CA in Jaipur | CA. Yogesh Jangid |ITR Filing 2023 | Company Registration | NGO Registration | Income Tax Raid Cases | Audit | Inc Incroporation | CPA in India | Subsidy | Project Funding | GST | GST Raid Cases | Income Tax Notice Faceless | DRI Cases |

Indian Government Considers Extending Support Program for Exporters

editor — Mon, 15 Apr 2024 04:44:59 +0000

The Ministry of Commerce in India is looking to recommend a five-year renewal of a program that helps exporters. This program, known as the interest equalisation scheme, has been well-received by exporters and aims to boost overseas shipments.

Government officials told a news channel that the extension would apply to both short-term and long-term loans for exports in Indian rupees. They also mentioned that the program’s effectiveness is being assessed, and the final decision will depend on the outcome of this evaluation. The current program is set to expire at the end of June 2024.

Since its launch in April 2023, a significant portion of the allocated funds have already been used. This highlights the program’s importance, especially considering the current global economic climate. In order to bridge the gap until June 2024, the government provided additional funding in December 2023.

Initially introduced in 2015, the program has been extended multiple times with additional funding. The scheme offers exporters interest rate reductions on loans for exports in rupees. This benefit is especially helpful for small and medium-sized businesses (MSMEs) in the manufacturing sector.

The program covers specific sectors like leather, textiles, and garments. It’s important to note that the program has a spending limit and a maximum annual benefit per exporter. Additionally, there are eligibility requirements for banks participating in the scheme.

This program is overseen by two government bodies along with the Reserve Bank of India, which is responsible for its implementation through authorized banks.

Source: https://www.cnbctv18.com/economy/interest-equalisation-scheme-five-year-extension-commerce-ministry-considering-sources-exporters-19395964.html

category

Maharashtra: The Leading State in GST Contribution at 19.6% and Per Capita Consumption Spending

editor — Sat, 13 Apr 2024 05:10:13 +0000

In the realm of GST collection, Maharashtra emerges as the primary player, contributing 19.6% to the national pool in the fiscal year 2024 (April-February), solidifying its status as a significant economic force in India. According to the latest data on state-wise collections, Maharashtra takes the lead, followed by Karnataka as the second-largest contributor to the GST pool, as highlighted in a Crisil report released on April 11.

The Crisil report, titled Quickonomics, underscores Maharashtra’s dominance not only in absolute GST collection figures but also in per capita terms. When adjusted for population size, Maharashtra secures the top spot, indicating robust consumption spending within the state.

Drawing a comparison with states of lower income, the analysis by Crisil delineates the top three states exhibiting the highest per capita consumption spending: Maharashtra, Karnataka, and Haryana. Conversely, states such as Bihar, Uttar Pradesh, and Jharkhand occupy the bottom ranks in per capita consumption spending.

Furthermore, when analyzed on a per capita basis, states like Uttar Pradesh, West Bengal, and Rajasthan witness a downward shift in rankings, signifying relatively lower per capita consumption spending despite their substantial absolute GST collections. Conversely, states like Haryana, Telangana, Kerala, and Punjab show an upward trajectory in per capita spending, indicating higher average consumption expenditure per individual.

The report also underscores the correlation between per capita income and average consumption, noting that states with higher per capita income, such as Telangana, tend to exhibit higher average consumption levels compared to states with lower per capita income, like Bihar.

Despite significant disparities in per capita income between states like Telangana and Bihar, their average GST collection growth rates over the past five years (fiscal 2020 to fiscal 2024) remain relatively similar. Telangana records a growth rate of 14.7%, while Bihar’s figure stands at 15.6%.

Source: https://www.livemint.com/economy/this-state-is-the-biggest-contributor-to-gst-collection-at-19-6-leads-per-capita-consumption-spend-11712894051524.html

category

RBI defers implementing directions on exchange-traded forex derivatives to May 3

editor — Fri, 05 Apr 2024 05:28:15 +0000

The Reserve Bank of India (RBI) has announced an extension of the deadline for implementing rules regarding exchange-traded forex derivatives to May 3, extending it from the previous deadline of April 5. This decision comes following concerns raised regarding participation in the exchange-traded currency derivatives (ETCD) market in light of the RBI’s currency derivative norms.

The RBI emphasized that the regulatory framework for ETCDs has remained consistent over the years and that there is no change in the RBI’s policy approach. This extension was made after considering feedback and concerns from various stakeholders.

According to a circular issued on January 5, investors must ensure the existence of a valid underlying contracted exposure, which has not been hedged using any other derivative contract. They should also be able to establish the same if required. The term “underlying” in derivatives contracts refers to the order bill or receipt for exporters and importers, or documents supporting the transaction in the case of remittances.

Source: https://www.moneycontrol.com/news/business/rbi-defers-implementing-directions-on-exchange-traded-forex-derivatives-to-may-3-12576811.html

category

Madras High Court Invalidates GST Assessment Over ITC Disparity

editor — Tue, 02 Apr 2024 04:58:07 +0000

In a significant ruling, the Madras High Court addressed the validity of a GST assessment order in the case of Sri Lakshmi Silvers versus The State Tax Officer, Gugai Circle, Salem. The case centered on the adherence to procedural guidelines and principles of natural justice in GST assessments, particularly concerning disparities between GSTR-3B and GSTR-2A returns.

Facts of the Case:

The petitioner, engaged in the supply of base metals, faced a GST assessment order pertaining to the tax demand arising from differences between the Input Tax Credit (ITC) claimed in GSTR-3B returns and that reflected in the auto-populated GSTR-2A returns for the year 2019-20.
Despite receiving a notice and show cause notice, the petitioner, relying on their accountant, remained unaware, resulting in no response from their side.
The central issue revolved around the validity of the assessment order, particularly concerning principles of natural justice and adherence to specific circulars regarding GST return discrepancies.

Petitioner’s Argument:

Department’s Argument:

Held:

category

CBIC Declares March 29-31, 2024 as Working Days for All Customs Field Formations

editor — Fri, 29 Mar 2024 07:06:36 +0000

The Central Board of Indirect Taxes and Customs (CBIC) has announced that March 29th, 30th, and 31st, 2024 will be considered as working days for all Customs field formations. This decision is communicated through a letter dated March 28, 2024, with reference number F.No.401/118/2016-Cus.III (Pt.).

All Customs field offices are required to remain operational during these days, and officers and staff are expected to report for duty as usual. It is requested that this information be disseminated among all personnel for compliance.

The directive has been issued with the approval of the relevant authority.

The full letter can be accessed at: https://www.nyca.in/wp-content/uploads/2024/03/Letter_Customs_Working_Day_280324.pdf

category

Insolvency and Bankruptcy Code, 2016

editor — Mon, 18 Mar 2024 07:40:03 +0000

Formation of the Insolvency and Bankruptcy Code, 2016:

Introduced in the Lok Sabha on December 21, 2015, the Insolvency and Bankruptcy Code, 2015 underwent scrutiny by the Joint Committee. The Committee presented its recommendations, leading to the passage of the modified Insolvency and Bankruptcy Code, 2016 by both Houses of Parliament in May 2016. The primary aim of this economic reform is to focus on creditor-driven insolvency resolution.

Shifting Existing Regime from ‘Debtor in Possession’ to ‘Creditor in Control’:

The Insolvency and Bankruptcy Code, 2016 represents a significant advancement in resolving legal complexities surrounding financial failures and insolvency in India. This code holds substantial value for stakeholders and various government regulators by providing a smoother exit mechanism for insolvent individuals and companies. It consolidates and replaces overlapping provisions found in laws such as the Sick Industrial Companies (Special Provisions) Act, 1985, The Recovery of Debts Due to Banks and Financial Institutions Act, 1993, The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and The Companies Act, 2013. Prior to its enactment, multiple agencies handling debt-related matters led to delays, complexities, and higher costs. The Insolvency and Bankruptcy Code, 2016 aims to expedite pending cases, resolving them within 180 days, with a further extension of 90 days.

Applicability of the Code:

The Code applies to insolvency, liquidation, voluntary liquidation, or bankruptcy of various entities, including companies incorporated under the Companies Act, 2013, Limited Liability Partnerships under the LLP Act 2008, partnership firms, and individuals. The minimum default amount for the Code’s application is Rs. 1 lakh, with exceptions for regulated financial service providers like banks, financial institutions, and insurance companies.

Objectives of the Code:

The Insolvency and Bankruptcy Code, 2016 aims to achieve several objectives:

Improving conflict resolution between creditors and debtors.
Providing procedural certainty for negotiation processes, reducing problems of common property, and minimizing information asymmetry.
Distinguishing between malfeasance and business failure.
Offering flexibility for parties to maximize value during negotiations.
Allocating losses effectively during macroeconomic downturns.
Balancing stakeholders' interests, promoting entrepreneurship, and increasing credit availability.
Establishing the Insolvency and Bankruptcy Board of India as a regulatory body.
Facilitating higher levels of debt financing and providing a painless revival mechanism for entities.
Addressing cross-border insolvency and resolving India's bad debt problem through a database of defaulters.

category

Understanding the SARFAESI Act, 2002: Scope, Aims, Procedures, and Documentation

editor — Mon, 18 Mar 2024 07:18:20 +0000

India’s financial sector plays a crucial role in the country’s economic development. However, outdated legal frameworks hindered the efficient recovery of defaulted loans and contributed to rising nonperforming assets (NPAs). In response, various committees, including the Narasimham Committee I and II and the Andhyarujina Committee, were formed to examine banking sector reforms and propose changes in the legal system.

What is the SARFAESI Act, 2002?

The SARFAESI Act, short for the “Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act,” empowers banks and financial institutions to auction commercial or residential properties to recover loans when borrowers default. It allows for the reduction of Non-Performing Assets (NPAs) through recovery methods and reconstruction.

Applicability and Objectives

The SARFAESI Act applies to secured loans, enabling banks to seize properties without court intervention, except for agricultural land. Its objectives include facilitating the recovery of NPAs, enabling banks to auction properties, and streamlining the recovery process.

Key Provisions and Processes

The Act regulates Asset Reconstruction Companies (ARCs) and facilitates the securitization of financial assets. It empowers banks to take possession of securities and manage them, appoint managers, or lease/sell the assets. Borrowers are given a 60-day notice period to discharge liabilities before action is taken.

Role and Amendments

The SARFAESI Act allows banks and ARCs to convert debt into equity, adjust debt with property value, and sell properties with deferred payments. Borrowers have rights to remit dues, receive officer default compensation, and approach Debt Recovery Tribunals for grievances.

Methods of Recovery

Recovery under the SARFAESI Act includes securitization, asset reconstruction, and enforcement of security without court intervention. These methods enable financial institutions to efficiently recover NPAs.

Assets Not Covered

Assets not covered by the SARFAESI Act include those under the Sale of Goods Act or Indian Contract Act, properties not liable for attachment under civil procedure laws, and conditional contracts without security interests.

Conclusion

The SARFAESI Act, 2002, strengthens India’s financial sector by providing effective mechanisms for loan recovery. Its provisions empower banks and financial institutions to streamline the recovery process, reduce NPAs, and foster economic stability.

category

Prevention of Money Laundering Act (PMLA), 2002: A Comprehensive Overview

editor — Mon, 18 Mar 2024 07:00:02 +0000

The Prevention of Money Laundering Act, 2002 (PMLA) was enacted to combat the criminal act of legitimizing income derived from illegal sources. It empowers the government or relevant authorities to seize property acquired through proceeds obtained from unlawful activities, commonly known as money laundering.

Understanding Money Laundering

Money laundering involves the conversion of illegally obtained funds, such as black money, into legitimate assets, thereby obscuring its illicit origin. This process typically entails routing the unlawfully acquired funds through various transactions or channels to make them appear legitimate, eventually integrating them into the formal financial system.

Objectives of the PMLA

The PMLA aims to achieve several key objectives:

Prevent money laundering activities.
Deter the flow of funds into illegal activities and economic crimes.
Facilitate the confiscation of properties derived from or used in money laundering.
Penalize offenders engaged in money laundering offenses.
Establish adjudicating authorities and appellate tribunals to address money laundering cases.
Address matters connected and incidental to money laundering activities.

Common Methods of Money Laundering

Money laundering can take various forms, including:

Hawala
Bulk cash smuggling
Fictional loans
Cash-intensive businesses
Round-tripping
Trade-based laundering
Shell companies and trusts
Real estate
Gambling
Fake invoicing

Understanding Money Laundering Offenses

An individual commits the offense of money laundering when directly or indirectly involved in concealing, possessing, acquiring, or using proceeds of crime. This includes projecting or claiming tainted money as untainted property.

List of Offenses Under PMLA

The PMLA encompasses offenses under various acts, such as the Indian Penal Code, Narcotics Drugs and Psychotropic Substances Act, Prevention of Corruption Act, among others. These offenses are categorized into three parts based on their nature and value involved.

Operational Stages of Money Laundering

Money laundering typically involves three stages:

Authorities and Actions Against Money Laundering

The Enforcement Directorate, under the Department of Revenue, Ministry of Finance, is responsible for investigating money laundering offenses. Financial Intelligence Unit – India (FIU-IND) coordinates efforts to combat money laundering and related crimes.

Role of Adjudicating Authority

The Adjudicating Authority appointed under the PMLA assesses complaints related to money laundering offenses. It has the power to issue notices, record findings, and order the attachment or confiscation of properties involved in money laundering.

Obligations of Banks and Financial Institutions

Financial institutions and intermediaries are obligated to maintain records of transactions, verify client identities, and report suspicious activities to the authorities. Failure to comply may result in fines imposed by the Director appointed under the PMLA.

Conclusion

The Prevention of Money Laundering Act, 2002, underscores the importance of combating illicit financial activities and preserving the integrity of the financial system. Through stringent regulations, enforcement mechanisms, and collaborative efforts, the PMLA aims to curb money laundering and safeguard economic interests.

category

Opting for GST Composition Scheme Deadline Extended to March 31, 2024: Check Eligibility and File Form CMP-02 for FY 2024-25

editor — Mon, 18 Mar 2024 06:34:53 +0000

Introduction

The deadline for GST-registered individuals to opt for the GST Composition Scheme for the fiscal year 2024-25 has been extended to March 31, 2024. This scheme simplifies tax compliance for eligible taxpayers, allowing them to avoid regular filings if their turnover remains within specified limits.

Eligibility Criteria

Businesses, including eateries, with an annual turnover of up to Rs 1.5 crore (or Rs 75 lakhs for certain northeastern and hill states) are eligible for the GST Composition Scheme. Service providers, excluding restaurant services, must not exceed a Rs 50 lakh turnover to qualify.

Enrollment Process

Taxpayers can enroll in the GST Composition Scheme during their initial GST registration or before the new financial year begins if they are already registered. For initial GST registration, the scheme is an option. Existing registrants aiming to switch must submit Form CMP-02 electronically before the next financial year starts.

Application Process

To opt for the Composition Scheme, existing GST registrants should log in to the GST portal, navigate to ‘Services’, then ‘Registration’, and select ‘Application to Opt for Composition Levy’ to fill and submit Form CMP-02.

Flexibility and Reversion

Taxpayers can revert to the regular GST system from the Composition Scheme at any time by submitting Form CMP-04 within the fiscal year. This allows for the resumption of normal tax payments and the issuance of tax invoices for all taxable supplies. Additionally, taxpayers can reclaim Input Tax Credit for various stocks and capital goods once they transition.

Ineligibility

Certain taxpayers are ineligible for the GST Composition Scheme, including casual taxable persons, non-resident taxable persons, those involved in inter-state supply of goods and services, providers of non-taxable goods and services, and suppliers through e-commerce platforms responsible for tax collection at source. Additionally, manufacturers of specific items like ice cream, pan masala, aerated drinks, tobacco products, fly ash bricks, and certain construction materials are prohibited from using the Composition Scheme as per GST Council directives.

category

Competition Act 2002

editor — Mon, 18 Mar 2024 06:07:52 +0000

Introduction to Competition

Competition, a fundamental aspect of market dynamics, involves individual sellers vying for buyer patronage to attain profitability or market share. The Competition Act 2002, passed by the Indian Parliament, supersedes the Monopolies and Restrictive Trade Practices Act 1969, serving as India’s governing legislation for competition law.

Evolution of the Act

Since its inception, the Competition Act 2002 has undergone two amendments: the Competition (Amendment) Act 2007 and the Competition (Amendment) Act 2009.

Key Provisions

At its core, the Competition Act 2002 establishes the Competition Commission and furnishes tools to curb anti-competitive practices while fostering healthy competition in India’s market.

Objectives of the Act

The Act aims to:

Addressing Anti-Competitive Agreements

Anti-competitive agreements, such as price-fixing or stock reduction pacts, are prohibited under Section 3 of the Act. Any agreement adversely impacting competition is deemed void.

Curbing Abuse of Dominant Position

Section 4 prohibits the abuse of dominant market positions, ensuring fair competition. Practices like predatory pricing are deemed abusive.

Remedies and Enforcement

The Competition Commission holds authority to:

Role of the Competition Commission

Established under the Act, the Competition Commission oversees and enforces its provisions, ensuring a fair competitive landscape in Indian markets.

Regulation of Combinations

The Act regulates mergers, acquisitions, and control acquisitions to prevent adverse impacts on competition.

Business Implications

Businesses must adhere to competition laws to:

Prevent cartel formation and monopolistic practices
Document discussions with competitors
Abstain from discussions on pricing and costs
Seek legal advice on competition law compliance
Exercise caution in communication to avoid allegations of dominance abuse

Conclusion

The Competition Act 2002 serves as a comprehensive framework to promote fair competition, aligning with global standards, protecting consumer interests, and fostering a stable market in India.

category