MSME Updates

MSME Ministry has come out with a consolidated notification in the form of guidelines for classification and registration of MSMEs. Highlights of the new guidelines are as below:

1. The Guidelines are effective from the 1st day of July, 2020.

2. New Classification:

     a. Micro - Investment Up to 1 Crore & Turnover Up to 5 Crores

     b. Small - Investment Up to 10 Crores & Turnover Up to 50 Crores

     c. Medium - Investment Up to 50 Crores & Turnover Up to 250 Crores

3. Now Trading entity can also register under MSME.

4. Now the MSME Registration shall be called file Udyam Registration and can be done online in the Udyam Registration portal.

5. Exports of goods or services or both, shall be excluded while calculating the turnover.

6. All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal. 

7. The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31stday of March, 2021.

Link Below:

https://msme.gov.in/sites/default/files/IndianGazzate_0.pdf

Registration  process.— (1)       The  form  for  registration  shall  be as provided in  the Udyam  Registration portal. (2)       (3)    (4)        (5)      (6)     (7)    (8)     7.         There will  be no  fee  for  filing  Udyam  Registration.   Aadhaar  number  shall  be required  for  Udyam  Registration. The  Aadhaar  number  shall  be  of  the  proprietor  in  the  case  of  a  proprietorship  firm,  of  the managing  partner  in  the  case  of  a  partnership  firm  and  of  a  karta  in  the  case  of  a  Hindu Undivided Family  (HUF). In  case  of  a  Company  or  a  Limited  Liability  Partnership  or  a  Cooperative  Society  or  a Society  or  a  Trust,  the  organisation  or  its  authorised  signatory  shall  provide  its  GSTIN  and PAN along  with  its Aadhaar  number.   In  case  an  enterprise  is  duly  registered  as  an  Udyam  with  PAN,  any  deficiency  of  information for  previous  years when it  did not  have  PAN  shall  be  filled up  on self-declaration  basis.     No enterprise  shall  file more than one Udyam  Registration:   Provided  that  any  number  of  activities  including  manufacturing  or  service  or  both  may  be specified or  added  in one Udyam  Registration. Whoever  intentionally  misrepresents  or  attempts  to  suppress  the  self-declared  facts  and figures  appearing  in  the  Udyam  Registration  or  updation  process  shall  be  liable  to  such penalty  as  specified  under  section 27  of  the Act.

Major changes introduced in ITR 2 for AY 2020-21

*Major changes introduced in ITR 2 for AY 2020-21*

RNORs and non-resident individuals have to file their income tax return in ITR-2 even in case of total income below Rs 50 lakh.

The taxpayer should disclose (a) the amount of cash deposits above Rs 1 crore in the current accounts with a bank, (b) expenditure incurred above Rs 2 lakh on foreign travel (c) expenditure incurred above Rs 1 lakh on electricity.

Resident individuals who own more than one house property should also file their income tax return in ITR-2.

ITR-2 continues to apply to resident individuals who have total income exceeding Rs 50 lakh.

Any individual taxpayer having income from business or profession cannot use ITR-2.

In case an individual is a director in a company or holds unlisted equity investments, the ‘type of company’ should also be disclosed

In case of short-term or long term capital gains from sale of land or building or both, the details of the buyer(s) i.e. name, PAN or Aadhaar, percentage share of ownership and address have to be given.

A separate schedule 112A for the calculation of the long-term capital gains on the sale of equity shares or units of a business trust which are liable to STT.

Under ‘income from other sources’, a taxpayer should provide the details of ‘any other income’.

The details of the deductions against ‘income from other sources’ should be provided.

The ‘Schedule VI-A’ for tax deductions is amended to include deduction under section 80EEA and section 80EEB.

In the case of a business trust or investment fund, the details of ‘capital gains’ income and ‘dividend’ income should be provided.

The details of tax deduction claims for investments or payments or expenditure made between 1 April 2020 until 30 June 2020.

While providing the details of bank accounts, if a taxpayer selects multiple bank accounts for credit of refund, the income tax department may choose any account for processing the refund.

*Eligible persons to file ITR 2 for AY 2020-21?*

ITR Form 2 is for Individuals and HUF receiving income other than income from “Profits and Gains from Business or Profession”. Thus persons having income from following sources are eligible to file Form ITR 2:

o Income from Salary/Pension

o Income from House Property(Income Can be from more than one house property)

o Income from Capital Gains/loss on sale of investments/property (Both Short Term and Long Term)

o Income from Other Sources (including winning from Lottery, bets on Race Horses and other legal means of gambling)

o Foreign Assets/Foreign Income

o Agricultural Income more than Rs 5000

o Resident not ordinarily resident and a Non-resident

A Director of any company and an individual who is invested in unlisted equity shares of a company will be required to file their returns in ITR-2.

MCA Updates

*नाम आरक्षित रखने एवं पुनः आवेदन करने की समयावधि बड़ाई गयी*

http://www.mca.gov.in/Ministry/pdf/Extension_22042020.pdf

*कंपनियों के निदेशकों की नियुक्ति एवव क्वालिफिकेशन संबंधी नियमों में परिवर्तन*

7 माह की जगह 10 माह

http://www.mca.gov.in/Ministry/pdf/Rule2_25062020.pdf

*कंपनियों की बोर्ड मीटिंग संबंधी नियमों में परिवर्तन*

30 जून की जगह 30 सितंबर 

http://www.mca.gov.in/Ministry/pdf/Rule1_25062020.pdf

Income Tax Update

*CBDT has issued a notification today further extending few of the time limits of compliances under Taxation & Other Laws*

 (Relaxation of Certain Provisions) Ordinance, 2020 as under:

👉 Due date for filing Income Tax Return for F.Y 2018-19 has been extended to 31st July, 2020

👉 Waiver of interest u/s 234A in cases where self assessment tax is upto Rs 1 lac

👉 Deductions under Ch-VIA like Sec 80C, 80D, 80G, etc can now be made upto 31st July, 2020

👉The date for furnishing of TDS/TCS statements for the quarter ending on 31st March, 2020 has been extended to 31st July, 2020

GST Updates

🆕 Companies can now file GSTR-1 and GSTR-3B through EVC (Electronic verification code)

✔️  GSTR-1  - From 27th May to 30th September 20

✔️ GSTR-3B  - From 21st April to 30th September 20

Source : Notification No. 48/2020 dated 19th June 20

SC stays Delhi HC order on transitional GST credit on Centre’s SLP

The Supreme Court has stayed the Delhi high court order that had allowed availing tax credits for the pre-GST period up to June 30 this year. The apex court was hearing a special leave petition filed by the Union Government against the Delhi High Court judgement.

The case relates to rule 117 of the CGST Act, which imposed the time limit of 90 days for claiming transitional Cenvat credit from the date of GST rollout from July 1, 2017. However, the high court had held that the time limit prescribed by the rule is directional and not mandatory. The high court had also held that the period of three years would be available for claiming these credits in line with the provisions of the Limitation Act.

The union government in its petition said that the time limit 90 days prescribed for availing transitional credit is mandatory, rational, and reasonable. It also pointed out that the Limitation Act cannot override the limitations prescribed in a special statute.

Read More at: https://www.business-standard.com/article/economy-policy/sc-stays-delhi-hc-order-on-transitional-gst-credit-on-centre-s-slp-120061901695_1.html

MCA Update

Companies (Share Capital and Debentures) Amendment Rules, 2O20

👇

http://www.mca.gov.in/Ministry/pdf/Rule_08062020.pdf

Revised TDS Chart Post 14.05 2020

RELATED PARTY TRANSACTIONS

Indian Legislature has paid special attention to Related Parties and their Transactions with Companies in order to avoid undue advantage taken by the management resulting in loss or injustice to Shareholders, i.e., the Owners of the Company.

Provisions have been made under various acts in order to ensure proper Compliances and Disclosures of Related Party Transactions so that no undue benefit arises from the same by causing harm to the Shareholders or any Third Party.

Who is a Related Party ?

Related Parties have been defined in detail under various Acts as per the requirements and scope under them. Following are some of the definitions of a ‘Related Party’:-

As per Section 2(76) of Companies Act, 2013:

Related Party, with reference to a Company, means –

a.    A director or his relative;

b.    A key managerial personnel or his relative;

c.     A firm, in which a director, manager or his relative is a partner;

d.    A private company in which a director or manager or his relative, is a member or director;

e.    A public company in which a director or manager is a director and holds along with his relatives, more than two per cent. of its paid-up share capital;

f.     Any body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager;

g.    Any person on whose advice, directions or instructions a director or manager is accustomed to act;

h.    Any company which is

- a holding, subsidiary or an associate company, or

- a fellow subsidiary; or

- an investing Company or the venturer of the Company

i.      Such other persons as may be prescribed

Where, following shall be considered as ‘Relative’ –

(1) Father (including step-father)

(2) Mother (including step-mother)

(3) Son (including step-son)

(4) Son’s wife

(5) Daughter

(6) Daughter’s husband

(7) Brother (including step-brother)

(8) Sister (including step-sister)

Further it is to be noted that as per MCA Notification dated 5/6/2015, for the purposes of Section 188 of the Act, a holding Company, Subsidiary Company, fellow subsidiaries and associate companies shall not be considered as related parties to a Private Limited Company and hence they shall be exempted from compliances to be followed under Section 188.

As per Accounting Standard 18:

Related Party shall be as follows –

a.    Enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the reporting enterprise.

b.    Associates and joint ventures of the reporting enterprise and the investing party or venturer in respect of which the reporting enterprise is an associate or a joint venture;

c.     Individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of any such individual; [Shareholding SI = 20% or more Voting Power]

d.    Key Management Personnel and relatives of such personnel; [KMP = MD, WTD and any persons in accordance with whose directions or instructions the Board is accustomed to act.] {Non-Executive Directors are not considered as KMP}

e.    Enterprises over which any person described in (c) or (d) is able to exercise significant influence;

As per Indian AS-24:

A related party is a person or entity that is related to the entity that is preparing its financial statements (in this Standard referred to as the ‘reporting entity’).

(a)  A person or a close member of that person’s family is related to a reporting entity if that person:

(i)     has control or joint control over the reporting entity;

(ii)    has significant influence over the reporting entity; or

(iii)   is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

(b)  An entity is related to a reporting entity if any of the following conditions applies:

(iv)  The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(v)    One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(vi)  Both entities are joint ventures of the same third party.

(vii) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(viii) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.

(ix)   The entity is controlled or jointly controlled by a person identified in (a).

(x)     A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

Following shall not be considered as Related Parties as per Accounting Standards:

a.    Two entities shall not be considered as Related Parties merely because they have common Directors or KMPs.

b.    Two Joint Ventures shall not be considered as Related Parties simply because they share joint control of a Joint Venture.

c.     Providers of finance, trade union, public utilities or government departments, simply by virtue of their normal dealings.

d.    Major Customer, franchisor, distributor or agent, simply by virtue of resulting economic dependence.

As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

“Related Party” Means a related party as defined under sub-section (76) of section 2 of the Companies Act, 2013 or under the applicable Accounting Standards.

As per Income Tax Act, 1961:

The term ‘Relative’ in relation to an individual has been defined under sub-section (41) of Section 2, as the husband, wife, brother or sister or any lineal ascendant or descendant of that individual.

Further, Section 40A(2)(b) defines “Related Parties and its close associates” as follows:

(A) In case individual is an assessee, relative of the individual;

(B) In case assessee is HUF/ Firm/ Company/ Association of Person any director of the company, partner of the firm, or member of the association or family, or any relative of such director, partner or member;

(C) any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual;

(D) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the assessee or any director, partner or member of such company, firm, association or family, or any relative of such director, partner or member or any other company carrying on business or profession in which the first mentioned company has substantial interest;

(E) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the business or profession of the assessee; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member;

(F) any person who carries on a business or profession,—

(a) where the assessee being an individual, or any relative of such assessee, has a substantial interest in the business or profession of that person; or

(b) where the assessee being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person.

Explanation.—For the purposes of this sub-section, a person shall be deemed to have a substantial interest in a business or profession, if,—

in a case where the business or profession is carried on by a company, such person is, at any time during the previous year, the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) carrying not less than twenty per cent of the voting power; and

in any other case, such person is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the profits of such business or profession.

As per Section 5(24) of the Insolvency and Bankruptcy Code, 2016:

Related Party, in relation to a Corporate Debtor, means –

a.    A director or partner of the corporate debtor or a relative of a director or partner of the corporate debtor;

b.    a key managerial personnel of the corporate debtor or a relative of a key managerial personnel of the corporate debtor;

c.     a limited liability partnership or a partnership firm in which a director, partner, or manager of the corporate debtor or his relative is a partner;

d.    a private company in which a director, partner or manager of the corporate debtor is a director and holds along with his relatives, more than two per cent. of its share capital;

e.    a public company in which a director, partner or manager of the corporate debtor is a director and holds along with relatives, more than two per cent. of its paid- up share capital;

f.     anybody corporate whose board of directors, managing director or manager, in the ordinary course of business, acts on the advice, directions or instructions of a director, partner or manager of the corporate debtor;

g.    any limited liability partnership or a partnership firm whose partners or employees in the ordinary course of business, acts on the advice, directions or instructions of a director, partner or manager of the corporate debtor;

h.    any person on whose advice, directions or instructions, a director, partner or manager of the corporate debtor is accustomed to act;

i.      a body corporate which is a holding, subsidiary or an associate company of the corporate debtor, or a subsidiary of a holding company to which the corporate debtor is a subsidiary;

j.      any person who controls more than twenty per cent. of voting rights in the corporate debtor on account of ownership or a voting agreement;

k.    any person in whom the corporate debtor controls more than twenty percent of voting rights on account of ownership or a voting agreement;

l.      any person who can control the composition of the board of directors or corresponding governing body of the corporate debtor;

m.  any person who is associated with the corporate debtor on account of-

(i) participation in policy making processes of the corporate debtor; or

(ii) having more than two directors in common between the corporate debtor and such person; or

(iii) interchange of managerial personnel between the corporate debtor and such person; or

(iii) provision of essential technical information to, or from, the corporate debtor;

What are Related Party Transactions ?

Any transactions entered between the Company and its Related Party shall be considered as Related Party Transactions. However, various laws have specified the transactions which shall be considered as Related Party Transactions under their ambit. Following shall be considered as Related Party Transactions under various Acts:

As per Section 188 of the Companies Act, 2013:

Following are the Specified Contracts between A Company and Related Party –

a.  Sale, purchase or supply or any goods or materials.

b.  Selling, buying property of any kind.

c.   Leasing of property of any kind.

d.  Availing or rendering of any services.

e.  Appointment of agent for purchase or sale of goods, materials, services or property

f.   Appointment to any office or place of profit in the company/Associate Company /Subsidiary Company.

g.  Underwriting of securities.

As per Regulation 2(ZC) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Related Party Transactions shall be Transfer of resources, services or obligations between the Company and Related Party regardless of whether price is charged or not.

As per Accounting Standard – 18:

Related Party Transactions shall be Transfer of resources or obligations between the Company and Related Party regardless of whether price is charged or not.

As per Indian Accounting Standard -24:

Related Party Transactions shall be Transfer of resources, services or obligations between the Company and Related Party regardless of whether price is charged or not.

Compliances to be followed under Companies Act, 2013

All Related Party Transactions u/s 188 require approval by Board of Directors of the Company. Audit Committee shall approve all transactions with Related Parties, wherever appointed. The Committee may also make Omnibus Approval for Related Party Transactions.

A company shall not enter into a contract or arrangement with any related party except with the prior approval of members of the company by Ordinary Resolution (Rule 15(3)) for the following transactions:

a.    Sale, purchase or supply of any goods or materials directly or through appointment of agents amounting to 10% or more of the Turnover of the Company.

b.    selling or otherwise disposing of, or buying, property of any kind directly or through appointment of agents amounting to 10% or more of Net worth of the company.

c.     leasing of property of any kind amounting to 10% or more of turnover of the company.

d.    availing or rendering of any services directly or through appointment of agents amounting to 10% or more of the turnover of the company.

e.    appointment to any office or place of profit in the company, its subsidiary company or associate company at a monthly remuneration exceeding two and half lakh rupees.

f.     remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding one percent of the net worth.

Shareholder’s approval shall not be necessary for transactions entered into between a Holding Company and its Wholly Owned Subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

Further, Related Party shall not be entitled to vote on Members’ Resolution. If 90% of members are either related parties or relatives of Promoters, Related Parties can vote on Resolution. Section 188 shall not apply to transactions entered in ordinary course of business which are on Arm’s length basis.

Compliances to be followed under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

As per Regulation 4(2)(f)(ii)(6):

There is no specific requirement of taking approval of from the Board of Directors for Related Party Transactions. However, the key function of the Board is to monitor and manage potential conflict of interest including abuse in Related Party Transactions.

As per Regulation 23:                     

All related party transactions shall require prior approval of the audit committee.

Audit committee may grant omnibus approval for related party transactions proposed to be entered into by the listed entity subject to the following conditions:

a.    the audit committee shall lay down the criteria for granting the omnibus approval in line with the policy on related party transactions of the listed entity and such approval shall be applicable in respect of transactions which are repetitive in nature;

b.    the audit committee shall satisfy itself regarding the need for such omnibus approval and that such approval is in the interest of the listed entity;

c.     the omnibus approval shall specify:

(i)     the name(s) of the related party, nature of transaction, period of transaction, maximum amount of transactions that shall be entered into,

(ii)    the indicative base price / current contracted price and the formula for variation in the price if any; and

(iii)   such other conditions as the audit committee may deem fit; Provided that where the need for related party transaction cannot be foreseen and aforesaid details are not available, audit committee may grant omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.

d.    the audit committee shall review, at least on a quarterly basis, the details of related party transactions entered into by the listed entity pursuant to each of the omnibus approvals given.

e.    Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.

Following Transactions shall not require approval of Shareholders:

a.    Transactions entered into between two government companies;

b.    Transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

Related Party Transaction Policy under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Following points shall be kept in mind while formulating the Policy on Related Party Transactions:

Materiality of Related Party Transactions

As per Regulation 23(1), the listed entity shall formulate a policy on materiality of related party transactions and on dealing with related party transactions including clear threshold limits duly approved by the board of directors and such policy shall be reviewed by the board of directors at least once every three years and updated accordingly.

A transaction with a related party shall be considered material if the transaction(s)  to  be  entered  into  individually  or  taken  together  with  previous transactions during a financial year, exceeds ten percent of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity.

A transaction involving payments made to a related party with respect to brand usage or royalty shall be considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceed five percent of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity.

Omnibus Approval of Related Party Transactions

As per Regulation 23(3)(a), Audit Committee shall lay down the criteria for granting the omnibus approval in line with the policy on related party transactions.

Disclosure on Website

As per Regulation 46(2)(g), Listed entity shall disseminate Policy on Dealing with Related Party Transactions under a separate section on its website.

Conclusion

The main objective of the Legislature for forming such stringent compliances and disclosure rules is to ensure that Related Party Transactions are entered into at a Fair Price, i.e., at arm’s length price and if such transactions are entered into at a price lower or higher than Fair Price, proper disclosures are made so that the Shareholders of the Company are aware of the Company’s dealings.

Input tax Credit on staff welfare and medi-claims

Q: Can GST be claimed for Staff Welfare Expenses on account of preventive measures taken for COVID spread. Eg: Purchase of masks, sanitizers, transport of workers etc?

A: Generally, ITC of GST cannot be availed on staff welfare expenses such as food, transport of workers, Insurance claim and human consumption items.

However, Inputs on same can be claimed if the same are OBLIGATORY (enforced by any law for the time being).

 

Statutory laws in Force: Epidemic Diseases Act, 1897 & Disaster Management Act, 2005.

ITC Claims that can benefit Enterprises expending for COVID:

1.Masks,Sanitizers and similar equipments:

Before Pandemic: Not Eligible-If for personal consumption.

During Pandemic: Eligible.

2.Rent or Hire of Vehicles for Workers Transportation:

Before Pandemic: Not Eligible.

During Pandemic: Eligible.

3.Health Insurance for Workers:

Before Pandemic: Not Eligible.

During Pandemic: Not Eligible.

4.Food and beverages:

Before Pandemic: Not Eligible.

During Pandemic: Not Eligible. Since not mandated by law.

 

Note: GST claim possible only if the above expense is made against a GST Invoice which must also have the GST details of the entity  purchasing/availing such goods or services.

CBIC issued instruction on Roll Out of 1st Phase of Faceless Assessment under Customs

As per Circular No. 28/2020-Customs, dated June 05, 2020 on the launch of Phase 1 of Faceless Assessment of bills of entry for goods imported primarily under Chapters 84 and 85 of the Customs Tariff Act, 1975 at Bengaluru and Chennai w.e.f. June 08, 2020. As mentioned therein, the Faceless Assessment is being rolled out in phases and it would be implemented pan India by 31st December 2020. While these instructions are immediately relevant for Bengaluru and Chennai Zones, they would get applied to other Zones as and when these Zones are covered by Faceless Assessment (with suitable modifications that may be warranted).

Instruction:-

CBIC vide Instruction No. 09/2020 – Customs dated June 5, 2020, has issued an instruction to roll out the first phase of faceless assessments. Further, the roll-out of Faceless Assessment across Bengaluru and Chennai Zones, the Principal Chief Commissioners/Chief Commissioners of Customs, Bengaluru and Chennai Zones are required to put in place the following arrangements in their jurisdiction:

I. Faceless Assessment Groups:

A Faceless Assessment Group would consist of Appraisers/Superintendents and Assistant Commissioners/Deputy Commissioners for verification of assessment of any bill of entry that is assigned to this group in the Customs Automated System. Thus, two Faceless Assessment Groups, one for Chapter 84 and another for Chapter 85 would need to be established. However, depending on the workload the two Faceless Assessment Groups could also be merged into one. The Faceless Assessment Group for each chapter would thus comprise officers of both Bengaluru and Chennai Customs Zones. It is advised that to begin with officers from the existing Appraising Groups for chapters 84 and 85 in each Customs station in each Zone may be made part of the Faceless Assessment Group. However, the Principal Chief Commissioners/Chief Commissioners of Customs may decide on the total number of officers to be placed in each Faceless Assessment Group based on the volume of bills of entry.

II. Port Assessment Groups:

Port Assessment Groups (PAGs) would be the Appraising Group currently located in each port of import for verification of the assessment and other related functions as is the normal practice. The PAGs would also handle all other functions pertaining to the bills of entry which are not marked to the Faceless Assessment Group by the Customs Automated System as well as the bills of entry that are referred by the Faceless Assessment Group to the port of import for any reason. It is clarified that the port of import is the Customs station of import of the goods where the importer has entered any bill of entry under Section 46 or Section 68 of Customs Act, 1962 for home consumption or warehousing.

III. Turant Suvidha Kendras:

Turant Suvidha Kendras (TSK) would be a dedicated cell in every Customs port of import manned by Custom officers to cater to functions and roles clarified in para 5.2.2 of this instruction. The Turant Suvidha Kendra is basically created to facilitate the trade-in completing various formalities relating to the Customs assessment locally at the port of import, as is presently done, even though the actual assessment may be done remotely or virtually by the proper officer physically located in another Customs station. It is important that the officers manning the Truant Suvidha Kendras are properly trained in their role as facilitators while ensuring legal compliance. The location and timing of the Truant Suvidha Kendras would need to be properly advertised and made known to all stakeholders.

Further, In order to introduce Phase 1 of Faceless Assessment at Bengaluru and Chennai from 8th June 2020 for imports primarily made under Chapters 84 and 85 of the Customs Tariff Act, 1975 at their jurisdictional Customs ports of import, Board has issued two notifications, as follows:

I. Notification No.50/2020-Customs (N.T.) dated 05.06.2020 implements Faceless Assessment across different Principal Chief Commissioner/Chief Commissioner Zones. This notification enables an assessing officer i.e., the proper officer under Sections 17 and 18 of the Customs Act, 1962, who is physically located in a particular jurisdiction to assess a bill of entry pertaining to imports made at a different Customs station/port of import, whenever such a bill of entry has been assigned to him in the Customs Automated System. However, it is clarified that in Phase 1 of the roll-out of Faceless Assessment, this notification will be applied only for the inter-linking of Bengaluru and Chennai Customs zones for this purpose. Thus, w.e.f. 8th June, 2020 the Customs Automated System will assign the non-facilitated bills of entry filed for imports of articles primarily falling under Chapters 84 and 85 of the Customs Tariff Act, 1975, at any of the Customs stations/ports of import of Bengaluru and Chennai Customs Zones to the officers of the concerned Faceless Assessment Group for assessment on a first-cum-first basis. In other words, irrespective of whether the goods are imported at any Customs station/port of import falling under the jurisdiction of Bengaluru or Chennai Customs Zone, the bills of entry pertaining to the said two chapters will be marked by the Customs Automated System to the nominated Faceless Assessment Group for assessment.

II. Notification No.51/2020-Customs (N.T.) dated 05.06.2020 is issued for the purpose of empowering the jurisdictional Commissioners of Customs (Appeals) at Bengaluru and Chennai to take up appeals filed in respect of Faceless Assessments pertaining to imports made in their jurisdictions even though the assessing officer may be located at the other Customs station.

To illustrate, Commissioners of Customs (Appeals) at Bengaluru would decide appeals filed for imports at Bengaluru though the assessing officer may be located at Chennai. This has been done to ensure the trade is not put to any hardship and can get their appeals heard locally, as at present.

Further, as one of the main objectives of Faceless Assessment is speedy and uniform assessment practices, in Phase 1 of Faceless Assessment, Board hereby nominates Principal Commissioner/Commissioner of Customs, Bengaluru City, Bengaluru, Principal Commissioner/Commissioner of Customs, Airport and Air Cargo Complex, Bengaluru, Principal Commissioner/Commissioner of Customs (II), Chennai and Principal Commissioner/Commissioner of Customs (VII), Air Cargo Complex Chennai to be the nodal Commissioners for the purpose of administratively monitoring the assessment practice in respect of imported goods which are assigned in the Customs Automated System to the officers of the Faceless Assessment Groups in Bengaluru and Chennai, for articles primarily falling under Chapters 84 and 85, of the Customs Tariff Act, 1975. These nodal Commissioners would work in a coordinated manner. This arrangement would pave the path to establish National Assessment Commissionerates (NACs) with the mandate to examine the assessment practices of imported articles across Customs stations and suggest measures to bring about uniformity and enhanced quality of assessments. The NACs would be put in place as and when the Faceless Assessment is rolled out in phases across the country.

For better clarity and guidance, the procedural details of the Faceless Assessment scheme are explained as follows-

1 Responsibilities of the Nodal Commissioners:  

1.1 The responsibilities of the Nodal Commissioners, in relation to bills of entry dealt with by a particular Faceless Assessment Group, will include the following:

1. Monitor the assessment practice for uniformity of classification, valuation, exemption benefit and compliance with import policy conditions;
2. Ensure that best assessment practices are followed, taking into account international practices;
3. Study audit objections and take corrective actions with regard to assessments, wherever necessary and provide inputs to the concerned ports of import;
4. Analyse the RMS facilitated bills of entry pertaining to Chapters falling under their purview and advise the DGARM regarding possible interventions or review of risk parameters;
5. Liaise with Principal Commissioner/Commissioner of Customs at ports of import with regard to interpretational issues pertaining to classification, valuation, scope of exemption notifications and trade policy conditions;
6. Interact with their sectoral trade and industry for inputs, as well as to resolve their issues relating to assessment;
7. Function as a knowledge hub or repository for that particular Chapter(s);
8. Examine the orders/appellate orders in relation to assessment practices pertaining to commodities assigned to each Faceless Assessment Group and provide inputs to the Commissionerates for reviewing of such orders so that uniformity of assessment orders could be upheld at legal forums.

1.2 Responsibilities of the Port of Import:

1.2.1 The ports of import would continue to have the Port Assessment Group(s) to cater to all other functions pertaining to the bills of entry which are not marked to the Faceless Assessment Group by the Customs Automated System, including the cases referred by the Faceless Assessment Group to the Customs station of import for any reason. In addition, the port of import would continue to be responsible for handling the examination/inspection of goods and all other functions other than assessment. The request for waiver of fee for late filing of bill of entry, request in relation to Section 49 of the Customs Act, 1962, request for permission under Section 48 of the Customs Act, 1962 shall also be done by the designated proper officers of the port of import.

The Commissionerate having jurisdiction over port of import would set up a Turant Suvidha Kendra for facilitating Customs clearances. It merits mention that to begin with each

Customs station would set up a Turant Suvidha Kendra and the Principal Commissioners/Commissioners are advised to devise suitable procedures for numbering, handling & safe keeping of documents handled in the TSK. Some of the functions to be entrusted to the Turant Suvidha Kendra are:

1. Accept Bond or Bank Guarantee;
2. Carry out any other verifications that may be referred by the Faceless Assessment Groups;
3. Defacing of documents/ permits licences, wherever required;
4. Debit of documents/ permits/ licences, wherever required; and
5. Other functions determined by Commissioner to facilitate trade.

1.3 Procedure for Verification of Assessment of Bill of Entry by Faceless Assessment Group:

1.3.1 Procedure to be adopted in the normal course:

1. The importer shall present bill of entry on the Customs Automated System (i.e., ICEGATE portal or ICEGATE) electronically, as per Section 46 of the Customs Act, 1962 and upload supporting documents such as Invoice, Packing List, Bill of Lading, as usual in all the cases, and License/Authorisation/permission, BIS or other registrations, Scrips, Equipment Type Approval, Certificate of Origin, Certificate for claiming duty exemption, etc., if required for the consignment, on e-Sanchit. As at present, the selection of a bill of entry for verification of selfassessment shall primarily be on the basis of risk evaluation through appropriate selection criteria.
2. In cases, where the importer has prior knowledge that there is a requirement of execution of Bond or Bank guarantee for the assessment of the said bill of entry, such as in the case of a warehouse bill of entry or where the importer has sought provisional assessment or where a claim to any concessional rate of duty or exemption under duty remission/exemption schemes, is subject to filing of Bond/ Bank Guarantee, they should be encouraged to opt for Continuity Bond option, to avoid fresh registration of Bonds every time during filing of the bill of entry.
3. The bill of entry would be assigned to an officer of the concerned Faceless Assessment Group for verification of assessment purposes by the Customs Automated System.
4. For verification of assessment of the bill of entry, the Faceless Assessment Group may decide to:

• return the bill of entry to the importer for payment of duty after verification on the basis of the declaration made and documents available in e-Sanchit; or
• seek additional information or documents for proceeding with the verification; and/or
• get examination and/or testing of goods carried out, for the determination of duty liability and/or for ensuring the compliance of restriction and prohibition;

5. Where the Faceless Assessment Group is of the opinion that additional information or documents are required for proceeding with the verification of assessment, the Faceless Assessment Group shall raise query electronically for additional information or seek additional documents, preferably in a consolidated manner, through ICEGATE portal. The importer shall respond to the query electronically and/or provide additional  documents through e-Sanchit. After scrutinising the same, the Faceless Assessment Group shall:

1. Return the bill of entry to the importer for payment of duty after verification; or
2. Not agree with the self-assessment and re-assess the bill of entry. In this case, if the importer does not agree with the re-assessment, the Faceless Assessment Group shall issue a speaking order, as prescribed in Section 17(5) of the Customs Act, 1962 following the procedure referred to in paragraph 5.4 of this instruction.

6. The Faceless Assessment Group may, whether in course of accepting the self- assessment or re-assessing the bill of entry, order for second check examination of the goods including the directions to the shed officers at the port of import to verify original documents, deface documents, take custody of the document, NOC from PGAs, verification of Country of Origin Certificate etc. Further, it is clarified that, wherever situation warrants that the authenticity of any document submitted through e-Sanchit has to be verified through any external agency, such communication shall be made by the port of import.

7. Where the Faceless Assessment Group is of the opinion that examination and/or testing of goods is required for proper verification of the assessment, based on own assessment or on the request from importer:

• The Faceless Assessment Group may order for first check examination or testing of the goods with specific directions or testing parameters to the shed officers at the port of import. The responsibility for sending the samples to the appropriate laboratory with the requisite test memo, if ordered by Faceless Assessment Group would lie with the shed officers at the port of import.
• The shed officers/Centralised Cell, as the case may be at the port of import would feed the examination and/or the test report, when it is received from the laboratory, in the system and refer the bill of entry back to Faceless Assessment Group, and thereupon, Faceless Assessment Group shall follow the procedure as laid down in paragraph (IV) to (VI) of 5.3.1, as applicable.
• If the Faceless Assessment Group concludes that the prior testing of goods is going to take considerable time and the bill of entry should be assessed provisionally, they may refer the bill of entry to the PAG at the port of import, following the procedure stipulated in 5.3.2 and clearly specifying the reasons thereof. In such cases, the bill of entry would be assessed by PAG at the port of import, after the receipt of the examination/test report.
• If the imported goods are found to be subject to some restriction or prohibition or mis-declared, on the basis of said test and/or examination report fed by the shed officers at the port of import, the Faceless Assessment Group shall refer the bill of entry to PAG at the port of import for action including action under Section 124 of the Customs Act, 1962.
• It is clarified that, irrespective of pending verification at Faceless assessment Group, if the importer requests for storage of the imported goods in warehouse pending clearance under Section 49 of the Customs Act, 1962, such request shall be processed by officers of the port of import promptly.

8. The shed officers at the port of import would carry out the necessary verification or examination or other tasks, as required by the Faceless Assessment Groups or required as per Compulsory Compliance Requirements of the Risk Management System.

9. Any time after the bill of entry is returned from Faceless Assessment Groups to the port of import, if the import of goods are found to be subject to some restriction or prohibition or misdeclared, PAG may carry out re-assessment and initiate action as prescribed under section 124 of the Customs Act, 1962, if required.

1.3.2 Procedure to be Adopted by Faceless Assessment Groups in Exceptional Circumstances. 

• In certain exceptional circumstances (listed below) the proper officer of the Faceless Assessment Groups may, with the approval of a senior officer not below the rank of Joint Commissioner/Additional Commissioner, transfer the bill of entry using the Customs Automated System to PAG at the port of import for assessment, without completion of verification of assessment. The Faceless Assessment Groups may also transfer a bill of entry to the PAG in any other exceptional circumstances, but in this case, this would be done after due approval from the Commissioner supervising the proper officer.
• Where the Faceless Assessment Groups has reasons to believe that the imported goods may be liable for confiscation as per the provisions of Section 111 of the Customs Act, 1962. In such circumstance, the reasons for such a transfer shall be duly recorded in the Customs Automated System. However, such cases may be referred to only in genuinely exceptional circumstances.
• In respect of `related party` transactions warranting investigation by SVB (other than cases that are already covered by an earlier order of the SVB such as in the case of continuing imports which have earlier been taken up for investigation by the SVB). In this case the port of import would refer the case to its jurisdictional Special Valuation Branch (SVB) for further investigation.
• Even after various several electronic query-based interactions with importer, the Faceless Assessment Groups is not able to complete the verification for want of additional documents, test reports etc.

1.3.3 Procedure to be Adopted by Port of Import in Exceptional Circumstances. 

Notwithstanding anything mentioned above, the Principal Commissioner/Commissioner of Customs at port of import may, at any stage pending at Faceless Assessment Groups, direct the PAG to pull the bill of entry from Faceless Assessment to the PAG  in the following situations:

1. Where specific alert or intelligence is available pertaining to the said bill of entry or class of bill of entry; and
2. Where the Principal Commissioner/Commissioner of Customs has ordered to do so for the reasons to be recorded in writing.

Annexures A and B outline the flow of bills of entry covered under Faceless Assessment. 

1.4 Speaking Order: 

1. For any re-assessment done by the Faceless Assessment Group, which is at variance with the self-assessment done by the importer and in cases other than those where the importer confirms his acceptance of the said re-assessment electronically in reply to the query raised by the assessing officer, the Faceless Assessment Groups shall pass a speaking order on the re-assessment, within fifteen days from the date of re-assessment of the bill of entry, as prescribed in section 17(5).
2. The Faceless Assessment Groups shall provide an opportunity to be heard to the importer, in accordance with the principles of natural justice, before proceeding with the re-assessment of the bill of entry. In the event a personal hearing is sought by the importer, the same can be conducted through video conferencing or other reliable technological means at the option of the importer.  In this regard, the Board’s guidelines vide F.No. 390/Misc/3/2019-JC dated 27th April 2020 may also be referred to.

1.5 Appellate Proceedings

Any appeal against any speaking order on re-assessment passed by Faceless Assessment Groups shall lie before the Commissioner (Appeals) as per Notification No.51/2020-Customs (N.T.) dated 05.06.2020. Thus, an appeal against an order passed by the proper officer of the Faceless Assessment Group as per Section 17(5) and/or Section 18, would lie with the Commissioner of Customs (Appeals) having jurisdiction over the port of import.

1.6 Review Proceedings

The review of any speaking order on re-assessment passed by a proper officer of Faceless Assessment Groups, under sub-section (2) of Section 129D of the Customs Act, 1962, shall lie with the reviewing authority having administrative control over that proper officer of the Faceless Assessment Group.

1.7 Demands under Section 28 of the Customs Act, 1962 

Issuing of demands under Section 28 of the Customs Act, 1962, adjudication thereof and handling of audit objections shall be done by the officers of the port of import. In matters where clarifications and inputs are required to be given by the Faceless Assessment Groups to port of import in such matter, the nodal Commissionerates as in para 4 above shall co-ordinate with the ports of import.

1.8 Provisional Assessment 

1. If the requisite approval for provisional assessment as per the Customs Act, 1962 and departmental guidelines has already been obtained, the Faceless Assessment Group may assess the bill of entry provisionally. The bond and bank guarantee for the same are to be registered with the Turant Suvidha Kendra at the port of import, as referred to in paragraph 5.2.2 of this instruction.
2. If the Faceless Assessment Group concludes that the prior testing of goods is going to take considerable time and the bill of entry should be assessed provisionally, they may refer the bill of entry to the PAG at the port of import, following the procedure stipulated in 5.3.2 and clearly specifying the reasons thereof. In such cases, the bill of entry would be assessed by PAG at the port of import, after the receipt of the examination/test report.
3. After receipt of the required test reports etc from the shed officers at the port of import, the finalisation of provisional assessment shall be done by the officers of PAG of the port of import.

1.9 Amendment of Bills of Entry 

1. Directorate General of Systems has enabled a facility whereby requests for amendments can be made online via ICEGATE Portal.
2. Once the amendments are filed online, System would queue them before the proper officer of the Faceless Assessment Group if the bill of entry is pending for verification. In all other cases, the request would be queued to the proper officer of the Port Assessment Group.
3. The facility of online levy of Amendment fees as per Levy of Fees (Customs Documents) Regulations, 1970 has also been enabled. The applicable fee would be included in the duty challan for payment.
4. Requests for amendments as per Section 149 of the Customs Act, 1962, and requests after the bill of entry has been returned for payment by the Faceless Assessment Group shall be processed by the port of import.

1.10  Exchange of communication exclusively by electronic mode and authentication of electronic records: 

1. For the purposes of Faceless Assessment, all communications between the Faceless Assessment Group and the importer shall be exchanged exclusively by ICEGATE ; and
2. All internal communications between the Faceless Assessment Groups and the officers at the port of import or Turant Suvidha Kendra shall be exchanged exclusively via electronic mode.
3. DG Systems shall enable above changes for implementing Faceless Assessment in the Customs Automated System and communicate the changes by way of detailed Advisory to the concerned field formations.
4. As Faceless Assessment is a major innovation it is important to ensure its smooth implementation. Therefore, feedback on the implementation may be sent to Board to dor@gov.in and system related issues to team.ices@icegate.gov.in.
5. Any difficulties, in this regard, may please be brought to notice of the Board.

RBI announces creation of Payments Infrastructure Development Fund

The Reserve Bank of India (RBI) announces creation of a Payments Infrastructure Development Fund (PIDF) to encourage acquirers to deploy Points of Sale (PoS) infrastructure (both physical and digital modes) in tier-3 to tier-6 centres and north eastern states.   Over the years, payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc. To provide further fillip to digitisation of payment systems, it is necessary to give impetus to acceptance infrastructure across the country, more so in underserved areas.   The Reserve Bank will make an initial contribution of ₹250 crores to the PIDF covering half the fund and remaining contribution will be from card issuing banks and card networks operating in the country. The PIDF will also receive recurring contributions to cover operational expenses from card issuing banks and card networks. The Reserve Bank will also contribute to yearly shortfalls, if necessary.

ITR 1 and ITR 4 available for E filing AY 2020-21

ITR-1:- For individuals being a resident (other than not ordinarily resident) having total income up to Rs.50 lakh, having Income from Salaries, one house property, other sources (Interest, etc.), and agricultural income up to Rs.5 thousand and Not for an individual who is either Director in a company or has invested in unlisted equity shares.

ITR-4:- For individuals, HUFs and Firms (other than LLP) being a resident having total income up to Rs.50 lakh and having income from business and profession which is computed under section 44AD, 44ADA or 44AE and not for an individual who is either Director in a company or has invested in unlisted equity shares.

Details Changes in ITR 4

1. A taxpayer who has a brought forward/carry forward loss from ‘Income from house property’ cannot use ITR-4 to file his income tax return for FY 2019-20 onwards.

2. In case the house property is rented out, the taxpayer will have to provide the name and PAN or Aadhaar of the tenant in the ITR-4.

3. A new disclosure has been added to Part A- General Information of ITR-1. Here, a taxpayer will have to disclose whether he/she has a valid Indian passport. If yes, he/she will have to provide the passport number.

4. The additional details required by the income tax department from the taxpayers using ITR-4 in FY 2019-20 are as follows: Has the taxpayer deposited an amount or aggregate of amounts exceeding Rs 1 crore in one or more current account during the previous year? If yes, the amount has to be reported. Has the taxpayer spent an amount or aggregate of the amount exceeding Rs 2 lakh for travel to a foreign country for himself/herself or for any other person? If yes, the amount has to be reported. Has the taxpayer incurred an expenditure exceeding Rs 1 lakh on the consumption of electricity during the previous year? If yes, the amount has to be reported.

5. In case ITR-4 is being filed by a representative, Aadhaar number of the representative is required to be provided in ITR-4 from FY 2019-20 onwards.

6. The taxpayers using ITR-4 will also have to disclose the following additional details in Part A- General information: Whether the taxpayer is a partner of a firm? If yes, he will have to furnish the name and PAN of the firm. Details of partners of the firm such as name, address, percentage of share in the firm, PAN, aadhaar number, rate of interest on capital and remuneration paid/payable.

7. The ‘Nature of Employment’ has been moved from the Part A- General Information to B1 of Part B- Salary Schedule of ITR-4.

8. The ‘Financial particulars of the business’ section of the ITR-4 has been replaced by “Particulars of cash and bank transactions relating to presumptive business”. Under this tab, the taxpayer will have to enter the opening balance of cash and bank (aggregate of all bank accounts), receipts during the year, and payments or withdrawals made in the previous year.

9. A separate column has been introduced under ‘Income from other sources’ for deduction u/s 57(iv) – in case of interest received on compensation or enhanced compensation under section 56(2)(viii)