Large unlisted companies may have to make quarterly or half-yearly filings, like their listed counterparts, as the government is considering amendments to the Companies Act to mandate more frequent disclosures in the aftermath of the IL&FS collapse.
The ministry of corporate affairs (MCA) is expected to prescribe a threshold for the disclosure requirement as it does not want to burden all companies, as a bulk of them are small companies, sources told TOI. The idea is to track the systemically important companies, which pose a risk to the entire system. “It will be an enabling amendment and MCA will decide on timing and extent of disclosures later,” said a source.
The assessment in the government is that there is a massive lag, often up to 18 months related to annual filings by companies, many of which have been non-compliant in the past. An entity like the beleaguered IL&FS was not on the radar till it collapsed and MCA is hoping that periodic disclosures would reduce the chances of such failures going undetected. Currently, companies are required to annually file the consolidated financial statement, balance sheet, profit & loss account, annual returns, directors’ report and certified true copy of board resolution with the designated RoC.
The proposal to increase disclosures is expected to be part of a set of amendments to be taken up by a group of ministers chaired by home minister Amit Shah, with defence minister Rajnath Singh, finance & corporate affairs minister Nirmala Sitharaman, commerce & industry minister Piyush Goyal and law & justice minister Ravi Shankar Prasad among the nine members of the committee, sources told TOI.
The ministerial panel, referred to as alternate mechanism by the Narendra Modi administration, will largely look at the recommendations of the company law panel, which submitted its report. While MCA was pushing for the introduction of the Bill during the recently concluded Winter Session, the legislation will now be placed before the Parliament as soon as it is cleared by ministers. The ministry is hoping to introduce the Bill during the budget session.
35th GST Council Meeting was held on 21 June 2019 at New Delhi, after a gap of more than three months, chaired by Union Finance Minister, Mrs Nirmala Sitharaman.
This GST Council meeting has been called at a time when the countdown to upcoming Union Budget 2019 is less than a month away. A lot of expectations piled up over months concerning various indirect tax issues will be addressed in this meeting.
Highlights of 35th GST Council Meeting
The 35th GST Council meeting concluded with consensus on the following matters
GST annual return due date extended till 31 August 2019 for FY 2017-18
The due date for filing GSTR-9, GSTR-9A, and GSTR-9C for the FY 2017-18 has been extended by two months, till 31 August 2019. Official notification can be made anytime soon.
Aadhaar-enabled GST Registration introduced:
In order to ease the current process of GST registration and reduce the paperwork involved, GST Council has given a go-ahead to a new system for verification of taxpayers registering themselves under GST. Aadhaar number shall be linked to the GSTIN while generation.
NAA tenure extended by two years
Tenure of National Anti-profiteering Authority (NAA) was due to end by 30 November 2019. GST Council has further extended this tenure by two years, to enable it to take up all the pending cases. Hence, the authority can take up new cases in future due to rate cut issues, indicating that the GST Council has plans for further rationalisation of GST rates.
10% penalty to apply for any delay in depositing profiteered amount
GST Council has approved a levy of 10% penalty for delay in depositing the profiteered amount by more than 30 days. This is a fair measure that would encourage timely compliance by the taxpayer.
E-invoicing to start from January 2020
The new system for raising all the tax invoices on the GST portal has received in-principle approval for implementation from 1 January 2020. This applies to only B2B invoicing. By this system, no separate e-way bill will be required in case of e-invoice. Returns to be framed from these e-invoices. A phased implementation is being worked out.
Earlier, the government had fixed Rs 50 crore as the limit for the applicability of e-invoicing.
E-ticketing made mandatory for multiplexes
Among other major decisions, the GST Council approved the electronic ticketing system, for multiplexes, having multi-screens. This will help curb cases of tax evasion and the use of black tickets that have been prevalent.
Rate cut decision on electric vehicles, chargers & leasing thereof deferred; Committee to submit its report
The decision to cut GST rates for electric vehicles and electric chargers have been postponed to the next Council meeting. The matter has been referred to the Fitment Committee for checking the feasibility of the rate cut. At present, the GST rates for electric vehicles and electric chargers are 12% and 28% respectively.
Likewise, the valuation rules for goods and services pertaining to solar power generating systems and wind turbines will be placed before the next Fitment Committee. The suggestions made by this Committee will be placed before the next GST Council meeting.
Rate cut for lottery put on hold; Matter to be referred before an Attorney General
The previous council meet had not tabled the rate cut matter for lotteries. The 35th GST Council meeting discussed the matter at length and also brought to light two pending cases on this matter before the high court and supreme court respectively. Although the courts had referred the matter back to GST Council, the Council has decided to consult the Attorney General of India.
GSTAT to be GST Appellate Tribunal.
The GST council also definitively stated the Goods and Service Tax Appellate Tribunal will be the appellate authority and will adjudicate on appeals arising from central and state tax authorities’ in-house dispute resolution system. The states will decide the number of GSTAT required by them as a result of which there can be two tribunals in a single state.
CMP-02 for opting into the composition scheme for service providers under Notification 2/2019-CT rate
31 July 2019
For non-filing of GST returns, E-way bills to be blocked
The law stated that where the GST returns in GSTR-3B/ GSTR-4 is not filed for two consecutive tax periods, e-way bill generation for such taxpayers would be disabled. This will be brought into effect from 21 August 2019, instead of the earlier notified date of 21st June 2019.
Both the countries would contribute USD 500 million to the fund, Sitharaman said while addressing India-Russia Business Forum at the ongoing International Engineering Sourcing Show (IESS).
India and Russia are setting up a USD 1 billion fund to promote mutual investments in infrastructure and technology projects, Commerce and Industry Minister Nirmala Sitharaman has said.
Both the countries would contribute USD 500 million to the fund, Sitharaman said while addressing India-Russia Business Forum at the ongoing International Engineering Sourcing Show (IESS) here yesterday.
While the Russian funds would be channeled through Russian Direct Investment Fund (RDIF), Indian contribution will be accrued from National Investment and Infrastructure Fund.
Sitharaman elaborated upon other measures being taken by Russia and India to scale up their economic engagement and to boost bilateral trade and investment.
As part of these initiatives, the India Russia CEO Forum will hold its meeting this year at a mutually convenient date. The forum was constituted in St Petersburg in June 2016.
Foreign Direct Investment (FDI) from Russia is estimated at USD 1.2 billion till date while Indian investment in Russia is around USD 4.9 billion.
“There is tremendous potential for enhancing such investments,” the minister said, adding that initiatives like Make-in-India would catalyse Russian investment in several Indian sectors including Defence production.
“The Make-in-India initiative was launched by the government in order to encourage businesses to manufacture products in the country, creating additional jobs for local population. This is a major drive to foster innovation, enhance skill development, protect intellectual property and build best-in-class manufacturing infrastructure,” she said.
India and Russia are engaged in robust cooperation in the energy sector, including collaborations in civil nuclear energy, hydrocarbons and renewable energy.
As many as a dozen states, including Uttarakhand, Rajasthan and Jharkhand, have implemented 75% of the reform initiatives under the ease of doing business programme, reflecting positive sentiments, commerce minister Nirmala Sitharaman said on Thursday.
These three states are followed by Telangana, Madhya Pradesh, Haryana, Chhattisgarh, Maharashtra, Andhra Pradesh, Gujarat, Punjab and Karnataka in implementing reforms.
The government, however, has maintained that the review process of the reform initiatives is still on and the current rankings may change.
The ranking of states is an assessment of the regulatory performance of states and a measure of how they improve over a period of time. Importantly, the rankings don’t accurately reflect the level of business-conducive nature of the states; rather, it shows how the states fared in implementing an action plan adopted by them with the help of the Centre within a particular time frame.
Addressing the inaugural session of the Invest North Summit organised by CII, Sitharaman also said tax and regulatory authorities are being directed not to go on an overdrive and asserted the government will not in any way create hindrances for businesses.
The ranking is based on indicators including the ease of starting a business, registering a property, getting credit, paying taxes and resolving insolvency.
The World Bank, which has been entrusted with the job of ranking states on their performance on ease of doing business by the centre, will likely wrap up this exercise by the end of this month.
Talking on the occasion, Department of Industrial Policy and Promotion Ramesh Abhishek said India is also hopeful of improving its rank among other nations in the World Bank’s Ease of Doing Business Index.
Last year, India was ranked 130th in the World Bank’s index covering 189 countries, an improvement of four notches from a year before.
While India improved its rank on three counts — starting a business, getting construction permits and accessing electricity — it witnessed its performance worsen in two areas — accessing credit and paying taxes.
In what showed a mindset shift among India’s policymakers, the government on Monday opened the floodgates for foreign direct investment (FDI) by easing the terms for nine sectors
In what showed a mindset shift among India’s policymakers, the government on Monday opened the floodgates for foreign direct investment (FDI) by easing the terms for nine sectors. Showing scant signs of legacy inhibitions, it virtually paved the way for even foreign airlines to acquire their Indian counterparts, removed the condition of domestic access to state-of-the-art technology for 100% FDI in the defence sector and put in abeyance the fractious 30% local sourcing norm for FDI in single-brand retail of advanced-technology products.
Despite the local pharma industry’s oft-expressed fear of being swamped by Big Pharma, foreign firms can now take majority (up to 74%) ownership in Indian drugmakers via the automatic route, which could again catalyse big-ticket M&A activity in the sector.
With the relaxations in the aviation sector, even a foreign airline could acquire 100% ownership in an India airline company by working in concert with a related party, according to some analysts. For example, a Qatar Airways could acquire a GoAir by directly picking up a 49% in the Indian firm and lapping up the balance equity through the West Asian nation’s sovereign wealth fund, Qatar Investment Authority.
Analysts, however, said the government seems to have tightened the sourcing rule in single-brand retailing, instead of giving a blanket exemption from such a rule for entities having “cutting-edge” technology, as was the case earlier. For instance, Apple will be exempted from the local sourcing rule for three years and have a relaxed sourcing regime for another five years if it wants to set up its own retail store, as its technology has already been described as “cutting edge” by a government panel. However, the company will still have to start local sourcing from the fourth year itself, thanks to the insistence of the finance ministry, which wanted that the Make in India programme get a boost. Similarly, Chinese company LeEco will be subjected to the same conditions if its claim of having “cutting edge” technology is endorsed by the panel headed by department of industrial policy and promotion secretary Ramesh Abhishek. However, another Chinese smartphone maker, Xiaomi, which recently withdrew its application for such a waiver, will have to comply with the mandatory 30% sourcing rule from the beginning should it wish to set up its own retail store.
Commenting on the new FDI policy for airlines, Amber Dubey, partner and India head of aerospace and defence at KPMG in India, said: “The avoidable controversies on settling ‘ownership and control’ issue is now over. Foreign airlines can now focus on the customers and competition rather than wasting time on legal and regulatory issues.”
“The likely increase in competition will bring down prices and enhance air penetration in India, both international and domestic. Indian carriers can now look for enhanced valuations in case they wish to raise funds or go for partial or complete divestment,” he added.
Calling the new norms a “bit tricky”, Amrit Pandurangi, senior director, Deloitte Touche Tohmatsu India, said, “Foreign airline investment is restricted to 49% and FDI investment in this sector has been opened up to 100%, so if the beyond the portion of the equity is by a related entity, then that needs to be tested.”
Among domestic airlines, the Rahul Bhatia-controlled Interglobe Enterprises holds close to 43% in IndiGo, Ajay Singh has a 60% stake in SpiceJet and Naresh Goyal holds 51% in Jet Airways. While Tata Sons holds 51% in both Vistara Airlines and AirAsia India, GoAir is wholly owned by the Wadia Group.
In defence, the decision to scrap the condition of access to “state-of-the-art technology” for FDI beyond 49% (through government route) will make it easier for foreign investors to invest in India. Already, Russian firm Kalashnikov is reportedly looking for local partners for manufacturing in India. Similarly, Swedish defence major Saab is learnt to be looking at more than 49% FDI in defence in its joint venture with a local partner to make the Gripen aircraft in India.
The government’s move to allow 100% FDI through the automatic route (earlier it was up to just 49%) in the broadcast carriage industry, comprising teleports, cable, direct-to-home (DTH) players, HITS (head-end-in-the sky) and mobile TV operators will provide a breather to the cable industry which has been struggling with the process of digitalisation of cable TV. The government has also allowed 74% FDI (49% under automatic route and through government approval beyond this ceiling) in private security agencies. Earlier, only 49% of FDI through government route was allowed.
Also allowed now is 100% FDI in animal husbandry (including breeding of dogs), pisciculture, aquaculture and apiculture under the automatic route under controlled conditions. It has been decided to do away with this requirement of ‘controlled conditions’ for FDI in these activities.
“For establishment of branch office, liaison office or project office or any other place of business in India if the principal business of the applicant is Defence, Telecom, Private Security or Information and Broadcasting, it has been decided that approval of Reserve Bank of India or separate security clearance would not be required in cases where FIPB approval or license/permission by the concerned Ministry/Regulator has already been granted,” a PMO statement said..
Monday’s is the second largest FDI liberalisation initiative by the Modi government, after the steps taken in November 2015. Prime Minister Narendra Modi tweeted: “In two years, Govt brings major FDI policy reforms in several key sectors… India now the most open economy in the world for FDI; most sectors under automatic approval route.” He added: “Today’s FDI reforms will give a boost to employment, job creation & benefit the economy.”
In what seemed to indicate that the government’s intention was indeed to let foreign airlines acquire Indian firms and thereby augment their capital and fleet strength for the benefit of air travellers, economic affairs secretary Shaktikanta Das said that Monday’s reforms in the sector were a “game changer”.
India’s FDI inflows increased to $55.5 billion in FY16 from $36 billion in FY14. Net FDI inflows stood at $36 billion in FY16 compared with $32.6 billion in FY15.
Commerce and industry minister Nirmala Sitharaman, however, rejected assumptions that the government decided to announce so many FDI policy reforms in one go to divert public attention from RBI governor Raghuram Rajan’s decision to not continue at the central bank after his current tenure ends on September 4. The reforms are a result of months of deliberations among various departments and are not announced in a hurry to divert attention, she affirmed.
The governments of India and Japan signed an agreement on Thursday for doubling of Japanese investment into Indian firms in the next five years, and boosting two-way trade. The signatories were Commerce and Industry Minister Nirmala Sitharaman and Japan’s minister for economy, trade and industry, Yoichi Miyazawa.
The plan was categorised into five broad areas: development of selected townships in India, promotion of investment and infrastructure development, further development and cooperation in information technology, enhancing cooperation in strategic sectors and Asia-Pacific economic integration.
Signing of the action plan is seen “as a step further in improving the trade relationship between India and Japan as a follow-up of Prime Minister Narendra Modi’s visit to Japan last year,” stated a release quoting Miyazawa.
According to Sitharaman, the agenda was in line with PM’s Make in India plan that will further investments from Japan into the country’s manufacturing sector.
Last year, the Department of Industrial Policy and Promotion under the ministry of commerce and industry had set up a mechanism to fast-track Japanese investments named ‘Japan Plus.’
During Modi’s visit, Japanese Prime Minister Shinzo Abe had set a target of 3.5 trillion yen ($33.5 billion) of public and private investment and financing from Japan including official development assistance to India to be made over five years. There are already 1,209 Japanese firms operating in India out of which 137 have started their operations after October 2013.
Japan is the fourth largest foreign direct investment (FDI) contributor to India, with major interests in pharmaceuticals, automobiles, and services sectors accounting for 7.46 per cent of total FDI equity inflows into India. During April 2000-November 2014, FDI from Japan into India stood at $17.55 billion.
Under the Tokyo Declaration for Japan-India Special Strategic and Global Partnership, Modi and Abe have set a target of doubling Japanese FDI and the number of Japanese firms in India by 2019.
The slowdown in China provides India another opportunity to make deep inroads into the African continent, strengthen business and economic ties.
The India-Africa summit will be a perfect setting for business communities from India and African nations to explore areas of cooperation and provide a roadmap to their governments.
Economic and trade relations between India and Africa have been on the slow track despite several Indian companies having a presence in the continent. The current trade is estimated around $75 billion. Experts say there is potential for this to go past $100 billion. But Commerce and Industry Minister Nirmala Sitharaman is cautious not to cite a number. More than 165 Indian companies invested in Africa between January 2003 and July 2015 in telecom, infrastructure, pharmaceuticals, healthcare and elsewhere.
India official says deeper cooperation in agriculture and agro-processing, engineering, textiles, leather and pharmaceuticals would have a positive impact on food security, raise health standards and create jobs in Africa and India. Food processing is a key area identified by both sides. Tourism too holds promise.
“There is clear intention that we will participate in African manufacturing and they’ll do whatever they can do to Make in India,” says Rajan Bharti Mittal, vice chairman of Bharti Enterprises.
Several African countries have high growth and are keen to engage with India.
Others would want Indian expertise in various sectors to speed up economic expansion. “There’s been growing interest in many African countries to do more business with the East and that includes India and China… Africa is opening to everybody who wants to do business,” says Zimbabwe trade minister Mike Bimha.
But there are issues to be addressed for smoother trade ties. Connectivity, banking links and security issues must be resolved. Trade experts say India needs to reorient strategy to boost ties.
“For the Africa-India trade potential to be realised, India must adopt an investment-led approach. We should support our African partners in development projects and handhold them in executing these efficiently,” says Biswajit Dhar, professor at JNU.
Large unlisted companies may have to make quarterly or half-yearly filings, like their listed counterparts, as the government is considering amendments to the Companies Act to mandate more frequent disclosures in the aftermath of the IL&FS collapse.
