Excise returns to be filed on line with Periodicity & Due Date:
|
Friday, April 3, 2015
DUE DATES FOR FILING OF EXCISE & SERVICE TAX RETURNS APRIL,2015 AND IN FINANCIAL YEAR 15-16
Wednesday, April 1, 2015
Rates of Service Tax: Budget 2015
*New Rate - 14% (inclusive EC and SHEC)
Old Rate – 12.36% (inclusive EC and SHEC)
*Applicable from the date of enactment of the Finance Bill 2015.
Swachh Bharat Cess @2% is proposed to be levied on all or certain services, gradually as and when notified.
After the enactment of the Finance Bill, a date will be notified for bringing into effect the above provisions. After such change, Service Tax will be charged @ 14% + Swachh Bharat Cess @2% (if applicable)
The effect of increase in rate of service tax will be triggered by Rule 4 of the Point of Taxation Rules. There are 3 events in service tax:
- Providing of Taxable Service
- Issue of Invoice
- Receipt of Payment
If any 2 of the above events occur before the date to be notified after enactment of Finance Bill, then the old rate i.e. 12.36% will be applicable. Otherwise, the new rate i.e. 14% will be applicable.
Alternative service tax rates have been provided under Rule 6 of Service Tax Rules, 1994 with respect to the services provided by Air Travel Agents, Insurance Service, Money Charging, Lottery Distributor & Selling Agents. Consequent to the increase in rate of service tax, alternative rate will also be increased proportionately. This will also come into effect when the new rates of service tax come into effect.
New rate of service tax on Air Travel Agent will be as follows:
- 0.7% of the basic fare in the case of domestic bookings.
- 1.4% of the basic fare in the case of international bookings.
Rate of service Tax on Life Insurance business will be as follows:
- 3.5% of the premium charged from policy holder in the first year and
- 1.75% of the premium charged from policy holder in the subsequent years.
Rate of Service Tax on purchase and sale of Foreign Currency.
The rate of service tax on purchase and sale of foreign currency has been also been increased proportionately and the slab-wise rate chart is as follows:
|
Amount of Currency exchanged
|
Rate of Service Tax
|
|
0
– 1,00,000
|
0.14% of the currency exchanged minimum Rs. 35/-
|
|
1,00,000
– 10,00,000
|
0.07% of the currency exchanged plus Rs. 140/-
|
|
Exceeding
10,00,000
|
0.014% of the currency exchanged plus Rs. 770/-
|
|
However, in any case service tax payable cannot exceed Rs.7,000/-.
Therefore, maximum service tax payable per transaction in case of currency
exchange is Rs. 7,000/-.
|
|
Rate of Service Tax on promotion, marketing, organizing or in any other manner assisting in organizing lottery will be as follows.
The rate of service tax on promotion, marketing, organizing or in any other manner assisting in organizing lottery has been increased proportionately and the new slab-wise rate chart is as follows.
|
Condition
|
Rate
of Service Tax
|
|
If the lottery or lottery scheme is one
where the guaranteed prize payout is more than 80%
|
Rs. 8200/- on every Rs. 10 Lakh (or part of Rs. 10
Lakh) of aggregate face value of lottery tickets printed by the organizing
State for a draw
|
|
If the lottery or lottery scheme is one where the guaranteed prize
payout is less than 80%
|
Rs. 12800/- on every Rs. 10 Lakh (or part of Rs.
10 Lakh) of aggregate face value of lottery tickets printed by the organizing
State for a draw
|
Monday, March 30, 2015
MCA RELAXES PRIVATE COMPANIES FOR LOANS RECEIVED PRIOR TO 01.04.13 FROM DIRECTORS AND RELATIVES
Long awaited circular has been issued by MCA today for
clarification on definition of deposits. With the introduction of section 74 which
was notified on April 01, 2014, any deposit accepted by a Company had to be
repaid in terms of section 74 (1) by 31st March,2015. Today MCA has
clarified that amounts received prior to 1st April, 2014 by private companies
from their members, directors or their relatives shall be considered as
deposits under the Companies Act, 2013 because such receipts / advances were
not treated as 'deposits' under section 58A of the Companies Act, 1956 and
rules made there under.
It is further clarified that such amounts received by private
companies prior to 1st April, 2014 shall not be treated as 'deposits' under the
Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014 but subject
to the condition that private company
shall disclose, in the notes to its financial statement for the financial year
commencing on or after 1st April, 2014 clearly specifying the figure along with
the accounting head in which such amounts have been shown in the financial
statement.
Any renewal or acceptance of fresh deposits on or after 1st
April, 2014 shall, however, be in accordance with the provisions of Companies
Act, 2013 and rules made there under.
Provisions
of section 74 and its compliance before issue of Such Circular
Section 74 of the Act, 2013 provides that the in case of
deposits accepted before the commencement of the Act, 2013, where the deposit
or part thereof or interest thereon has remained unpaid on such commencement or
where the deposit falls due after April 1, 2014, Company shall:
- U/S 74(1) (a) File with the MCA a statement of deposit accepted and deposits remaining unpaid detailing the interest as well as the arrangement made for such repayment.
- Before or on 31st March 2015 i.e within one year from such commencement or from the date on which sums are due, whichever is earlier to repay the amount outstanding with interest due there on.
Every company which has accepted deposits before the
commencement of Act, 2013, to file DPT 4 with the MCA within 3 months from
April 1, 2014 or from the date the deposits are falling due for payment. The details
of all deposits accepted by the company and sums remaining unpaid on such
deposits and the interest payable thereon along with the arrangements made for
repayment are included in such form.
The due date for filing of DPT 4 was July 31, 2014 further
extended up to August 31, 2014 to enable the companies to file the statements
by way of General Circular no. 27/2014. Non-filing of such a statement is
an offence and is punishable under Section 450 of the Act, 2013 and the Companies
have to bear additional fee cost for completing the compliance by filing the
DPT-4.
NOW MCA HAS RELAXED TO CERTAIN EXTENT BY NOT TAKING SUCH
ADVANCES TAKEN PRIOR TO THE COMMENCEMENT OF COMPANIES ACT 2013, IN THE
DEFINITION OF DEPOSITS AND ISSUED THE MOST AWAITED CIRCULAR NO.05/2015
Thursday, March 19, 2015
Consequences of Late Filing of Form MGT-14 and Condonation of Delay
As per Companies Act, 2013 it is mandatory for companies to inform the MCA about certain activities. Special Resolutions passed in the companies shall be filed with MCA in Form MGT-14, in which certified copies of such resolutions are to be attached.
Section 117 of the Companies Act, 2013 states that a copy of every resolution or agreement proposed in the meeting needs to be filed with the ROC within 30 days of passing the resolution.
List of resolutions to be filed with Form MGT-14 is divided in 4 categories:
- Under Section 117(3)
- Under Section 179(3)
- Provided as per Rule 8
- Miscellaneous Provisions
A detailed list of resolutions to be filed in Form MGT-14 is given here.
Filing of form MGT-14 is mandated by Section 117 of the Companies Act, 2013. Section 117(2) prescribes the penalty for non-filing of Form MGT-14.
As per Section 117(2), if a company fails to file the resolution with Registrar of Companies within 30 days of passing resolution, the company shall be punishable with additional fees and fine as follows.
Additional Fees
The following table of additional fees shall be applicable for delays in filing of the form other than for increase in Nominal Share Capital.
|
Period Of Delay
|
Additional Fees
|
|
Upto 15 days (Sections 93, 139
and 157)
|
Equal
to normal filing fees
|
|
More than 15 days and upto 30
days (Sections 93, 139 and 157) and upto 30 days in remaining forms.
|
2 times of normal filing fees
|
|
More than 30 days and upto 60
days
|
4 times of normal filing fees
|
|
More than 60 days and upto 90
days
|
6 times of normal filing fees
|
|
More than 90 days and upto 180
days
|
10 times of normal filing fees
|
|
More than 180 days and upto 270
days
|
12 times of normal filing fees
|
Note:
- Additional Fee or Late Filing Fee or Penalty is to be paid based on the number of days' delay in filing of Form MGT-14.
- Additional Fee is required to be paid with normal filing fees.
- For delay beyond 270 days, the second proviso to sub-section (1) of section 403 of the Act may be referred.
Penalty
If company fails to file E-form within 30 days + additional 270 days (total 300 days), then provision of Section 403(2) will be applicable.
- The company shall be punishable with fine which shall not be less than Rs. 5,00,000 but which may extend to Rs. 25,00,000, and
- Every office of the company who is in default, including liquidator of the company, if any, shall be punishable with fine which shall not be less than Rs. 1,00,000 but which may extend to Rs. 5,00,000.
But there is a way to save the company from a penalty of Rs. 5,00,000...
Compounding/Condonation of Delay under Section 460
Where any document or application required to be filed with the Registrar is not filed within the time specified, and a company has passed Special Resolution or Board Resolution but failed to file e-form MGT-14 in this respect beyond 300 days, it needs to file application for condonation of delay in FORM CG-1. The fees for condonation of delay is required to be paid with additional fees while filing the e-form MGT-14.
Two-step Process for Filing of Form in case of Delay beyond 300 Days
If Company fails to file MGT-14 within 300 days from the date of passing of resolution then following steps are to be followed:
Step 1: Authorize any Director or Secretary of the company in a Board Meeting to make application with Central Government u/s 460 for condonation of delay of filing of resolution. Prepare and submit an application for such condonation mentioning the facts of the resolution and the reason for non-filing within the stipulated time. Such an application shall be signed by any two Directors of the company.
Step 2: File Form CG-1
Saturday, March 14, 2015
Transfer of Shares in Indian Company by One Non-Resident to Another Non-Resident
Facts of the Case:
- A non-resident company called ABC Ltd. incorporated in a tax haven (say, Mauritius) has shareholding of 25% in a private Indian company called ABC India Pvt. Ltd.
- It wishes to transfer its shareholding in the Indian company to another company incorporated outside India (say, in Australia) called ABC Australia Ltd.
- The consideration for transfer of shares is Rs. 1 million.
- There is no tax on capital gains in the tax haven (in this case Mauritius, as per the India-Mauritius DTAA)
Questions:
- Can the Indian company refuse to acknowledge and register such transfer?
- What all procedures should be followed by ABC India Pvt. Ltd. to ensure compliance with various laws with respect to this share transfer from ABC Mauritius to ABC Australia?
- Will ABC India Pvt. Ltd. have to deduct any withholding taxes on the consideration received by ABC Mauritius, being an “Agent” of the latter as per the Income Tax Act?
Answer: Let us examine this case in
light of the Companies Act 2013, the Stamp Duty laws, FEMA and RBI regulations,
the Income Tax Act, 1961 and the India-Mauritius DTAA.
Companies Act, 2013
Can transfer of
shares be restricted by other shareholders who hold 75% of the share capital?
The
only restriction that can be placed on transfer of securities are those
specified in any law or in the Articles of Association of the company. There is
no general power to company to refuse the share transfer. [VB Rangaraj v. VB Gopalakrishnan 1991 AIR SCW 3020 = (1992) 1 SCC 160 =
AIR 1992 SC 453]
Powers
of Board to refuse transfer are only those specified in Articles. Board has no
inherent or general powers to refuse a transfer [Hemangini Finance v. Tamilnadu Mercantile Bank Ltd. (1996) 22 CLA 108
(CLB)] The Articles cannot provide total prohibition on transfer.
Further, the restriction on transfer should be fair and reasonable. However,
regulations in Articles cannot be against provisions of any Act.
Relevant Extracts of Section 56 of the Companies
Act, 2013
Section
56 (1): A company shall not register a transfer of securities of the company
unless a proper instrument of transfer, in such form as may be prescribed, duly
stamped, dated and executed by or on behalf of the transferor and the transferee
and specifying the name, address and occupation, if any, of the transferee has
been delivered to the company by the transferor or the transferee within a
period of sixty days from the date of execution, along with the certificate
relating to the securities, or if no such certificate is in existence, along
with the letter of allotment of securities.
Provided
that where the instrument of transfer has been lost or the instrument of
transfer has not been delivered within the prescribed period, the company may
register the transfer on such terms as to indemnity as the Board may think fit.
Section
56(4): Every company shall, unless prohibited by any provision of law or any
order of Court, Tribunal or other authority, deliver the certificates of all
securities allotted, transferred or transmitted within a period of one month
from the date of receipt by the company of the instrument of transfer.
Relevant
Extracts of Rule 11 of Companies
(Share Capital & Debentures) Rules 2014
An instrument of transfer of securities
held in physical form shall be in Form
No. SH-4 (earlier Form 7B) and every instrument of transfer with the date
of its execution specified thereon shall be delivered to the company within
sixty (60) days from the date of such execution.
Other Matters under Companies Act, 2013
Any
transfer of shares should be in strict compliance with the Articles of
Association, failing which the transfer is liable to be set aside [Satyanarayan Rathi v. Annamalaiar Textiles Pvt. Ltd.
(1999) 19 SCL 56 = 95 Comp Cas 386 (CLB); Cruickshank Co. Ltd. v. Stridewell
Leather Pvt. Ltd. (1996) 86 Cmp Cas 439 =4 SCL 202 (CLB); Chotoo Sud v. Bhagwan
Finance Corporation Pvt. Ltd. (2006) 66 SCL 223 (CLB)]
In a
private company, transfer of shares has to be in accordance with Articles of
the company and transfer in violation of provisions of Articles would be void. [Stridewell Leathers v. Shoe Specialities Pvt. Ltd.
(2001) 33 SCL 797 (CLB)]
The
share transfer must be authorized by the Board of Directors, as all powers of
company, except those specified in Act or Articles, are vested in Board.
Authority can be delegated to one Director.
A
security should be duly transferred or transmitted within one month from the
date of receipt of instrument of transfer [Section
56(4)(c) of Companies Act, 2013]
In
case of default, company is punishable with minimum fine of Rs. 25,000 which
shall extend upto Rs. 5 lakhs. Every officer of the company who is in default
is punishable with imprisonment of six months or fine which shall not be less
than Rs. 10,000 but which may extend to Rs. 1 lakh, or both. [Section 56(4)(c) of Companies Act, 2013]
If
the company fails to register the transfer within one month, the aggrieved
person (transferee) can appeal to NCLT and NCLT can direct the company to
register the transfer [Section
58(5) of Companies Act, 2013]. But the company can obviously refuse
to register the transfer if the transfer is not as per the Articles of
Association or the application is not duly stamped or for any other valid
reason.
So
long as the Transfer Deed is not registered, the transferee has not the
perfected right of property which he would have if he had been the registered
holder of the shares. Until the actual entry of name of transferee on the
register, the transferor remains legal owner of the share. [LIC v. Escorts Ltd. (1986) 1 Comp LJ 91 = AIR 1986 SC 1370 = (1986) 1
SCC 264 = 59 Comp Cas 548]
A
Transfer Deed is improper if:
- Document is not “duly stamped”
- Transfer deed is not signed by proper authority
- Signature of authorized person does not tally with signature available on record
- Original certificates not attached
- Instrument of Transfer not in prescribed Form SH-4
- Incomplete transfer deed
- Date stamp on transfer deed beyond limit
- Transfer deed submitted after book closure date
The
Board may decline to recognize any instrument of transfer if:
- The instrument of transfer is not in the form as prescribed in rules;
- The instrument of transfer is not accompanied by the certificate of the shares to which it relates and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer is not submitted (e.g. Power of Attorney, Board resolution, etc.)
Transfer
of shares is complete between transferor and transferee only when instrument of
transfer is signed and the share certificates are handed over. [Martin Castelino v. Alpha Omega Ship Management
(2001) 33 SCL 210 (CLB)]
Transfer
Deed can be signed by holder of Power of Attorney (PoA) on behalf of the
transferor. Such PoA should be registered with the company beforehand or
certified copy should be furnished along with the Transfer Deed. If PoA was
already registered with company by submitting certified copy, its registration
number and date of registration with the company shall be given on reverse of
Transfer Deed at the place provided for that purpose in Form SH-4.
Transfer
can be declined if it is in violation of Section 50 i.e. if Transfer Deed is
not duly stamped or not lodged within prescribed time or if signature differs. [Hemagiri Finance v. Tamilnadu Mercantile Bank Ltd.
(1996) 22 CLA 108 (CLB)]
Procedure
for Registering Transfer or Refusal Thereof by the Board
Usually, the following steps are followed
by a private company to give effect to the transfer of shares:
- Transferor should give a notice in writing for his intention to transfer his share to the company.
- Get the share transfer deed and transfer form in SH-4 duly executed both by the transferor and the transferee.
- The transfer deed should bear stamps according to the Indian Stamp Act and Stamp Duty Notification in force in the State concerned.
- The signatures of the transferor and the transferee in the share transfer deed must be witnessed by a person giving his signature, name and address.
- Relevant share certificate or allotment letter must be attached with the share transfer deed and delivered to the company.
- The share transfer deed should be deposited with the company within sixty (60) days from the date of such execution by or on behalf of the transferor and by or on behalf of the transferee.
- After receipt of share transfer deed, the Board shall consider the same. If the documentation for transfer of share is in order, board shall register the transfer by passing a resolution.
If a
private company refuses to register transfer, it shall, within 30 days from
date of lodgment of transfer deed send notice of refusal to the transferee and
the transferor. The Board will have to give reasons for refusal to transfer, if
it decides to refuse the transfer [Section 58
of Companies Act, 2013]
Right
of refusal is not lost even if refusal is not communicated within prescribed
period. However, penalty can be imposed. Further, transfer can be refused only
for bona fide reasons and not arbitrarily or for collateral purposes. [Shailesh Prabhudas Mehta v. Calico Dyeing (1994) 80
Comp Cas 64]
Stamp Duty on Share Transfer Deed
Amount of Stamp Duty: Presently, the
stamp duty payable is @25 Paise per Rs. 100 of consideration (and not on the
basis of face value of shares). Therefore, for a consideration of Rs. 1 million
the stamp duty amount will be Rs. 2,500/-
The
term “duly stamped” means that the
stamp should be of adequate value and crossed out if it is not an e-stamp.
If
the share transfer deed does not bear the stamp payment as required, transfer
cannot be recorded on basis of such transfer deed. Company can legitimately
refuse to register such transfer deed.
FEMA Regulation/RBI Master Circular
Relevant
extracts of the RBI Master Circular No.
15/2014-15 dated 1st July, 2014 on Foreign Investments in India are reproduced below:
8B: Acquisition by way of transfer of existing shares by person
resident in or outside India: Foreign investors can also invest in Indian companies by
purchasing/acquiring existing shares from Indian shareholders or from other
non-resident shareholders. General permission has been granted to
non-residents/NRIs for acquisition of shares by way of transfer in the
following manner:
8 B.I: Transfer of shares by a
Person resident outside India: Non Resident to
Non-Resident (Sale/Gift): A
person resident outside India (other than NRI and OCB) may transfer by way of
sale or gift, shares or convertible debentures to any person resident outside India
(including NRIs but excluding OCBs).
Regulation 9 of The Foreign Exchange Management (Transfer of
Security by a Person Resident outside India) Regulation 2000 states:
Transfer of shares and convertible debentures of an Indian company
by a person resident outside India:-
(1) Subject to the provisions of sub-regulation (2), a person
resident outside India holding the shares or debentures of an Indian company in
accordance with these Regulations, may transfer the shares or debentures so
held by him, in compliance with the conditions specified in the relevant
Schedule of these regulations.
(2) (i) A person resident outside India, not being a non-resident
Indian or an overseas corporate body, may transfer by way of sale, the shares
or convertible debentures held by him to any person resident outside India:-
(ii) A non-resident Indian may transfer by
way of sale or gift, the shares or convertible debentures held by him or it to
another non-resident Indian.
Provided that the person to whom the shares
are being transferred, in terms of Clauses (i) and (ii), has obtained prior
permission of Central Government to acquire the shares if he has previous
venture or tie up in India through investment in shares or debentures or a
technical collaboration or a trade mark agreement or investment by whatever
name called in the same field or allied field in which the Indian company whose
shares are being transferred is engaged.
Thus,
from a bare perusal of the above stated provisions of Foreign Exchange
Management (Transfer of Security by a Person Resident outside India) Regulation
2000, read with the Master Circular on Foreign Direct Investment, it is evident
that there is no bar under Indian laws on the transfer of shares of an Indian
Company by a non-resident to a non-resident. A general permission has been
granted by the RBI for the said transaction.
Income Tax Regulations
Article
13 of the India-Mauritius Double Tax
Avoidance Agreement (DTAA) on Capital Gains states:
- Gains from the alienation of immovable property, as defined in paragraph (2) of article 6, may be taxed in the Contracting State in which such property is situated.
- Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may be taxed in that other State.
- Notwithstanding the provisions of paragraph (2) of this article, gains from the alienation of ships and aircraft operated in international traffic and movable property pertaining to the operation of such ships and aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
- Gains derived by a resident of a Contracting State (Thomson Reuters Mauritius) from the alienation of any property other than those mentioned in paragraphs (1), (2) and (3) of this article shall be taxable only in that State (Mauritius).
- For the purposes of this article, the term "alienation" means the sale, exchange, transfer, or relinquishment of the property or the extinguishment of any rights therein or the compulsory acquisition thereof under any law in force in the respective Contracting States.
Keeping in mind the
benefit of exemption from capital gains tax in India available on the basis of
the India-Mauritius DTAA, and further, in light of the landmark judgment given by
the Hon’ble Supreme Court in the Vodafone case which had similar facts, it can
prima facie be stated that ABC India Pvt. Ltd. should not be liable to deduct
withholding taxes on consideration received by ABC Mauritius Ltd.
However, in a country like India, such matters hold immense potential to attract the Income Tax Department and lead to litigation, where the contention of the Department is that the Indian company should have deducted withholding taxes on the capital gain made by the non-resident transferor. In such a scenario, the Indian company can safeguard itself by either taking an indemnity bond from the transferor, stating that the transferor will bear any expenses that may arise on the Indian company in case of any such litigation; or an Advance Ruling can be applied for on the matter by ABC India Pvt. Ltd. or ABC Mauritius Ltd.
Tuesday, March 3, 2015
Statutory Due Dates for March,2015
|
Date
|
Statutory Act
|
Applicable Form
|
Obligation
|
|
05/03/2015/06/03/2015
|
Service Tax
|
Challan No.GAR-7
|
Payment of Service Tax of Jan by Companies
(MANDATORY E-PAYMENT in case tax amount exceeds one lakh in previous
financial year) (6th for e-
payment)
|
|
07/03/2015
|
Income Tax
|
Challan 281
|
Payment of TDS for month of Feb 2015
|
|
07/03/2015
|
Income Tax
|
F.No. 15G, 15H, 27C
|
Submission of forms received in Feb ‘2015
to IT Commissioner.
|
|
10/03/2015
|
Excise
|
ER-1
|
Return for Non SSI assessees for Feb 2015.
|
|
10/03/2015
|
Excise
|
ER-6
|
Return by units paying duty >1 crore
(CENVAT +PLA) for Feb 2015.
|
|
10/03/2015
|
Excise
|
ER-2
|
Return for EOUs for Feb 2015.
|
|
15/03/2015
|
DVAT
|
DVAT 20
|
Deposit of DVAT TDS for Feb 2015.
|
|
15/03/2015
|
Provident Fund
|
E Challan Cum Return
|
E-Payment of PF for Feb 2015
|
|
15/03/2015
|
Income Tax
|
Challan 280
|
Payment of Final Installment of Advance
Tax by the Assessee
|
|
21/03/2015
|
DVAT
|
DVAT 20 & Central
|
Deposit of VAT and CST for Feb 2015
(monthly tax period),
|
|
22/03/2015
|
DVAT
|
DVAT 43
|
Issue of DVAT Certificate for deduction
made in Feb 2015.
|
|
31/03/2015
|
Income Tax
|
ITR
|
Last date for filing of Income Tax Returns
& Wealth Tax Returns for Financial
Year 2013-14
|
|
31/03/2015
|
Service Tax
|
GAR-7
|
Last date for the Payment of Service
Tax(Monthly & Quarterly Cases)
|
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