Saturday, August 29, 2020

Import Details, Eligibility Details in GSTR-2B

The CBIC has announced through a Press Release on 29-Aug-2020 that details of import of goods and the IGST paid thereon, which reflects on the Bill of Entry, will now be displayed in a new table in the GSTR-2A. This information will be taken from the ICEGATE System of the Customs Department.

Currently, the table is displaying information up to 06-Aug-2020 as filed at computerized ports only. Import information for Bills of Entry filed at non-EDI ports and imports through courier may not be displaying currently.

Further, information in Form GSTR-2B is also being made available on the GST portal, which shall display eligibility or ineligibility for ITC of all inputs that may be filed by a person's vendors/suppliers in their GSTR-1/GSTR-5/GSTR-6. This shall be available as static information on the 12th of every month after the respective filing has been completed by the suppliers on the due dates.

To access your GSTR-2B: Login to GST Portal > Returns Dashboard > Select Return period > GSTR-2B

It is recommended that you download your GSTR-2B and reconcile it with your ITC Register.

Tuesday, August 25, 2020

Labor Law Compliance in Haryana

The Haryana Labor Department's Portal can be accessed here. Your establishment should create an account on this portal for all eligible filing under various applicable laws online, and to access the latest notifications in their regard. The Ministry of Labor & Employment also has a Shram Suvidha Portal for all necessary information.

Applicability - For salaried employees with Basic Salary + Dearness Allowance less than Rs.15,000 per month, it is mandatory to open a PF account through the employer. Establishments with 20 employees or more are mandatorily required to register for the EPF scheme. Others can register voluntarily. Employees drawing a salary higher than Rs. 15,000 per month can also register voluntarily.

The employer's contribution is calculated as 12% of  Basic + DA. An equal amount is contributed by the employee as well. Out of the employer’s contribution of 12%, 8.33% is directed to Employees’ Pension Scheme. This amount is calculated on the salary of Rs 15,000. Thus, for every employee receiving a Basic amount equal to Rs 15,000 or more, Rs 1,250 each month is invested into EPS. The amount in addition to 8.33% is retained by the EPF scheme. On retirement, the employee receives his entire share plus the share retained to his credit. 

Registration - Online on the EPF Portal. The process for registering is given here and here. Employees have to obtain a UAN through their employers, which is their registration number with the EPF Scheme.

Returns - The amount is paid monthly before the 15th of the subsequent month through a challan online on the portal after logging in.

Forms - All other forms and processes are given on the official EPF website.

Penalty - Late payment invites interest @ 12% p.a. for every single day of delay. Further, penalty from 5% to 25% may be levied depending on the number of months of delay.

Monday, August 24, 2020

Application to ROC for Extension of AGM (Form GNL-1)

We have drafted an application format for filing in Form GNL-1 with the ROC so as to seek an extension for holding the AGM in case your company's financial statements are not prepared to be signed in September, 2020 due to delays that may be attributed to the coronavirus spread. We had written about it here. This has to be filed in e-Form GNL-1.



The Registrar of Companies (RoC) 

NCT of Delhi & Haryana

Subject: Request for Extension of Annual General Meeting 2020

Dear Sir/Mam,

The ___th Annual General Meeting of the Members of the Company in respect of the year ended on 31st March, 2020 is required to be held on or before 30 September, 2020. The company is not in a position to hold its Annual General Meeting within the stipulated time period.

Despite the Company's best efforts to complete its books of accounts for FY 2019-20 in time for the statutory audit to be conducted, the spread of the Corona virus (COVID-19) pandemic has left the company's staff and officers in the lurch, and they have not been able to spend adequate time from their homes on completing the accounting records, all of which lay physically in the office location and the access to which is not available remotely to the staff.

The nationwide lockdown announced by the government w.e.f. 25th March, 2020, extended multiple times vide various orders of the Ministry of Home Affairs, Government of India, leading up to the 30th of June, 2020, has put the company's operations on a backlog of completion by 3 months.

Saturday, August 22, 2020

How To Get a Tax Residency Certificate (TRC) in India - Form 10FA / 10FB

Indian Residents carrying out business with foreign entities may at times be asked for an Indian Tax Residency Certificate (TRC) right before the customer can send the payment for work delivered, so as to avail the benefit as per the Double Tax Avoidance Agreement (DTAA) between India and that country.

Further, Non Resident Indians (NRIs) may also be asked to submit their TRC in the host country. Similarly, it may also be needed by foreign companies with offices in India.

It is issued for one financial year for which the application is made, and thus, may be required to be obtained in each financial year.

To obtain a TRC in India, the assessee must file an application in Form 10FA with the Assessing Officer (AO).

The TRC is given in Form 10FB.

The form is linked above and would require mentioning of the following:

- Full Name and address of the assessee 
- Status (Individual, HUF, Partnership Firm, Body of Individuals, Company, etc)
- Nationality (in case of individual)
- Country of Incorporation/Registration
- Address of the assessee during the period for which TRC is desired
- Email ID
- Basis on which the status of being resident in India is claimed
- Period for which the TRC is applicable
- Purpose of obtaining TRC
- Any other detail

Friday, August 21, 2020

Aadhaar Authentication for GST Registration

Aadhaar Authentication for GST Registration

For any person applying for a fresh GST registration as a normal taxpayer, composition dealer, casual taxable person, input service distributor (ISD) or SEZ unit, a new Aadhaar authentication process has been introduced.

Individuals, being authorised signatories of all types of businesses, viz. partnership firms, HUF, etc. applying for new registration can opt to undergo e-KYC authentication through their Aadhaar.

In case of successful authentication of Aadhaar, registration will be deemed approved within 3 working days.

Site Verification in case of Failure to Authenticate through Adhaar w.e.f 21-Aug-2020

Applicants who do not provide Aadhaar while applying for registration or whose Aadhaar authentication fails in validation, may be subjected to site verification by the tax department.

Further, if no Show Cause Notice is issued within 21 days by the GST Department in such case, the registration will be deemed approved.


CBIC Notification No. 62/2020 – CT dated 20-Aug-2020

Tuesday, August 18, 2020

Balance Sheet Signing Due Date for Companies in 2020

The date for Annual General Meeting (AGM) for the Financial Year ended on 31-Mar-2020 has not been extended by the MCA as yet. Therefore, the AGM should be conducted on time (i.e. by 29-Sep-2020) to avoid penalties under the Companies Act, 2013.

Due to the pandemic outbreak, the AGM can also be held through video conferencing (VC) or other audio visual means (OAVM) the process for which has been detailed by us here. The recording of such meeting should be kept by the company.

As always, the meeting can be held by physical presence of the members as well.

There are 3 possible alternative available for holding of AGM, which are enumerated below.

Case 1: Conduct of AGM with Normal Notice Period of 21 Days

If you want to conduct the AGM with the normal notice period (i.e. clear 21 days’ notice before the date of AGM), the notice of the AGM should be given on or before 6-Sep-2020 and the board meeting should be conducted on or before such date for the approval of audited financial statements by the board of directors. Therefore, your signed audited financial statement should be ready before 06-Sep-2020.

Case 2: Conduct of AGM at Shorter Notice

You can conduct your AGM at a shorter notice period (i.e. less than 21 days) if the consent from not less than 95% of the members entitled to vote at such a meeting is available and a resolution of board of directors for taking note of above is also with minimum 95% consent. In such case, notice of AGM will be given on or before 29-Sep-2020 and board meeting should be conducted on or before such date for approval of audited financial statements by the board of directors. Therefore, your signed audited financial statement should be ready before 29-Sep-2020.

Excel Download for ITC Details in Form GSTR-9

At the time of filing of GSTR-9, the details of ITC as per GSTR-2A are auto-populated in Table 8A, the details of which, in a few instances, did not match with data downloaded and compiled from GSTR-2A by the registered persons.

The reason for such mismatch was that Table 8A is populated on the basis of documents in filed Form GSTR-1 or Form GSTR-5 of the supplier. Documents which are uploaded or submitted, but not filed are not accounted for credit in table 8A of Form GSTR 9.

To address this issue, a facility has been provided to the taxpayers to download document wise details of ITC as being auto-populated in Table 8A of Form GSTR-9, in an Excel spreadsheet.

A new option called ‘Document wise Details of Table 8A’ is now available on the GSTR-9 dashboard w.e.f. FY 2018-19.

Steps to Download Details in Excel

Services -> Returns -> Annual Return -> Form GSTR-9 (Prepare Online) -> Download Table 8A Document Details

Clarifications on Udyam MSME Registration

Has the Udyam Portal started working for registrations of Existing MSMEs having EM-II or UAM?

No. Such service for registration of existing entities has not started on the UDYAM portal yet.

Is the old Udyog Aadhaar Memorandum (UAM) portal still working? If yes, what can it be used for?

Yes. The old portal is enabled for the following purposes till 31-Mar-2021.

- Updation of Udyog Aadhar with NIC codes, value of plant & machinery

- Printing of the Application

- Printing of the Certificate

- Verifying Udyog Aadhar Memorandum (UAM)

What is the validity of the existing MSME Registration in EM–Part-II or Udyog Adhaar Memorandum (UAM)?

The existing MSME registration and UAM registered till 30-Jun-2020 are valid up to 31-Mar-2021. Further, as per notification dated 26-Jun-2020, the time limit for registration is 01-Jul-2020 to 31-Mar-2021.

Monday, August 17, 2020

DIR-3 KYC by Directors on MCA Portal

Who needs to file Form DIR-3 KYC?

Every Director who has been allotted DIN on or before the end of the financial year, and whose DIN status is ‘Approved’ is compulsorily required to file Form DIR-3 KYC before 30th September of the immediately succeeding financial year. This KYC has to be done every year.

Such filing is also to be done by a person who may have a DIN but may not be a Director in a company during the year.

How is Form DIR-3 KYC Filed?

Persons who are allotted a DIN for the first time during the financial year, need to file e-Form DIR-3 KYC as downloaded from the MCA portal in the immediately succeeding financial years. 

For other Directors who have already submitted e-Form DIR-3 KYC previously and do not have any changes to report in their KYC details in the following year, may simply file a web services version of the form on the MCA portal that confirms the existing contact details using OTP.

Wednesday, August 12, 2020

Compliance Calendar [August 2020 - March 2021]

Month   Due Date   Particulars   Head
Aug-20 03.08.2020 GSTR-1 Quarterly for Apr-Jun 2020 GST
05.08.2020 GSTR-1 Monthly for Jun 2020 GST
07.08.2020 TDS Deposit for Jul 2020 TDS
11.08.2020 GSTR-1 Monthly for Jul 2020 GST
14.08.2020 FLA Return for Foreign Liabilities & Assets as on 31.03.2020 FEMA
15.08.2020 Issue of TDS Certificates to employees in Form 16, others in 16A TDS
15.08.2020 PF & ESI Payment and Return for the previous month's salary Labor
20.08.2020 GSTR-3B for Jul 2020 (turnover > 5 crore) GST
31.08.2020 ITC-04 up to Jun 2020 GST
31.08.2020 GSTR-4 Quarterly for Apr-Jun 2020 (Composition) GST
31.08.2020 GSTR-6 of Mar-Jul 2020 for ISD GST
31.08.2020 GSTR-7 of Mar-Jul 2020 for TDS GST
31.08.2020 GSTR-8 of Mar-Jul 2020 for E-Commerce Operators GST
Sep-20 07.09.2020 TDS Deposit for Aug 2020 TDS
10.09.2020 GSTR-7 of Aug 2020 for TDS GST
10.09.2020 GSTR-8 of Aug 2020 for E-Commerce Operators GST
11.09.2020 GSTR-1 Monthly for Aug 2020 GST
12.09.2020 GSTR-3B of May 2020 for SS1* (turnover < 5 crore) GST
12.09.2020 Interest @9% starts on May GSTR-3B upto 30.09.20 SS1 (turnover < 5cr) GST
12.09.2020 Form PAS-6: Reco of Share Capital Audit Report (Unlisted Public Cos.) MCA
13.09.2020 GSTR-6 of Aug 2020 for ISD GST
15.09.2020 GSTR-3B of May 2020 for SS2* (turnover < 5 crore) GST
15.09.2020 2nd Installment for Advance Tax AY 2021-22 Income Tax
15.09.2020 Interest @9% starts on May GSTR-3B upto 30.09.20 SS2 (turnover < 5cr) GST
15.09.2020 PF & ESI Payment and Return for the previous month's salary Labor
15.09.2020 Financial Results filing with SEBI FY 2019-20 (Listed Cos.) SEBI
20.09.2020 GSTR-3B of Aug 2020 (turnover > 5 crore) GST
23.09.2020 GSTR-3B of Jun 2020 for SS1 (turnover < 5 crore) GST
23.09.2020 Interest @9% starts on Jun GSTR-3B up to 30.09.20 SS1 (turnover < 5cr) GST
25.09.2020 GSTR-3B of Jun 2020 for SS2 (turnover < 5 crore) GST
25.09.2020 Interest @9% starts on Jun GSTR-3B up to 30.09.20 SS2 (turnover < 5cr) GST
27.09.2020 GSTR-3B of Jul 2020 for SS1 (turnover < 5 crore) GST
27.09.2020 Interest @9% starts on Jul GSTR-3B up to 30.09.20 SS1 (turnover < 5cr) GST
29.09.2020 Interest @9% starts on Jul GSTR-3B up to 30.09.20 SS2 (turnover < 5cr) GST
29.09.2020 GSTR-3B of Jul 2020 for SS2 (turnover < 5 crore) GST
30.09.2020 ITR Filing for AY 2019-20 Income Tax
30.09.2020 Form DIR-3 KYC: Directors KYC for Companies MCA
30.09.2020 Form DPT-3: Return of Deposits for balance as on 31.03.2020 MCA
30.09.2020 Form MSME-1: Outstanding to MSME over 45 Days as on 31.03.2020 MCA
30.09.2020 Form BEN-2: Beneficial Owners Declaration in Companies MCA
30.09.2020 All pending MCA Forms for Companies without Additional Fees MCA
30.09.2020 Form LLP-11: Annual Return of LLP MCA
30.09.2020 E-Verification of ITRs pending verification since AY 2015-16 Income Tax
Oct-20 01.10.2020 New procedure follow for registration of not for profit entities Income Tax
07.10.2020 TDS Deposit for Sep 2020 TDS
01.10.2020 Interest @18% starts on GSTR-3B up to Aug 2020 SS1 (turnover < 5 cr) GST
01.10.2020 GSTR-3B of Aug 2020 for SS1 (turnover < 5 crore) GST
03.10.2020 GSTR-3B of Aug 2020 for SS2 (turnover < 5 crore) GST
03.10.2020 Interest @18% starts on GSTR-3B up to Aug 2020 SS2 (turnover < 5 cr) GST
07.10.2020 Equalization Levy payment for Jul-Sep 2020 TDS
10.10.2020 GSTR-7 of Sep 2020 for TDS GST
10.10.2020 GSTR-8 of Sep 2020 for E-Commerce Operators GST
11.10.2020 GSTR-1 Monthly of Sep 2020 GST
13.10.2020 GSTR-6 of Sep 2020 for ISD GST
14.10.2020 Form ADT-1: Auditor's Appointment (within 14 days of AGM date) MCA
15.10.2020 PF & ESI Payment and Return for the previous month's salary Labor
18.10.2020 GSTR-4 of Jul-Sep 2020 for Composition Dealer GST
20.10.2020 GSTR-3B of Sep 2020 GST
25.10.2020 ITC-04 of Jul-Sep 2020 GST
29.10.2020 Form AOC-4 for FY 2019-20 (within 30 days of AGM) MCA
29.10.2020 Form MR-3: Secretarial Audit (if paid-up cap > 50 cr; turnover > 250 cr) MCA
30.10.2020 Form LLP-8: Statement of Account & Solvency of LLP MCA
30.10.2020 GSTR-1 Quarterly of Jul-Sep 2020 GST
31.10.2020 Filing of Tax Audit Report AY 2020-21 Income Tax
31.10.2020 Form MSME-1: Outstanding to MSME over 45 Days as on 30.09.2020 MCA
Nov-20 07.11.2020 TDS Deposit for Oct 2020 TDS
10.11.2020 GSTR-7 of Oct 2020 for TDS GST
10.11.2020 GSTR-8 of Oct 2020 for E-Commerce Operators GST
11.11.2020 GSTR-1 Monthly of Oct 2020 GST
13.11.2020 GSTR-6 of Oct 2020 for ISD GST
15.11.2020 PF & ESI Payment and Return for the previous month's salary Labor
20.11.2020 GSTR-3B of Oct 2020 GST
28.11.2020 Form MGT-7: Annual Return FY 2019-20 (within 60 days of AGM) MCA
28.11.2020 MGT-8: CS Certificate (if listed, or paid up cap>10 cr, or turnover>50cr) MCA
30.11.2020 Filing of ITR AY 2020-21 Income Tax
30.11.2020 Payment of Bonus for FY 2019-20 Labor
Dec-20 07.12.2020 TDS Deposit for Nov 2020 TDS
10.12.2020 GSTR-7 of Nov 2020 for TDS GST
10.12.2020 GSTR-8 of Nov 2020 for E-Commerce Operators GST
11.12.2020 GSTR-1 Monthly of Nov 2020 GST
13.12.2020 GSTR-6 of Nov 2020 for ISD GST
15.12.2020 3rd Installment for Advance Tax AY 2021-22 Income Tax
15.12.2020 PF & ESI Payment and Return for the previous month's salary Labor
20.12.2020 GSTR-3B of Nov 2020 GST
31.12.2020 Application for Vivad Se Vishwas Scheme Income Tax
Jan-21 07.01.2021 TDS Deposit for Dec 2020 TDS
07.01.2021 Equalization Levy payment for Oct-Dec 2020 TDS
10.01.2021 GSTR-7 of Dec 2020 for TDS GST
10.01.2021 GSTR-8 of Dec 2020 for E-Commerce Operators GST
11.01.2021 GSTR-1 Monthly of Dec 2020 GST
13.01.2021 GSTR-6 of Dec 2020 for ISD GST
15.01.2021 PF & ESI Payment and Return for the previous month's salary Labor
18.01.2021 GSTR-4 of Oct-Dec 2020 for Composition Dealer GST
20.01.2021 GSTR-3B of Dec 2020 GST
25.01.2021 ITC-04 of Oct-Dec 2020 GST
30.01.2021 GSTR-1 Quarterly of Oct-Dec 2020 GST
31.01.2021 Annual Return/Form III under Minimum Wages Act Labor
Feb-21 07.02.2021 TDS Deposit for Jan 2021 TDS
10.02.2021 GSTR-7 of Jan 2021 for TDS GST
10.02.2021 GSTR-8 of Jan 2021 for E-Commerce Operators GST
11.02.2021 GSTR-1 Monthly of Jan 2021 GST
13.02.2021 GSTR-6 of Jan 2021 for ISD GST
15.02.2021 PF & ESI Payment and Return for the previous month's salary Labor
20.02.2021 GSTR-3B of Jan 2021 GST
Mar-21 07.03.2021 TDS Deposit for Feb 2021 TDS
10.03.2021 GSTR-7 of Feb 2021 for TDS GST
10.03.2021 GSTR-8 of Feb 2021 for E-Commerce Operators GST
11.03.2021 GSTR-1 Monthly of Feb 2021 GST
13.03.2021 GSTR-6 of Feb 2021 for ISD GST
15.03.2021 4th Installment for Advance Tax AY 2021-22 Income Tax
15.03.2021 PF & ESI Payment and Return for the previous month's salary Labor
20.03.2021 GSTR-3B of Feb 2021 GST
31.03.2021 TDS Returns for Apr-Dec 2020 TDS


Specified States under GST
SS1 Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, Daman & Diu and Dadra & Nagar Haveli, Puducherry, Andaman and Nicobar Islands, Lakshadweep
SS2 Delhi, Haryana, Uttar Pradesh, Chandigarh, Punjab, Rajasthan, Himachal Pradesh, Uttarakhand, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand, Odisha, Jammu and Kashmir, Ladakh
MCA Forms having due dates that may vary for each company
PAS-6 HY within 60 days of deployment of form
AOC-4 Within 30 days of AGM
MR-3 Submitted along with AOC-4
MGT-7 Within 60 days of AGM
MGT-8 Submitted along with MGT-7
ADT-1 Within 15 days of AGM or appointment of auditor
MGT-14 Within 30 days of GM
CRA-2 Earlier of 30 days from BM appointing Cost Auditor or within 180 days from 1st April
CRA-4 Within 30 days of receipt of Cost Audit Report
INC-20A Within 180 days of incorporation
BEN-2 Within 30 days of declaration in BEN-1
MCA - Original Due Dates
DPT-3 30th June
DIR-3 KYC 30th September
MSME-1 For HY ending 31st March, it is 30th April. For HY ending 30th September, it is 31st October.
LLP-11 30th May
LLP-8 30th October
FEMA Compliances - Original Due Dates
FLA 15th July
ECB 2 Monthly
FC-GPR Within 30 days of issue of capital instrument
FC-TRS Within 60 days of remittance of funds or transfer date, whichever is earlier
FDI LLP-I Within 30 days of receipt of consideration
FDI LLP-II Within 60 days of date of receipt of funds
Form DI Within 30 days from date of allotment of capital instrument

Tuesday, August 4, 2020

Start Up Dictionary / Glossary

A/B Split

1. A/B testing (also known as bucket testing or split-run testing) is a user experience research methodology. A/B tests consist of a randomized experiment with two variants, A and B. It includes application of statistical hypothesis testing or "two-sample hypothesis testing" as used in the field of statistics. A/B testing is a way to compare two versions of a single variable, typically by testing a subject's response to variant A against variant B and determining which of the two variants is more effective. - WeWork

2. The A-B split is a method of testing the effectiveness of marketing methods or media. Using A-B split marketing, a list of target names is split into two groups on a random basis, with one group designated as a control group and the other as a test or variation group. The objective of the A-B split is to determine which single variable is the most effective in improving response rates to a marketing campaign or achieving some other desired outcome. The A-B split is also referred to as "A/B testing," "bucket tests," or "split-run testing.” - Investopedia


An accelerator is a program intended to mentor and accelerate the growth and success of a startup company.

Accredited Investor

1. The SEC (Securities and Exchange Commission ) defines an accredited investor as, “A natural person with income exceeding $200,000 in each of the two most recent years or joint income with spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person.” In layman’s terms, it is a rich individual potentially interested in investing in your company. - Medium
2. An accredited investor is a person or entity who is allowed to deal, trade and invest in financial securities as long as they satisfy one (or more) requirements regarding income, net worth, asset size, governance status or professional experience. - Investopedia

Saturday, August 1, 2020

Summary of Important Changes in Income Tax

Here's a summary of a few important changes in Income Tax that are applicable in the current year.

S.No. Head Details of Change Period
1 Depreciation on Motor Cars Motor cars acquired between 23-Aug-2019 and 31-Mar-2020 and put to use before 01-Apr-20 would be depreciated @30% p.a. for Income Tax purposes. However, those used for business of running them on hire to be depreciated @45% p.a. This increase is due to one time additional depreciation offered. Only for AY 2020-21
2 Tax Audit Turnover Threshold Tax Audit turnover threshold u/s 44AB increased to Rs. 5 crore from Rs. 1 crore only for businesses that have cash receipts or payments less than 5% of total sales or expenses, respectively. w.e.f. AY 2020-21
3 Due Date of Filing ITR for Audit Cases The due date for filing of Tax Audit Report (TAR) for audit cases is 30-Sep. The ITR for such cases is to be filed by 31-Oct. w.e.f. AY 2020-21
(Note though that the one time extension given for AY 2020-21 to 30-Nov is only due to the pandemic)
4 Self Occupied House Property A person can claim 2 house properties as self-occupied instead of only 1 as was allowed earlier, thus avoiding deemed rent on the second such property. w.e.f. AY 2020-21
5 Capital Gain on Property Older than 01.04.2001 For indexation of acquisition cost, the FMV as on 01-Apr-2001 will be capped at the stamp duty value as on that date, wherever available. Thus, FMV, if greater than stamp duty value, would not be considered for indexation. w.e.f. AY 2020-21
6 LTCG Exemption on Sale of House Property To save LTCG on sale of house property, investment u/s 54 can be made in 2 residential house properties. This option can be exercised only once in the lifetime, and the LTCG should not exceed Rs. 2 crores. w.e.f. AY 2020-21
7 Dividends Dividends are now taxable in the hands of shareholders w.e.f. AY 2021-22
8 TDS on Dividends TDS @10% will be deducted if an investor receives dividend above Rs. 5000 w.e.f. AY 2021-22
(All TDS rates to be 75% of declared rates only till 31-Mar-21 due to the pandemic)
9 Rebate on income up to Rs. 5 lakh The rebate from tax u/s 87A for income up to Rs. 5 lakh has been extended to Rs. 12500 instead of the earlier Rs. 2500 w.e.f. AY 2020-21
10 New Tax Regime & Old Tax Regime New tax slabs have been announced under a New Tax Regime, which can be opted for if the assessee does not claim any other deductions. For people taking deductions of HRA, 80C, 80D, etc., the old tax slab may be beneficial subject to comparative computation of tax under both regimes. w.e.f. AY 2021-22
11 PF, NPS Taxable if in excess of 7.5 Lakhs If the employer contributes to the retirement funds such as NPS + EPF + any super anuation fund in excess of Rs. 7.5 lakhs for an employee, such amount in excess will be taxable as perquisite in hands of the employee w.e.f. AY 2021-22
12 Standard Deduction Standard Deduction from Salary is increased to Rs. 50000 from Rs. 40000 w.e.f. AY 2020-21
13 TDS on Cash Withdrawal TDS @2% will be deducted by the bankers in case cash withdrawal in a year from all accounts exceeds Rs. 1 crore. The threshold is Rs. 20 lakhs if ITR not filed in previous 3 years. w.e.f. AY 2021-22
14 TCS on Sales above Rs. 50 Lakh For a person with annual turnover above Rs. 10 crore, on sale of above Rs. 50 lakh in a year to a single buyer, TCS of 0.1% on sale value is to be collected from such buyer. This does not apply to export sales. Further, TCS is @1% in case of no PAN. w.e.f. 01-Oct-2020
15 Mandatory ITR Filing ITR Filing is mandatory even if total income is less than Rs. 2.5 Lakhs, but if the person has had foreign travel costing above Rs. 2 lakh during the year or has had electricity bill of over Rs. 1 lakh in the year. w.e.f. AY 2020-21
16 Reduced Corporate Tax Rates For corporate assessees, the tax rate has been reduced to 22% + surcharge + cess in case no deductions or MAT credit or additional depreciation is claimed u/s 115BAA w.e.f. AY 2020-21
Similarly, the tax rate is reduced to 15% + surcharge + cess for a new manufacturing company that also meets the requirements as set out u/s 115BAB
17 MAT Rate The rate of Minimum Alternate Tax (MAT) has been reduced to 15% from 18.5% w.e.f. AY 2020-21

Phantom Stock or Share Appreciation Rights (SAR)

"Phantom Stock" or "Share Appreciation Rights (SAR)" is a contractual agreement between a company and the recipient of such rights that gives the recipient the right to a payment, the amount of which is linked to the market value of such company's share valuation at a predefined later date or event. 

The recipients for phantom stock or SAR could be advisors to the Founder, Board of Directors or other important consultants or third party vendors, whose advise may be valuable for the growth of the business.

It is a way to incentivize such persons by linking their compensation or fees to the valuation of the company without actually giving them any share in the ownership of the company.

In terms of the event on which such payment may become due or may be valued, the grants can be tied to negotiated vesting schedules and the payout being tied to a change of control or liquidity event such as an IPO or acquisition.

The benefits of such a compensation or fee structure could be in the form of liquidity management, flexibility of liability and optimized taxation for the grantee. Such a structure also aligns the grantee's motives with those of the owners.

On the payment becoming due or on vesting of such option, tax may become payable and TDS liability may arise u/s 194J or 194C depending on the terms of agreement even if the amount is not actually paid in cash.

For accounting purposes, such stock may be treated in the same way as deferred cash compensation. An entry may be made for the amount accrued till the end of a financial year, which may be adjusted in the subsequent period with the change in valuation.

However, liability under GST based on time of supply, as well as those under TDS provisions on the company and taxability in the hands of the grantee would all depend on the terms of vesting and payment of such phantom stock or SAR.

Important Factors for Designing a Phantom Stock or SAR Compensation Structure

1. Deliverables of Advisor - number of meetings or hours of consulting required in a week or month or in the year.

2. Compensation Credits - a fixed number of credits can be agreed on for each meeting or based on association over time, i.e. credits for each week/month/year of association in advisory capacity.

3. Credit Conversion Ratio - such number of credits may be converted to a value equivalent to X equity shares on a specific event in the future.

4. Specific Event - the specific event when such value of credits will be computed or be due for payment may be an acquisition or next round of funding or an exit - each characteristic of such event may be defined and made part of the agreement.

5. GST and Tax Implication - the tax liability would arise only on the happening of such event when the amount vests or becomes due for payment or is recognized as a liability in the books of accounts. It may be taxed under the head salaries as a perquisite (if given to employees) or income from business & profession (if offered to independent advisors) and even as capital gains depending on the terms of such agreement.

6. Payout - if the payout is in cash, the transaction is fairly simple. If the payout is in the form of stock or shares in the company, then further the terms as applicable under the Companies Act for ESOPs and Sweat Equity Shares may apply, requiring filing with the ROC among other regulatory compliance.

7. Transferability - restrictions may be placed on transferability or tradability of such rights.

8. Clawback - instances may be defined where the company may rescind these rights and nothing may become payable, i.e. in case the person goes to work for a competitor or is absenting for a fixed period 

9. Approvals from Board, Shareholders, ROC - depending on the terms of agreement in light with any restrictions if specifically placed on this in the Articles of Association, such a contract may require approval of the Board or Shareholders, as the case may be, especially so if these advisors are added in any way to the Board of the company.

10. Intellectual Property Rights - it may be clearly specified that work done on the advise of the advisors may not lead them to have any IP rights over the product of the company.

11. Confidentiality & Other Terms - other terms as normally drafted with respect to confidentiality, non-compete, etc. may be as per general legal and commercial prudence.