(RBI) on October 9, maintained a status quo on key lending rates and kept its policy stance ‘accommodative’. The Monetary Policy Committee (MPC) of the RBI took a unanimous decision to keep the repo rate unchanged at 4 percent and reverse the repo rate at 3.35 percent. “MPC has voted unanimously to leave the repo rate unchanged at 4 percent, a stance also kept ‘accommodative’ for as long as needed, to support growth,” said RBI Governor Shaktikanta Das.
Here are the top 6 highlights of RBI MPC: Growth outlook: RBI underscored while COVID-19 remains a threat, the economy is showing signs of improvement. RBI said that the modest recovery in various high-frequency indicators in September 2020 could strengthen further in the second half of 2020-21 with progressive unlocking of economic activity. “The mood is shifting from fear and despair to hope. Inflation will ease closer to target by Q4FY21. GDP growth may turn positive by Q4. India is likely to see speedy recovery with variations across sectors. Agriculture, consumer goods, power, and pharma sectors to see quicker recovery,” said Governor Das.
Das also added that the rural economy looks resilient. Foodgrain production set to cross another record in FY21 and migrant labour is return to work in urban areas. Online commerce is booming, people are getting back to offices. Forward-looking biz expectations are optimistic. RBI sees FY21 GDP contracting by 9.5 percent. PMI for September rose to 56.9; the highest since January 2012. Inflation projection: The RBI said inflation will remain elevated in the September print, but ease gradually towards the target over Q3 and Q4. “Our analysis suggests that supply disruptions and associated margins/mark-ups are the major factors driving up inflation. As supply chains are restored, these wedges should dissipate,” Das said. Meanwhile, aggregate demand remains subdued and there is evidence of considerable resource slack. Liquidity measures: RBI said the focus of liquidity measures by the RBI will now include the revival of activity in specific sectors that have both backward and forward linkages, and multiplier effects on growth. The central bank will conduct special and outright bond purchases and announced on-tap TLTRO for Rs 1 lakh crore at 4 percent till March 2021. Besides, RBI will conduct OMO worth Rs 20,000 crore next week. The RBI assured that the borrowing programme of the centre and states for the rest of 2020-21 will be completed in a non-disruptive manner without compromising on price and financial stability. “The limit for Ways and Means Advances (WMA) for the centre has been kept higher at Rs 1.25 lakh crore compared to Rs 35,000 crore in the second half of the previous year. Similarly, the 60 percent increase in WMA limit for states in the first half of 2020-21 has been extended for a further period of 6 months till March 31, 2021,” Das said. Additional measures: Against this backdrop and to provide impetus towards reviving the economy, RBI announced certain additional measures. As per RBI, these measures are intended to (i) enhance liquidity support for financial markets; (ii) regulatory support to improve the flow of credit to specific sectors within the ambit of the norms for credit discipline; (iii) provide a boost to exports; and (iv) deepen financial inclusion and facilitate ease of doing business by upgrading payment system services. SLR HTM limit extended: RBI extended the dispensation of the enhanced HTM (Held to Maturity) limit of 22 percent up to March 31, 2022, for securities acquired between September 1, 2020, and March 31, 2021. It is expected that banks will be able to plan their investments in SLR securities in an optimal manner, RBI said. On September 1, 2020, the RBI increased the investments permitted to be classified as HTM from 19.5 percent to 22 percent of NDTL in respect of SLR securities acquired on or after September 1, 2020, up to March 31, 2021. Review of the Co-origination Model: In 2018, the RBI put in place a framework for the co-origination of loans by banks and a category of Non-Banking Financial Companies (NBFCs) for lending to the priority sector, subject to certain conditions. Based on the feedback received from stakeholders, it has been decided to extend the scheme to all NBFCs, including HFCs, in respect of all eligible priority sector loans, and allow greater operational flexibility to the lending institutions. “This ‘Co-Lending Model’ is expected to leverage the comparative advantages of banks and NBFCs in a collaborative effort, and improve the flow of credit to the unserved and underserved sectors of the economy,” RBI said.
A big relief again announced by the Central Government for the GST taxpayers but this time the government has given this relief to the small taxpayers who were waiting eagerly for the waiver of late fees.
As recently government has announced the late fees waiver on GSTR-3B for the normal taxpayer who were not filed the GSTR-3B similarly there are lots of Composition dealers who were also not field their GSTR-4 for previous quarters and therefore they were also expecting from government to waive of late fees on GSTR-4.
Now on 21st September 2020 CBIC has issued a notification vide number 67/2020 – Central Tax and in the said notification it states as follows:
(ii) after the second proviso, the following proviso shall be inserted, namely: –
―Provided also that late fee payable under section 47 of the said Act, shall stand waived which is in excess of two hundred and fifty rupees and shall stand fully waived where the total amount of central tax payable in the said return is nil, for the registered persons who failed to furnish the return in FORM GSTR-4 for the quarters from July, 2017 to March, 2020 by the due date but furnishes the said return between the period from 22th day of September, 2020 to 31st day of October, 2020.
As per the above notification if any Registered Composition dealer has not filed his GSTR-4 from July 2017 to March 2020 can now file his GSTR-4 without paying any late fees if his tax liability is nil and if he has any tax liability than he has to pay maximum Rs. 500 i.e. (CGST 250 and SGST 250) but the pending returns must be filed between 22nd September 2020 to 31st October 2020.
Scenario
Late fees waiver
Condition
If GSTR-4 filed without any tax liability
Late fees fully waived off (Full Waiver)
Must File pending returns before 31st October 2020
If GSTR-4 filed with Tax liability
Maximum late fees payable Rs.500 (Late fees waived off in excess of Rs.500)
A welcome step has been taken by the government and it will also give boost to ease of doing business.
On 08th September 2020 the Ministry of Corporate Affairs issued a new Notification regarding the Extension of Annual General Meeting for the year ended on 31st March, 2020
In this notification the due date for annual general meeting for the Financial Year ended 31.03.2020 has been extended by 3 Months for all companies and There is no need of separate application in form GNL-1 for extension.
This is a major relief which has been granted by Ministry of Corporate Affairs by way of granting extension of 3 months for holding annual general meeting and hence Companies with annual general meeting due date as 30.09.2020 can conduct their annual general meeting by 31.12.2020 without filing application in Form GNL-1.
But as per the section 96 of companies act 2013 it states that every company, other than a One Person Company, shall in each year hold in addition to any other meetings, a general meeting as its annual general meeting (AGM) and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one AGM of a company and that of the next
Further the third proviso to Section 96(1) of the companies Act 2013 states that the Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first annual general meeting, shall be held, by a period not exceeding three months;
Now although the Ministry of Corporate affairs has granted extension of 3 months for holding annual general meeting but as per the section 96(1) not more than fifteen months shall elapse between the date of one AGM of a company and that of the next therefore this extension does not allow all the companies to hold their AGM till 31st December 2020, each company has to check its due date on the basis of the date of last AGM so that the provision of maximum 15 months gap between two AGM is complied.
Illustration to calculate the due date for AGM
Last AGM
This year Due date for AGM
Remarks
Before 30th September 2019
Must held AGM Before 31st December 2020
Must held AGM before 31st December to comply the provision of maximum 15 months gap between two AGM
On or after 30th September 2019
Can held AGM up to 31st December 2020
As the provision of maximum 15 months gap between two AGM is automatically complied if the AGM is held upto 31st December 2020
The 41st GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman via video conferencing today i.e. 27th day of August, 2020. ShrI Anurag Thakur and Finance Ministers of States & UTs and Senior officers from Union Government & States were present.
EXPECTATIONS:
issues such as compensation to states and GST rates revision.
issues such as compensation to states, revenue shortfall.
two-wheeler industry desperately seeks GST rate cut
Finance Ministry to examine if sin tax applies to soft drinks
Issues such as the Centre should borrow from the market and provide to states as it will get a lower rate and easier access to markets. More so, since Centre has to make good on its promise to states for paying the due compensation.
41ST GST COUNCIL MEETING KEY HIGHLIGHTS
States were given two options to make up for their revenue shortfall amid the Covid-19 pandemic.
to provide a special bowrrowing window to states, in consultation with the RBI, to provide Rs 97,000 crore at a “reasonable” interest rate and this money can then be repaid after 5 years by extending cess collections.
to meet the entire GST compensation gap of Rs 2.35 lakh crore this year itself after consulting with the RBI
2. States will also be given a further relaxation in FRBM of 0.5% points for market borrowing.
3. States Seek Seven Days To Consider Cess Option
4. The Attorney General is of the view that compensation needs to be paid to states for five years. But this compensation gap has to be met from the levy of cess.
5. This is not the appropriate time to talk of increases in tax rates.
6. Data analysis:
About Rs 3 lakh crore would be the need of compensation to be paid to states while compensation cess collected would be Rs 65,000 crore. April-July compensation is around Rs 1.50 lakh crore
Disclaimer:
IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION.
As per section 96 of the Companies Act 2013 every company other than a One Person Company shall hold the Annual General Meeting within six months of closing of each financial year and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next.
In Annual General Meeting the shareholders approve the Audited Financial Statements of the Company for the closing financial year therefore it is very important to hold the Annual General Meeting each year.
Now in 2020 the whole world is facing the Covid-19 pandemic so therefore it is very difficult for companies to hold the Annual General Meeting.
Therefore, lots of representations have been made in the Ministry of Corporate Affairs, for providing relaxations in the provisions of Companies Act, 2013 or rules made thereunder to allow companies to hold their annual general meeting (AGM) for the financial year ended on 31st March, 2020 beyond the statutory period provided in section 96 of the Act.
Although Ministry of Corporate Affairs vide General Circular No. 20/2020, dated 05.05.2020 has allowed the companies to hold AGM through video conferencing (VC) or other audio-visual means (OAVM) for the calendar year 2020
But still some companies are still not able to hold the AGM within stipulated time because due to lockdown offices were closed and companies were not able to finalise their accounts for audit.
Now Ministry has clarified that the companies which are unable to hold their AGMs are advised to prefer applications for extension of AGM and should file their applications in form No. GNL-1 for seeking extension of time in holding of AGM for the financial year ended on 31.03.2020 with the concerned Registrar of Companies on or before 29.09.2020 and extension can be given only up to for three months.
On 20/08/2020 Central Board of Indirect Taxes and Customs issued a Notification No 62/2020 In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, amended the Central Goods and Services Tax Rules, 2017
Via this Notification Central government has introduced Aadhaar Authentication process for New GST Registration.
Now Individuals, Authorised signatory of all types of businesses, Managing and Authorised partners of a partnership firm and Karta of an Hindu undivided family (HUF), applying for new registration, can opt to undergo e-KYC authentication of their Aadhaar number.
Applicants, who, either do not provide Aadhaar, while applying for new registration or whose Aadhar authentication fails in validation, would be subjected to site verification by the tax department. However, Tax authority based on the documents produced can grant registration.
Applicants who opt for Aadhaar verification than registration will be deemed approved within 03 working days.
And if If Aadhar authentication is not opted for or if authentication fails in validation and no SCN is issued within 21 days by tax official, registration will be deemed approved.
“GST Applicability on Residential Accommodations _an analysis with Case Law”
“GST Applicability on Residential Accommodations _an analysis with Case Law” (Subletting, Leasing Services) (AAR – Authority for Advance Ruling – Karnataka) Advance Ruling No. KAR ADRG 17/2020, Dated 23rd March, 2020
Clarification required to be sought: • Whether exemption prescribed under entry number 13 of notification no. 9/2017- integrated tax (rate) dated. 28thJune, 2017 can be sought and the lessors (here Ambrish Vasudeva and 4 others) need not charge GST while issuing the invoice for the lease service to M/s. Dtwelve Spaces Pvt Ltd. ?
• Whether the lease service falls under the Exemption prescribed and can be described as “Services by way of renting of residential swelling for use as residence”? as listed in the aforesaid Notification.
Case Overview: Sri. Taghar Vasudeva Ambrish have filed an application before the Karnataka Authority for Advance Ruling Goods and Service Tax to sought clarification on GST applicability to Sub-Leasing Services, i.e. whether GST applicable to Sub-Leasing Services would attract Goods and Services Tax.
The application have been filed by the applicant for Advance Ruling under Section 97 of the CGST Act,2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of the KGST Act, 2017 read with Rule 104 of KGST Rules 2017 & KGST Rules 2017, in FORM GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act.
Purpose of AAR (Authority of Advance Rulings): To provide certain aid to the taxpayers related to unerring interpretation of the legal provisions under the GST Regime.
Applicant’s (Sri. Taghar Vasudeva Ambrish) key points: • He is a proprietary concern registered under the provisions of the GST Act, 2017 • Engaged in the business of providing affordable residential accommodation to students on a long term basis (Period starting from 3 to 11 months)
Facts represented by Applicant: a. The applicant along with four others collectively has let out a Residential complex to M/s. D. Twelve Spaces Pvt. Ltd which is engaged in the business of providing affordable residential accommodation to students on a long term basis (starting from 3 to 11 months). b. And the Company is also engaged in providing a host of other services such as maintenance, food, Wi-Fi etc. generally called as a Paying Guest Accommodation. c. the Company is also engaged in providing a host of other services such as maintenance, food, Wi-Fi etc. generally called as a Paying Guest Accommodation. d. Schedule II enlists activities to be treated as supply of goods or as supply of services. Entry 2(b) reads as any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. e. Under Notification No. 9/2017-Integrated Tax (Rate) dated 28th June, 2017, certain exemptions have been prescribed for specified activities and it provides that: “Services by way of renting of residential dwelling for use as residence” are exempt from GST.” f. Agreement with Students: M/s. DTwelve Spaces Pvt. Ltd. Has entered into sub lease agreement with students for providing residential accommodations with living amenities, security, entertainment facilities for a long stay for a period varying from 3 months to 11 months. g. Mr. Ambrish Vasudeva along with four others have let out a residential complex to the Company to conduct their business are of the view that GST should be charged for invoices raised towards lease service.
Facts of M/s. D. Twelve Spaces Pvt. Ltd. The Company has concluded that: • Rental accommodation services provided by the Company to the students will not attract GST • There would be no GST obligation on the Company in case of lease arrangement with their lessor too (Here Ambrish Vasudeva and 4 others). • The lessor should not charge GST to the Company when issuing the invoice for the lease service.
Key Definitions relevant to this Case Law a. Schedule II enlists activities to be treated as supply of services. b. “Business” – (Section 2(17) of the CGST Act 2017) “business” includes – a. any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for pecuniary benefit; b. any activity or transaction in connection with or incidental or ancillary to sub-clause (a); c. any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; d. supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; e. provision by a club, association, society or any such body (for a subscription or nay other consideration) of the facilities or benefits to its members; f. admission, for a consideration, of persons to any premises; g. services supplied by a person as holder of an office which has been accepted by him in the course / furtherance of his trade, profession or vocation; h. services provided by a race club by way of totalizator or a license to bookmaker in such club; • Further any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.”
c. “supply” – Section 7 of the CGST Act “supply” include all forms of supply such as lease, rental made or agreed to be made for a consideration by a person in the course or furtherance of business. Section 7(1-A) guides in determining whether a supply shall be treated as supply of goods or supply of services as referred to in Schedule II.
Key Points discussed by Authority: 1. CGST Act and the KGST Act, provisions are the same except for certain provisions. 2. As per Lease Deed: a. lessors (totally live in number) have collectively leased out their premises to the Company by way of a single agreement. b. the property consists of “42 room along with the 2400 sq.ft of terrace area” on the execution date. c. para 7.1 of the agreement shows very clearly that the consideration for the contract is settled at Rs. xxx per month. The consideration payable is paid to the bank accounts at a fixed percentage of that monthly rent. d. contract is for the entire property and the lessors have pooled their individual properties into a single one e. para 12 of the agreement also proves that the entire property is let out as the lessee has taken the total property from the lessors and has the right to sub-lease to any third party.
3. applicant is not providing the service in individual capacity to the lessee, but as a part of the group of lessors.
4. Lessors are providing the service of leasing / renting of the immovable property for a consideration due to following reasons: a. providing the right to use the immovable property without transfer of the ownership of the immovable property. b. Supply has been defined as – “any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.”
5. Providing services of leasing of a building for business or commerce to the Company as a group of persons after pooling in their assets.
Final Statement by Authority • the applicant is not providing service to the Company, but as a part of the group, for the transaction between the Group and the Company, invoice needs to be issued by the Group to the Company. • the transaction between the individuals and the Group are a different transactions, as the individuals are distinct from the Group of Individuals. • The exact nature of the group cannot be ascertained. • applicant himself is not effecting any supply of service to the Company directly.
Order by AAR: Advance Ruling No. KAR ADRG 17/2020, Dated 23.03.2020 1. The exemption prescribed under entry no. 13 of Notification No.9/2017 -Integrated tax (Rate) dated 28th June 2017 cannot be sought and the lessors (as an entity) have to charge GST while issuing the invoice for the lease services to M/s DTwelve Spaces Pvt. Ltd, provided they are registered under the GST Act. 2. The lease services does not fall under the exemption “Services by way of renting of residential dwelling for use as residence” as listed in entry 13 of Notification No.9/2017 – Integrated tax (Rate) dated 28th June 2017.
Comment by Experts: a) Sh. Rajat Mohan AMRG & Associates Senior Partner: “Though ruling has some basic logic to it, still it is expected to open a Pandora’s box of litigation for numerous individuals earning passive income”. b) Harpreet Singh, partner at KPMG India: “With this ruling, lessors may not have the comfort of presuming GST to be exempt, where end use of the property is residential,”
Conclusion by AAR: GST is applicable on residential accommodation sublet by a tenant. This AAR order dated March 23 is likely to trigger a number of litigations. The exemption prescribed cannot be sought and the lessors have to charge GST while issuing invoice for the lease services.”
Effects of this Ruling Tax authorities could well begin demanding 18% GST applicable on renting out commercial property from landowners leasing residential hostel-style accommodations to schools, colleges, educational institutions, offices, corporates, or any other establishment.
Author’s Views
1. AAR is generally pro-revenue centric. and is applicable to specific case only 2. Order is binding on the assessee in whose case ruling has been pronounced. 3. This ruling can be challenged at Higher Authority, Appellate Authority for Advance Ruling. 4. Authority in a view that property given out for sub-renting matched the criteria of a hotel – rooms with attached bathroom and other facilities. 5. Now we need to carefully consider the facts of each case to determine whether the amount paid to a director is with respect to his employment with the company or with respect to an independent professional service in order to determine the liability of GST on such payment.
IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION.
Very Important update for Charitable Trusts and Exempt Institution registered under section 80G, 12A or section 12AA: New – Fresh Registration Required: Last Date 31.12.2020
All Charitable trusts and exempt institution which are already registered under section 80G, 12A or section 12AA of Income Tax Act, 1961 will now be required to obtain FRESH REGISTRATION by December 31, 2020.
Provisions of registration under section 80G, 12AA, or section 12A will be redundant from 31st December 2020 and a new section 12AB will come into force with effect from 01st January 2021. All the existing registered trusts under the erstwhile section 80G, 12A, or section 12AA would move to new provision section 12AB.
The new section 12AB proposes to change the registration process by prescribing the time frame for processing the application and validity of such a registration certificate so granted under the new section 12AB.
An order granting registration or approval shall be passed within 3 months of the application. Such registration or approval shall be valid for 5 years.
Similarly, charitable trusts and exempt institutions which already have Section 80G certificate will now be required to reapply for registration or approval by December 31, 2020.
In the recent times the Company secretary plays a vital role in the corporate world as the Companies Act 2013 as a KMP. However there are few glitches in practically life where the CS is only Leveraging for Name Sake rather than giving proper accreditation.Except the Listed and Fortune 1000 Companies, Most of the other Companies , Especially private Companies were hesitate to recognise CS.
As the role of the company Secretary is to Sign the Balance sheet as per the statutory Act( Companies Act2013) Many Companies Directors and Other officers were not considered this profession as white collar job (High profile), Its not encouraging the CS to Employed in Corporates and the remuneration package is also not up to the mark the effort taken to complete the CS course is huge. however the Corporates are offering the pay scale for the new comers and the middle Exprienced folks were only 30k to 50k Is this worth of the CS after struggling hard to complete the Course.
Also, could witness many Companies still yet to appoint Company Secretary, Especially the Korean, Taiwan, Japanese , Chinese , US and other Indian / foreign Companies not ware of the Company Secretary roles and Significance.
The companies are Managing by General Managers Finance and Financial Controllers Who are all Chartered Accountant and Cost Accountants either Both. However the GM designated person were not allowed to sign the Balance Sheet and they are not considered as Officer in Default. However the GMs and Financial Controllers not allowing the Space to Company Secretaries. Which states the negative impact of the Company Secretary in a Company in India.
In most of the Companies the Reporting structure is not Perfect The company Secretary should be Interviwed by Director And they should report to Directors only, Instead of Financial Controllers and General Managers.Especially the private Companies.
As mentioned above the Law is not enforced properly and the merit of Being CS is not motivational, for this reason few of them turning to self Employed as practising Company Secretary But all of them cannot turn to practice. The demand for the company Secretary is high and the recognition and renumeration is still yet to reach the Bench Mark.
In order to fix this Enforcement of Law in appointing Company Secretary the MCA should put a stringent Rules and Monitor by Auditing or Inspection the Companies periodically to make sure that the KMP we’re appointed for the Eligible Companies and they , should put heavy fine for non compliance of the companies Like the way in Singapore,UK and Australia then only the Company Secretary professionals will be meaningful and useful to the society at Large.
Upon the above facts and details the MCA should emphasis more on the CS in Companieos Like Singapore, UK and Australia and also ensure that the CS remunerations should be decent to encourage the young generation to motivate and peruse the course.
Hope after fixing the glitch henceforth Company Secretary will be as a actual or Real KMP as mentioned in Companies Act 2013.
