Finance Bill, 2021. Please note that these proposals
will come into effect from a date to be notified later. It is stated
that Sections 2 to 79 of Finance Act, 2021 shall come into force on the
1st day of April, 2021 and Sections 99 to 114 of Finance Act, 2021 shall
come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint.

It is submitted that Section 16 of CGST Act, 2017 contains four (4)
sub-section out of which sub-section (1) talks about the ‘eligibility
for taking Input Tax Credit (ITC)’. Whereas sub-section (2) talks about
‘conditions which should be satisfied for taking ITC’. Further
additional condition has been also put in sub-section (3) regarding ‘ITC
not admissible if depreciation claimed on tax component’. Moreover,
sub-section (4) provides the ‘time limit for availing ITC’.

It is stated that for conditions and restrictions, we have to see the
provisions of Section 16 (2) with Rule 36 of the Central Goods and
Services Tax, Rules, 2017 (“CGST Rules, 2017”). With the amendment by
Finance Act, 2021 a further new condition has been inserted is Section
16(2) of the CGST Act, 2017. Section 100 of the Finance Act, 2021
provides that-

“100. In section 16 of the Central Goods and Services Tax Act, in
sub-section (2), after clause (a), the following clause shall be
inserted, namely:––

  “(aa) the details of the invoice or debit note referred to in clause
(a) has been furnished by the supplier in the statement of outward
supplies and such details have been communicated to the recipient of
such invoice or debit note in the manner specified under section 37;”.

It is submitted that the aforesaid is one more condition regarding
entitlement of ITC. It provides that ITC on invoice or debit note may be
availed only when the details of such invoice or debit note have been
furnished by the supplier in the statement of outward supplies (GSTR-1)
as specified in Section 37 of the CGST Act, 2017 and such details have
been communicated to the recipient of such invoice or debit note.

It is pertinent to note that pursuant to the Rule 59(3) of CGST Rules,
2017, the details of outward supplies furnished by the supplier shall be
made available electronically to the concerned registered person
(recipient) in PART A of FORM GSTR-2A, in FORM GSTR-4A and in FORM
GSTR-6A through the common portal after the due date of filing of FORM
GSTR-1.

In this regard it is important to note that Rule 36(4) of the CGST
Rules, 2017 was recently amended vide Notification No. 94/2020-Central
Tax dated December 22, 2020 w.e.f. January 01, 2021 to restrict the ITC
to 5% in respect of invoices or debit notes not furnished by supplier in
FORM GSTR-1.

Rule 36 of CGST Rules, 2017 provides ‘documentary requirements and
conditions for claiming input tax credit’ under Chapter V INPUT TAX
CREDIT. Rule 36(4) of CGST Rules, 2017, now, restricts the credit
relating to the invoices not uploaded by the suppliers in their FORM
GSTR-1 to the extent of 5%. It provides that ITC can be here after
claimed in the FORM GSTR-3B only to the extent of 105% of eligible ITC
reflected in FORM GSTR-2A in aggregate.

Rule 36(4) of CGST Rules, 2017 is concerned with regard to restriction
on the availment of ITC in cases where FORM GSTR-1 has not been uploaded
by the suppliers under sub-section (1) of section 37. It is important to
note that this newly inserted rule is a substantive condition to be
fulfilled for the availment of ITC in addition to conditions prescribed
under Section 16 of CGST Act, 2017.

Now it is seeming that the aforesaid amendment is only to provide
statutory backing to much debated Rule 36(4) of the CGST Rules, 2017.

MCA initiates decriminalisation of LLP Act

The ministry of corporate affairs (MCA) has initiated the process of
decriminalisation of the Limited Liability Partnership (LLP) Act, based
on the recommendations of a high-level government panel.

“The objective of the decriminalisation exercise is to remove
criminality of offences from business laws where no malafide intentions
are involved,” the ministry said in a statement on Wednesday.

Mega Investment Textiles Parks (MITRA)

Mega Investment Textiles Parks (MITRA) scheme to be Launched

Highlights

1.The scheme will enable the textile industry to become globally
competitive.
2.It will help the industries to attract large investments and boost
employment generation besides boosting the exports.
3.The scheme will help in creating a world class infrastructure with
plug and play facilities. This in turn will create global champions in
exports.
4.MITRA scheme will be launched in addition to the Production Linked
Incentive Scheme (PLI).

MCA Amends The Definition of Small Companies

The ministry of corporate affairs (MCA) has amended definition of the
small companies by amending the Companies Rules. The new amendment
allows the non-resident Indians (NRIs) to incorporate one person
companies (OPCs) in India.

Highlights

1. The changes were announced by finance minister Nirmala Sitharaman
during the presentation of Union budget.
2.These changes will come into effect from April 1.
3.The notification also highlights that the epaid-up capital and the
turnover of the small company shall not exceed respectively rupees two
crores and rupees twenty crores.
4.Earlier, the definition was based on the thresholds defined by the
Companies Act.
5.The companies act had mentioned a maximum paid up capital of Rs 50
lakh and turnover of Rs 2 crores.

Budget Features And Facts Thereof

BUDGET 2021

1. Big Reform Push in Banking, Insurance.
2. FM breaks Taboos, Puts Economy on Turbo Charge.
3. Infra, Jobs Focus to Put FMCG in Fast Lane.
4. Cheaper gold, Silver Jewellery to Add Glitter to Marriage Season.
5. Phones May Cost More
6. Gold Coins Get Cheaper.
7. Palm oil Prices to Rise.
8. Taxpayers who are above 75 years with only pension and interest
income won’t have to file their tax returns.
9. Boost for Homebuyers.
10. Time limit for reopening of income tax assessment cut to 3 years.
11. FM sets out big ideas to bring in First – time Investors
12. Luxury Car Prices to Sprint Once Again
13. Imported Tipple may not Pinch.
14. Expect More Power Suppliers.
15. Ujjwala scheme offering free cooking gas connection to poor families
extended to one crore more households.
16. 100 more districts for city gas distribution network.
17. A natural gas pipeline project to be started in Jammu & Kashmir.
18. Relief for SWF/Pension Funds.
19. Pushing Digital Transactions.
20. Respite from Double Taxation.
21. Custom duties have been increased on certain auto components, parts
of mobile phones and solar panels.
22. Taxman can go back only Three Years to Scrutinise Any Lapses in
small Cases.
23. Budget has eased taxes on dividends for overseas investors and
upcoming instruments like Real Estate Investment Trust and
Infrastructure Investment Trust.
24. No depreciation will be available on goodwill though the amount paid
for acquiring it shall be allowed on its sale.
25. TDS on dividend income reduced to FPIs
26. Several treaties like India – Singapore have dividend tax rates of
10-15%.
27. No TDS on dividend payments to REITs and InvITs.
28. Tax Rates Unchanged, but Changes in Proposals to Have a Big Impact.
29. LIC policy holders will be eligible to subscribe to the insurer’s
IPO at a discounted price.
30. A Rightful Focus on Local Output, Creating Jobs.
31. Putting Faith in Private Investor’s ability to Power The Economy.
32. All set to make India Aatmanirbhar and Global.
33. Govt. will roll up its sleeves on disinvestment in banks and
insurance cos, monetize real estate with PSUs
34. Maximising Impact : Fewer centre-sponsored schemes.
35. Jal He Jeevan Hai: Keeping Air, Water & Roads Clean.
36. Enhancing EoDB: Quick Resolution of Contract Tiffs.
37. Weaving In Progress: Mega Textile Parks Scheme.
38. FM opens Govt Spending Tap for Revival.
39. More Small Cos to Bear Lower Compliance Burden Now.

FINE PRINT

  • Fake invoice or sham trasactions: To discourage fraud in cases
  • involving fake invoicing or sham transactions of over 2crore, tax
  • department will have power to attach assets.
  • Faceless appellate tribunal: After faceless assessment, even income-
  • tax appellate tribunal being made faceless and jurisdiction reduced to
  • make administration more friendly.
  • Non- deposit to labour welfare funds: No deductions to be allowed if
  • employer is late in depositing employee contribution towards welfare
  • funds. This will encourage timely deposit by employers.
  • TDS on purchase of goods: 0.1% TDS on purchase transaction of over 50
  • lakh in a year in case the total turnover exceeds 10crore. It’s another
  • measure to widen tax net.
  • BAR instead of AAR: Authority of Advance Ruling to be replaced with
  • Board of Advance Ruling for faster disposal of cases. Appeal against
  • order with high court.
  • Tax free Disinvestment transfer of assets by PSU to resulting company
  • to be a tax- neutral demerge.
  • Tax liability term “Liable to tax” defined to provide certainty.
  • Tax holiday for affordable housing extended up to March 31, 2022.

Commerce Ministry notifies Rs 945 crore seed fund for startups

The government has approved the Rs 945-crore Startup India Seed Fund
Scheme (SISFS) for the period 2021-25 to offer early-stage funding to
startups for “proof of concept, prototype development, product trials,
market entry and commercialization,” implementing body Department for
Promotion of Industry and Internal Trade (DPIIT) said in its
notification.Startups across sectors registered with the DPIIT and
incorporated not more than two years ago at the time of applying for the
the scheme will be eligible for securing capital. The funding will be
disbursed through selected incubators assisted by the central government
or state governments.

The government also announced eligibility criteria for incubators
assisted by the central government or state governments to participate
in the scheme that included at least two years of operability on the
date of applying for the scheme, capacity to seat at least 25
individuals, at least five startups undergoing incubation at the time of
application of the scheme. The scheme will be executed and monitored by
an Experts Advisory Committee (EAC) to be set-up by DPIIT. EAC will
evaluate incubators to provide grants of up to Rs 5 crore in
milestone-based three or more instalments.

MCA notifies Companies (Incorporation) Amendment Rules, 2021

The Ministry of Corporate Affair (MCA) notified Companies
(Incorporation) Amendment Rules, 2021 which sought to amend the
Companies (Incorporation) Rules, 2014.

The notification amended Rule 41 of Companies (Incorporation) Rules,
2014 which relates to Application under section 14 Companies Act, 2013
for conversion of public company into private company.

The notification specified that where an objection has been received or
Regional Director on examining the application has specific objection
under the provisions of the Act, the same shall be recorded in writing
and the Regional Director shall hold a hearing or hearings within a
period of 30 days as required and direct the company to file an
affidavit to record the consensus reached at the hearing, upon executing
which, the Regional Director shall pass an order either approving or
rejecting the application along with the reasons within 30 days from the
date of hearing.

In case where no consensus is received the Regional Director may approve
the conversion, if he is satisfied having regard to all the
circumstances of the case, that the conversion would not be against the
interests of the company or is not being made with a view to contravene
or to avoid complying with the provisions of the Act, with reasons to be
recorded in writing.

However, the conversion shall not be allowed if any inquiry, inspection
or investigation has been initiated against the company or any
prosecution is pending against the company under the Act.

RBI Working Group on Digital Lending

Digital Lending

The Reserve Bank of India recently constituted a working group on
digital lending. The working group was constituted to study all aspects
of digital lending activities in the regulated and regulated financial
sector. The working group will ensure that an appropriate regulatory
approach is put in the digital lending platform.