Published by compdiskinc on April 25, 2017

Legal Update Circiriars/Notifications

Given below are the important Circulars and Notifications issued by the CBDT, CBEC, MCA., RBI, SEBI and IRDA during the last month for information and use of members.] Readers are requested to use the citation/website or weblink to access thefull text of desired circular/notification. You are requested to please submit your feedback and suggestionsi on the column at eboard@icai.in

  1. Rule 12CA on “Statement under section 115UA(4)” requires:NOTIFICATIONS
  2. Statement under Section 115UA(4)-lnsertion of Rule 12CA and introduction of new Form Nos. 64A and 64B The Finance (No. 2) Act, 2014 inserted new chapter XII-FA containing the special provisions relating to business trusts. Section 115UA provides for tax on income of unit holder and business trust. Section 115UA(4) provides that any person responsible for making payment of the income distributed on behalf of a business trust to a unit holder shall furnish a statement to the unit holder and the prescribed authority, within such time and in such form and manner as may be prescribed, giving the details of the nature of the income paid during the previous year and such other details as may be prescribed. In exercise of the powers conferred by Section 295 read with section 115UA(4), the Central Board of Direct Taxes, has inserted Rule 12CA (along with Form No. 64A and Form No. 64B), which shall come into force from the day of their publication in the Official Gazette.
  • the statement of income distributed by a business trust to its unit holder to be furnished electronically under digital signature to the Principal Commissioner or the Commissioner of Income-tax within whose jurisdiction the principal office of the business is situated in Form No. 64A, duly verified by an accountant, by the 30th November of the financial year following the previous year during which such income is distributed.
  • the statement of income distributed by a business trust to its unit holder to be furnished to the unit holder in Form No. 64B, duly verified by the person distributing the income on behalf of the business trust in the manner indicated therein, by 30th June of the financial
    year following the previous year during which the income is distributed.
  • the Director General of Income-tax (Systems)! to specify the procedure for filing of Form Nod 64A and shall also be responsible for evolving^ and implementing appropriate security^ archival and retrieval policies in relation to the statements so furnished.

[Notification No. 3/201S, dated 19-01-2015]

  1. Section 80C of the Income-tax Act, 1961 – Notified plan under Section 80C(2)(viii) for deductions from total income

Section 80C provides for deduction from gross total income in respect of sums paid and investments] made through specified modes like life insurance] premia, deferred annuity etc. Under clause (viii) of Section 80C(2), deduction is available in respect of sums paid or deposited in the previous year by the assessee as subscription to any such deposit scheme that the government may specify by notification in the official gazette. Accordingly, in exercise of the powers conferred by Section 80C(2)(viii) of the Income-tax Act, 1961, the Central Government has specified the scheme for Girl child named ‘Sukanya Samridhhi Account’ for the purpose of said section which shall come into force with effect from the date of its publication in the Official Gazette.

Further, the Finance Minister has, vide Office Memorandum, dated 20.1.2015, decided to allow 9.1% rate of interest on investments in the said scheme during the Financial Year 2014-15.

[Notification No. 9/2015, dated 21-1-2015]

  1. Agreement for avoidance of double taxation and prevention of fiscal evasion with South Africa – Amendment in Notification No. GSR 198(E), dated 21-4-1998

In exercise of the powers conferred by Section 90 of the Income-tax Act, 1961, the Central Government had notified that all the provisions of the protocol amending the agreement between the Government of the Republic of India and the Government of the Republic of South Africa for the avoidance

 

Legal Update


 

 

of double taxation and the prevention of fiscal evasion with respect to taxes on income, which was signed in Pretoria on the 26.07.2013, shall be given effect to in the Union of India with effect from the 26.11.2014.

[Notification No. 10/2015, dated 2-2-2015]

  1. Income-tax (Second Amendment) Rules, 2015 -Safe Harbour Rules for Specified Domestic Transactions- Government company engaged in business of generation, transmission and distribution of electricity In exercise of the powers conferred by Section 92CB and 92D read with Section 295 of the Income-tax Act, 1961, the Central Board of Direct taxes has, through this notification, amended Rules 10D, IOTA and inserted Rules 10TH, 10THA, 10THB, 10THC, 10THD and Form No. 3CEFB to provide the following:
  • Sub-Rule (2A) has been inserted in Rule 10D to provide that an eligible assessee, a person who has exercised a valid option for application of safe harbour rules and is a Government Company engaged in the business of generation, transmission or distribution of electricity, shall keep and maintain the information and documents specified therein.
  • The heading “Safe Harbour Rules for International Transactions” shall be substituted under Rule 10T for the heading “Safe Harbour Rules”.
  • Further, “Safe Harbour Rules for Specified Domestic Transactions” has been notified through the following rules:
  • The word “Appropriate Commission” and “Government Company” has been defined under rule 10TH.
  • ‘Eligible assessee’ has been defined under rule 10THA to mean a Government Company engaged in the business of generation, transmission or distribution of electricity and has exercised a valid option of safe harbor rules.
  • Rule 10THB defines an ‘eligible specified domestic transaction’ to mean a specified domestic transaction, which comprises of supply of electricity by generating company or transmission or wheeling of electricity.
  • Rule 10THC provides that the transfer price declared by the assessee, in respect of eligible specified domestic transaction entered by him, shall be accepted by the

income-tax authorities, if it is in accordant with the rules specified therein.

  • Rule 10THD provides the procedure I be followed for the purpose of exercisii the option for safe harbour for which tl application shall be furnished in Form Ni 3CEFB.

[Notification No. 11/2015, dated 4-2-20U

The complete text of the above Notification can be downloaded from the link: http://wwi incometaxindia.gov.in/Pages/communicatiom notifications.aspx

  1. CIRCULARS
  2. Explanatory Notes to the provisions of the Finance] (No. 2) Act, 2014

This circular contains the Explanatory notes t the provisions of the Finance (No. 2) Act, 201 as assented by President on 6th August, 2014 This circular, thus, explains direct tax provisions contained in the Finance (No. 2) Act, 2014.

[Circular No. 1/2015, dated 21-01-20151

  1. Chargeability of Interest under Section 234A of the Income-tax Act, 1961 on self assessment tax paid before the due date of filing of return of income Interest under Section 234A is charged in case of default in furnishing return of income by an assessee. The interest is charged at the specified rate on the self] assessment tax which is the amount of tax payable on total income as reduced by the amount of advance tax, TDS/TCS, any relief of tax, deductions, and tax credit allowed under the Act Since self-assessment tax is not mentioned as a component of tax to be reduced from the amount on which interest under Section 234A of the Act is chargeable, interest is being charged on the amount of self-assessment tax paid by the assessee even before the due date of filing of return.

However, it has been held by the Hon’ble Supreme Court in the case of CIT vs. Prannoy Roy, 309 ITR 231 (2009) that the interest under section 234A shall be payable only on the amount of tax that has not been deposited before the due date of filing of the Income-tax return for the relevant assessment year.

Accordingly, the CBDT reviewed the present practice of charging interest and decided that no! interest under Section 234A shall be charged on self I assessment tax paid before the due date of filing of I return.

[CircularNo. 2/2015, dated 10-2-2015]\


Legal Update


 

 

  1. \Clarification regarding ‘Amounts not deductible’ under Section 40(a)(i) of the Income-tax Act, 1961 If there has been a failure in deduction or in payment of tax deducted in respect of any interest, royalty, fees for technical services or other sum chargeable under the Act either payable in India to a non-resident (not being a company)/a foreign company or payable outside India, then disallowance of the related expenditure/payment is attracted under Section 40(a) (i) while computing income chargeable under the head “profit and gains of business or profession”. This circular clarifies the doubts which have been raised about the interpretation of the term ‘other sum chargeable’ e. whether this term refers to the whole sum being remitted or only the portion representing the sum chargeable to income-tax under the Act.

In its Instruction No. 2/2014, dated 26.02.2014 the Central Board of Direct Taxes has clarified that the Assessing Officer shall determine the appropriate portion of the sum chargeable to tax as mentioned in Section 195(1), to ascertain the tax
liability on which the deductor shall be deemed to be an assessee in default under Section 201, in cases where no application is filed by the deductor for determining the sum so chargeable under Section 195(2).

In this circular, the CBDT has, in exercise of its powers under Section 119, clarified that for the purpose of disallowance of ‘other sum chargeable’ under Section 40(a)(i), the appropriate portion of the sum which is chargeable to tax shall form the basis of disallowance. Further, the appropriate portion shall be determined by the Assessing Officer having jurisdiction for the purpose of Section 195(1). Also, where the determination of ‘other sum chargeable’ has been made under sub-Section (2), (3) or (7) of Section 195 of the Act, such determination will form the basis for disallowance, if any, under Section 40(a) (0-

[Circular No. 3/2015, dated 12-02-2015]

The detailed circulars can be downloaded from the link: http://www.incometaxindia.gov.in/Pages/ communications/circulars.aspx

Legal Update


SCNs Adjudicating Authority
All cases where the duty involved is more than ? 5 crore ADG (Adjudication) of DGCEI
Pertaining to jurisdiction of one executive Commissioner of Central Excise The Jurisdictional Executive Commissioner
Pertaining to jurisdiction of multiple Commissionerates Commissioner in whose jurisdiction the noticee from whom the highest demand of duty has been made falls.

 

  • INSTRUCTIONS
  1. Acceptance of Order of High Court of Bombay in case of Vodafone India Services Pvt Ltd.

The High Court of Bombay, in Vodafone India Services Pvt. Ltd. for A.Y. 2009-10 (WP No. 871/2014), held that the premium on share issue was on account of a capital account transaction and does not give rise to income and, hence not liable to transfer pricing adjustment. The CBDT has, through, this instruction informed all Principal CCITs/ DsGITs and CCsIT/DsGIT that it has accepted the decision of the Bombay High Court in said Writ petition and directed that the ratio decidendi of the judgement must be adhered to by the field officers in all cases where this issue is involved. The Board has also instructed that this may also be brought to the notice of the ITAT, DRP’s and CsIT (Appeals).

[Instruction No. 2/2015, dated 29-1-2015] The complete text of the above Instruction can be downloaded from the link: http://www. incometaxindia.gov.in/Pages/communications/ circulars.aspx

(Matter on Indirect Taxes has been contributed by the Indirect Taxes Committee of the ICAI)

  1. EXCISE
  2. Issue of summons in Central Excise and Service Tax matters CBEC vide Instruction F. No 207/07/2014- CX-6 dated 20.01.2015 has further streamlined the process of issuance of summons:
  3. Summons need not always be issued when a simple letter, politely worded, can also serve the purpose of securing documents relevant to the investigation. Further, it is emphasised that the use of summons be made only as a last resort when it is absolutely required.
  4. Summons by Superintendents should be issued after obtaining prior written permission from an officer not below the rank of Assistant Commissioner with the reasons for issuance of summons to be recorded in writing.

Due to operational reasons it is not possible to obtain written permission; oral/telephonic permission must be obtained and the same should be reduced to writing and intimated to
the officer according such permission at the earliest opportunity.

  • In all cases, where summons are issued, the officer issuing summons should submit a report and submit the same to the officer who has authorised the issue of summons.
  1. CEO, CFO, General Managers of a large company or a PSU should not be issued summons at the first instance and should be summoned only when there are indications of involvement in the decision making process which lead to loss of revenue.

It may be noted that the aforesaid Instruction has been issued to remove the hardship faced by the assesse in pursuance of circular no. F. No 208/122/89-CX.6 dated 13.10.1989 in respect of central excise and F. No. 137/39/2007-CX.4 dated 26.2.2007 in Service tax.

[Instruction F. No 207/07/2014-CX-6 dated 20th January, 2015]

  1. Adjudication of Central Excise and Service Tax Cases booked by DGCEI

CBEC vide Circular No. 994/01/2015-CX dated February 10, 2015 has specified the cases to be adjudicated by the ADG (Adjudication) of . The Directorate General, Central Excise Intelligence (DGCEI) and jurisdictional Central Excise officers in the following manner:

Cases to be adjudicated by the officers below the rank of Commissioner shall be adjudicated only by the field officers in the executive Commissionerates. The guidelines shall apply mutatis mutandis to the Service Tax cases booked by DGCEI.

[Circular No. 994/01/2015-CX, Dated: February 10,2015]


Legal Update

 

 

 

  1. Introduction of Taxpayers Day – an initiative towards better governance

Central Government, in order to ensure good governance, to further simplify and modernise the tax system, expand the tax base and improve compliance, has decided that one day of the week, viz., Wednesday (9 AM to 1 PM) will be designated as Taxpayers’ day wherein Heads of all offices in the field will meet the taxpayers without any prior appointment in order to address their grievances expeditiously.

[Instruction F. No. 296/267/2014-CX-9 dated 7th January 2015]

  1. CUSTOMS
  2. Enhancement of limit to carry Indian Currency from/to India

CBEC vide Circular No. 03/2015-Customs, Dated: January 16, 2015 has directed its officers to adhere with RBI A. P. (DIR series) Circular No. 146 which enhanced the limit, to take/bring Indian currency from/into India, to ?25000/- per person from earlier
limit of ? 10,000/- per person. This limit does not apply in case of Nepal and Bhutan.

[Circular No.03/2015-Customs, Dated: January 16,

2015]

  1. Power of officer has been modified in case of re­export of goods imported under bona-fide mistake With a view to expedite decision-making in respect of re-export of imported goods destined for elsewhere but which are inadvertently imported at a particular Customs station, CBEC vide Circular No. 04/2015-Customs, Dated: January 20, 2015 has modified the earlier Circular to provide that the permission for re-export may be granted on merit by the Customs Officers concerned in accordance with their powers of adjudication.

Earlier the permission for re-export of goods that are shipped contrary to instruction of the importer was granted only by Commissioner of Customs.

[Circular No. 04/2015-Customs, Dated: January

20,2015]


 

 

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Legal Update

 

 

 

S. No. Country Earlier Notification No.
1. Singapore Notification No. 10/2008-Customs, dated the 15th January, 2008
2. Korea Notification No. 152/2009-Customs, dated the 31st December, 2009
3. Malaysia Notification No. 53/2011-Customs, dated the 1st July, 2011
4. ASEAN Notification No.

46/2011-Customs, dated the 1st June, 2011

 

S. No. Country Earlier Notification No.
5. Japan Notification No.

69/2011-Customs dated the 29* July, 2011

 

[Notification No. 01/2015-Cus., Dated: January 05, 2015; Notification No. 36/2014-Customs,
Dated: December 29,2014; Notification No. 37/2014-Customs, Dated: December 29, 2014; Notification No. 38/2014-Customs, Dated: December 29, 2014; Notification No. 39/2014-Customs, Dated: December 29, 2014]
  1. Duty Drawback – Revised All Industry Rate

The Central Board of Excise and Customs has revised All Industry Rates of Duty Drawback with effect from 13th February 2015 vide Notification Nos. 20/2015-Customs (N.T.) & 21/2015-Cus., (N.T.), both dated: February 10, 2015. The revised schedule, notes & conditions and the other details can be viewed in the Notification.

[Circular No. 6/2015-Customs dated February 11, 2015; Notification Nos. 20/2015-Customs (N. T.) and 21/2015-Cus., (N.T.), Dated: February 10, 2015]

  1. Customs Ports/lnland Container Depot (ICD)

Notified by CBEC

CBEC has notified the following two ports for the purpose specified against them:

S. No. Port Purpose
T. Panaji (3)-Port Unloading of imported goods and loading of export goods or any class of such goods
2. Hindaun City, District Karauli, Rajasthan, ICD Unloading of imported goods and loading of export goods
[Notification No. 14/2015-Customs (NT), Dated: January 28, 2015 and Notification No. 19/2015-
Cus., (N.T.), Dated: February 9, 2015]

 

  1. Amendments made in Preferential Trade Agreements/Comprehensive Economic Cooperation Agreement with various Countries.

CBEC has made amendments in the Notifications describing the Preferential Trade Agreements entered with the following countries effective January 2015:

  1. VALUE ADDED TAX Rajasthan VAT
  2. Submission and Correction of PAN data on rajtax web portal.

Circular No. 19 F.16 (9S)Tax/CCT/14-15/1072 Dated 6th February, 2015 provides that dealers are required to submit or correct their PAN details at http://rajtax.gov.in. Further, Dealers whose PAN is not available or is not validated by Income Tax data base, shall be requested to submit Form VAT-05 for amendment with regard to PAN. Dealers may refer a hand book on Process for Application of PAN submission/correction provided in user guide under e-services guidelines on rajtax web portal.

[Circular No. 19 F.16 (9S)Tax/CCT/14-15/1072 Dated 6°’ February, 2015]

  1. E-facility to apply online for closure of business by Dealer

A facility to apply online for closure of business in Form VAT-06A has been provided at: http://rajtax. gov.in.The dealer shall have to enter mandatory details in the form after mentioning date and reason for closure of business and details of closing stock etc.

[Circular No. 20 F.16 (9S)Tax/CCT/14-15/1081 Dated 6th February, 2015]

  1. Introduction of Amnesty Scheme

Notification No. F. 12 (16) FD/TAX/2009-188- Dated 9th February, 2015 has notified Amnesty scheme-2015 for waiver of interest and penalty to some extent. The salient features of the scheme are as follows:

♦ The Scheme shall remain up to 31st March, 2015.

 

Legal Update

 

 

 

Now every registered dealer shall furnish self- assessed return in Form VAT-XV in the following manner:-

Sr.

No.

Gross Turnover Time for filing return
1 Up to ? 1 Crore Within 40 days from the end of each quarter
2 Exceeding ? lCrore but not exceeding X 5 Crore Within 45 days from the end of each quarter
3 Exceeding ? 5 crore shall furnish return monthly within forty five days from the expiry of each month of a financial year;

 

  • It applies to dealer or person against whom total outstanding demand of sales tax/vat is up to rupees five Crore.
  • The demand must be created on or before 31st March, 2011 or is under dispute on or before 31st December, 2013.
  • The scheme benefits in regards to waiver/ reduction of interest and penalty have been divided into 3 categories such as demand related to evasion of tax, interest and others.

For more information about terms & conditions and procedures in Form AS-1 and Form AS-2 in regards to amnesty scheme the notification can be viewed.

[Notification No. F. 12 (16) FD/TAX/2009-188- Dated 9th February, 2015]

Himachal Pradesh

  1. Time limit for filing of VAT return amended Notification No. EXN-F(10)-7/2011-Vol.I Dated 30th January, 2015 has amended Rule 40(1) of Himachal Pradesh Value Added Rule, 2005.

Further, in case of dealer for whom the return period has been fixed by the assessing authority under Rule 40(3), are required to submit the return within 45 days from the closure of each month.

[Notification No. EXN-F(10)-7/2011 -Vol.I Dated

30th January, 2015]


 

 

 

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Legal Update

 

 

 

Delhi VAT

  1. Date of Filing of reconciliation return in form 9 extended to 31st March, 2015

Circular No. 26 of 2014-15 No.F.7(420)/VAT/ Policy72011/PF/761-767 Dated 16th February, 2015 extends the date of filing of online return in form 9, containing details of interstate sale at concessional rates against statutory forms C/F/H, to 31/03/2015.

[CircularNo. 26 of 2014-15No.F.7(420)/VAT/ Policy/2011/PF/761-767Dated 16th February, 2015]

Assam VAT

  1. E- filing of details in transportation of goods Notification No. LGL.6/2003/108-Dated 6th February, 2015 has inserted a new sub-Section (3A) in Section 75 which provides that the owner of any goods or the transporter of such goods or the person in-charge of the goods vehicle carrying such goods shall also furnish relevant information in the electronic format online as may be prescribed.

Further a new clause (aa) has inserted in Section 77 (2) which provides that where any taxable goods are consigned by railway, river, air or post from a place outside the state for delivery to a dealer inside the state, the importer shall not obtain or cause to be obtained delivery thereof unless he files details of vehicle, consignment and statutory form online in advance before the goods carrying vehicle reaches delivery point.

[Notification No. LGL.6/2003/108 – Dated 6th February, 2015]

Andhra Pradesh VAT

  1. Guidelines issued regarding conducting of Audit and Assessments in Rule 59 of APVAT Rules, 2005.

Circular CCT’s Ref. No.                                 Enft/E3/716/2014

Dated: 11th February, 2015 provides guidelines in respect of VAT Audits and Assessments for allocation/selection of the cases for audit by the officer in charge.

[Circular CCT’s Ref. No. Enft/E3/7 16/2014 Dated:

11th February, 2015]

  1. Purchase/sale details are required to be provided along with Return.

Notification No. GOMS. No. 26 Dated: 05th February, 2015 Provides that details of purchases from registered VAT dealers in Annexure-I and sales to
registered VAT dealers in Annexure-11 has to beH submitted along with the Tax return. The detailsH procedure in this regard can be viewed in theH Notification.

[Notification No. GOMS. No. 26 Dated: 05£/iB February, 2015]I

(Matter on FEMA has been I contributed by CA. Manoj Shah I and CA. Hinesh Doshi)

  1. Overseas Direct Investments by! proprietorship concern/unregistered I partnership firm in India Notification No. FEMA.325/RB-2014 dated November 12, 2014 and A. P. (DIR Series) Circular No.59 dated January22,2015

Keeping in view the changes in the definition/11 classification of the exporters as per the Foreign I Trade Policy of the Ministry of Commerce and! I Industry it is decided to review the policy framework I for Overseas Direct Investments (ODI) by a I proprietorship concern/unregistered partnership I I firm in India. Accordingly following revised terms I and conditions are required to be complied with for I considering the proposal of ODI, by a proprietorship I concern/unregistered partnership firm in India, by I the Reserve bank under approval route:

  1. The proprietorship       concern/unregistered I

partnership firm in India is classified as ‘Status Holder’ as per the Foreign Trade Policy issued I by the Ministry of Commerce and Industry, Government of India from time to time.

  1. The proprietorship       concern/unregistered

partnership firm in India has a proven track record i.e. export outstanding does not exceed 10% of the average export realisation of the I preceding three years and a consistent high I I export performance.

  1. The Authorised Dealer is satisfied that ■ proprietorship concern/unregistered firm ■ is a KYC (Know Your Customer) compliant, ■ engaged in the business and has turnover as I indicated.
  2. The entity has not come under adverse notice I of any government agency and does not appear ■ in exporter’s caution list of the Reserve Bank or ■ in defaulters list of the banking system in India, I and
  3. The amount of proposed investment outside 11 India does not exceed 10 percent of the average 11

 

Legal Update

 

 

 

Delhi VAT

  1. Date of Filing of reconciliation return in form 9 extended to 31st March, 2015

Circular No. 26 of 2014-15 No.F.7(420)/VAT/ Policy/2011/PF/761-767 Dated 16th February, 2015 extends the date of filing of online return in form 9, containing details of interstate sale at concessional rates against statutory forms C/F/H, to 31/03/2015.

[CircularNo. 26 of 2014-15No.F.7(420)/VAT/ Policy/2011/PF/761-767Dated 16th February, 2015]

Assam VAT

  1. E- filing of details in transportation of goods Notification No. LGL.6/2003/108-Dated 6th February, 2015 has inserted a new sub-Section (3A) in Section 75 which provides that the owner of any goods or the transporter of such goods or the person in-charge of the goods vehicle carrying such goods shall also furnish relevant information in the electronic format online as may be prescribed.

Further a new clause (aa) has inserted in Section 77 (2) which provides that where any taxable goods are consigned by railway, river, air or post from a place outside the state for delivery to a dealer inside the state, the importer shall not obtain or cause to be obtained delivery thereof unless he files details of vehicle, consignment and statutory form online in advance before the goods carrying vehicle reaches delivery point.

[Notification No. LGL.6/2003/108 – Dated 6th February, 2015]

Andhra Pradesh VAT

  1. Guidelines issued regarding conducting of Audit and Assessments in Rule 59 of APVAT Rules, 2005.

Circular CCT’s Ref. No.                                Enft/E3/7 16/2014

Dated: 11th February, 2015 provides guidelines in respect of VAT Audits and Assessments for allocation/selection of the cases for audit by the officer in charge.

[Circular CCT’s Ref No. Enft/E3/7 16/2014 Dated:

11th February, 2015]

  1. Purchase/sale details are required to be provided along with Return.

Notification No. GOMS. No. 26 Dated: 05th February, 2015 Provides that details of purchases from registered VAT dealers in Annexure-I and sales to

registered VAT dealers in Annexure-II has to be submitted along with the Tax return. The details procedure in this regard can be viewed in the Notification.

[Notification No. GOMS. No. 26 Dated: 05th February, 2015]

(Matter on FEMA has been contributed by CA. Manoj Shah and CA. Hinesh Doshi)

  1. Overseas Direct Investments by ; proprietorship concern/unregistered partnership firm in India Notification No. FEMA.325/RB-2014 dated November 12, 2014 and A. P. (DIR Series) Circular No.59 dated January22,2015

Keeping in view the changes in the definition/ I classification of the exporters as per the Foreign I Trade Policy of the Ministry of Commerce and I Industry it is decided to review the policy framework I for Overseas Direct Investments (ODI) by a I proprietorship concern/unregistered partnership I firm in India. Accordingly following revised terms and conditions are required to be complied with for considering the proposal of ODI, by a proprietorship concern/unregistered partnership firm in India, by the Reserve bank under approval route:

  1. The                 proprietorship         concern/unregistered

partnership firm in India is classified as ‘Status Holder’ as per the Foreign Trade Policy issued by the Ministry of Commerce and Industry, Government of India from time to time.

  1. The                 proprietorship         concern/unregistered

partnership firm in India has a proven track record i.e. export outstanding does not exceed 10% of the average export realisation of the preceding three years and a consistent high export performance.

  1. The Authorised Dealer is satisfied that proprietorship concern/unregistered firm is a KYC (Know Your Customer) compliant, engaged in the business and has turnover as indicated.
  2. The entity has not come under adverse notice of any government agency and does not appear in exporter’s caution list of the Reserve Bank or in defaulters list of the banking system in India, and
  3. The amount of proposed investment outside j India does not exceed 10 percent of the average I

 

Legal Update

 

 

 

of last three years export realisation or 200 percent of the net owned funds of the entity, whichever is lower.

Necessary amendments to the Notification No. 120 have been issued vide Notification No. 325/RB- 2014 dated November 12,2014.

  1. Foreign Direct Investment-Review of FDI Policy (Sector Specific-Construction Development) Notification No. FEMA.329/RB-2014 dated December 8, 2014 and A.P. (DIR Series) Circular No. 60 dated January 22,2015

The extant FDI Policy for Construction Development sector has been reviewed and accordingly, effective from 3rd December 2014 100% FDI under automatic route shall be permitted in Construction Development sector subject to conditions specified in Press note No 10 (Series 2014) dated December 3,2014 issued by DIPP.

Reserve Bank has since amended the Principal Regulations through Foreign Exchange Management (Transfer or Issue of Security by a Person Resident
outside India) (Sixteenth Amendment) Regulations, 2014 notified vide Notification No. FEMA.329/2014- RB dated December 8,2014.

For detailed amendments, please refer the said notifications on RBI website available at: http://rbidocs.rbi.org.in/rdocs/notification/PDFs/ NT329FEM140115FN.pdf

  1. Depository Receipts Scheme Notification No. FEMA.330/RB-2014 dated December 15, 2014 and A.P. (DIR Series) Circular No. 61 dated January22,2014

A new scheme called ‘Depository Receipts Scheme, 2014’ (DR Scheme, 2014) for investments under ADR/GDR have been notified by the Central Government effective from December 15, 2014 which provides for repeal of extant guidelines for Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993 except to the extent relating to foreign currency convertible bonds.

 

 

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