CBIC clarifes fully electronic refund process through FORM GST RFD-01

CBIC clarifes fully electronic refund process through FORM GST RFD-01

Circular No. 125/44/2019 – GST

 

CBEC-20/16/04/18-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
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New Delhi, Dated the 18th November, 2019

To,
The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All) / The Principal Director Generals/ Director Generals (All)

The Principal Chief Controller of Accounts (CBIC)

Madam/Sir,

Subject: Fully electronic refund process through FORM GST RFD-01 and single disbursement – regarding

After roll out of GST w.e.f. 01.07.2017, on account of the unavailability of electronic refund module on the common portal, a temporary mechanism had to be devised and implemented wherein applicants were required to file the refund application in FORM GST RFD-01A on the common portal, take a print out of the same and submit it physically to the jurisdictional tax office along with all supporting documents. Further processing of these refund applications, i.e. issuance of acknowledgement of the refund application, issuance of deficiency memo, passing of provisional/final order, payment advice etc. was also being done manually. In order to make the process of submission of the refund application electronic, Circular No. 79/53/2018-GST dated 31.12.2018 was issued wherein it was specified that the refund application in FORM GST RFD- 01A, along with all supporting documents, shall be submitted electronically. However, various post submission stages of processing of the refund application continued to be manual.

2. The necessary capabilities for making the refund procedure fully electronic, in which all steps of submission and processing shall be undertaken electronically, have been deployed on the common portal with effect from 26.09.2019. Accordingly, the Circulars issued earlier laying down the guidelines for manual submission and processing of refund claims need to be suitably modified and a fresh set of guidelines needs to be issued for electronic submission and processing of refund claims. With this objective and in order to ensure uniformity in the implementation of the provisions of law across field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby lays down the procedure for electronic submission and processing of refund applications in supersession of earlier Circulars viz. Circular No. 17/17/2017-GST dated 15.11.2017, 24/24/2017-GST dated 21.12.2017, 37/11/2018-GST dated 15.03.2018, 45/19/2018-GST dated 30.05.2018 (including corrigendum dated 18.07.2019), 59/33/2018-GST dated 04.09.2018, 70/44/2018-GST dated 26.10.2018, 79/53/2018-GST dated 31.12.2018 and 94/13/2019-GST dated 28.03.2019. However, the provisions of the said Circulars shall continue to apply for all r efund applications filed on the common portal before 26.09.2019 and the said applications shall c ontinue to be processed manually as prior to deployment of new system.

Filing of refund applications in FORM GST RFD-01

3. With effect from 26.09.2019, the applications for the following types of refunds shall be filed in FORM GST RFD 01 on the common portal and the same shall be processed electronically:

a. Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;
b. Refund of tax paid on export of services with payment of tax;
c. Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;
d. Refund of tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax;
e. Refund of unutilized ITC on account of accumulation due to inverted tax structure;
f. Refund to supplier of tax paid on deemed export supplies;
g. Refund to recipient of tax paid on deemed export supplies;
h. Refund of excess balance in the electronic cash ledger;
i. Refund of excess payment of tax;
j. Refund of tax paid on intra-State supply which is subsequently held to be inter-State supply and vice versa;
k. Refund on account of assessment/provisional assessment/appeal/any other order;
l. Refund on account of “any other” ground or

4. The following modalities shall be followed for all refund applications filed in FORM GST RFD-01 on the common portal with effect from 26.09.2019:

a. FORM GST RFD-01 shall be filled on the common portal by an applicant seeking refund under any of the categories mentioned above. This shall entail filing of statements/declarations/undertakings which are part of FORM GST RFD-01 itself, and also uploading of other documents/invoices which shall be required to be provided by the applicant for processing of the refund claim. A comprehensive list of such documents is provided at Annexure-A and it is clarified that no other document needs to be provided by the applicant at the stage of filing of the refund application. The facility of uploading these other documents/invoices shall be available on the common portal where four documents, each of maximum 5MB, may be uploaded along with the refund Neither the refund application in FORM GST RFD-01 nor any of the supporting documents shall be required to be physically submitted to the office of the jurisdictional proper officer.

b. The Application Reference Number (ARN) will be generated only after the applicant has completed the process of filing the refund application in FORM GST RFD-01, and has completed uploading of all the supporting documents/ undertaking/ statements/invoices and, where required, the amount has been debited from the electronic credit/cash ledger.

c. As soon as the ARN is generated, the refund application along with all the supporting documents shall be transferred electronically to the jurisdictional proper officer who shall be able to view it on the system. The application shall be deemed to have been filed under sub-rule (2) of rule 90 of the CGST Rules on the date of generation of the said ARN and the time limit of 15 days to issue an acknowledgement or a deficiency memo, as the case may be, shall be counted from the said date. This will obviate the need for an applicant to visit the jurisdictional tax office for the submission of the refund application and /or any of the supporting documents. Accordingly, the acknowledgement for the complete application (FORM GST RFD-02) or deficiency memo (FORM GST RFD-03), as the case may be, would be issued electronically by the jurisdictional tax officer based on the documents so received from the common portal.

d. If a refund application is electronically transmitted to the wrong jurisdictional officer, he/she shall reassign it to the correct jurisdictional officer electronically as soon as possible, but not later than three working days, from the date of generation of the Deficiency memos shall not be issued in such cases merely on the ground that the applications were received electronically in the wrong jurisdiction.

e. It may be noted that the facility to reassign such refund applications is already available with the Commissioner or the officer(s) authorized by him.

5. The refund application in FORM GST RFD-01 filed by all taxpayers, who have already been assigned to the Centre or the State tax authorities, shall be automatically forwarded by the common portal to the concerned authority. At the same time, there might be some migrated taxpayers, who have remained unassigned so The refund application in FORM GST RFD-01 filed by such unassigned taxpayers shall be forwarded, for processing, by the common portal to the jurisdictional proper officer of the tax authority from which the taxpayer has originally migrated. Such officers will continue to process these applications up to the stage of issuance of final order in FORM GST RFD-06 and the related payment order in FORM GST RFD-05 even if the applicant is assigned to the counterpart tax authority while the refund claim is under processing. However, if such an applicant gets assigned to one of the tax authorities after generation of the ARN and a deficiency memo gets issued for the refund application submitted by him, then the re-submitted refund application, after correction of deficiencies, shall be treated as a fresh refund application and shall be forwarded to the jurisdictional proper officer of the tax authority to which the taxpayer has now been assigned, irrespective of which authority handled the initial refund claim and issued the deficiency memo.

6. Any refund claim for a tax period may be filed only after furnishing all the returns in FORM GSTR-1 and FORM GSTR-3B which were due to be furnished on or before the date on which the refund application is being However, in case of a claim for refund filed by a composition taxpayer, a non-resident taxable person, or an Input Service Distributor (ISD) furnishing of returns in FORM GSTR-1 and FORM GSTR-3B is not required. Instead, the applicant should have furnished returns in FORM GSTR-4 (along with FORM GST CMP-08), FORM GSTR-5 or FORM GSTR-6, as the case may be, which were due to be furnished on or before the date on which the refund application is being filed.

7. Since the functionality of furnishing of FORM GSTR-2 and FORM GSTR-3 remains unimplemented, it has been decided by the GST Council to sanction refund of provisionally accepted input tax credit. However, the applicants applying for refund must give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements of clause (c) of sub-section (2) of section 16 read with sub-section (2) of section 42 of the CGST Act have not been complied with in respect of the amount refunded. This undertaking should be submitted electronically along with the refund claim.

8. The applicant, at his option, may file a refund claim for a tax period or by clubbing successive tax periods. The period for which refund claim has been filed, however, cannot spread across different financial years. Registered persons having aggregate turnover of up to Rs. 1.5 crore in the preceding financial year or the current financial year opting to file FORM GSTR-1 on quarterly basis, can only apply for refund on a quarterly basis or clubbing successive quarters as aforesaid. However, refund claims under categories listed at (a), (c) and (e) in para 3 above must be filed by the applicant chronologically. This means that an applicant, after submitting a refund application under any of these categories for a certain period, shall not be subsequently allowed to file a refund claim under the same category for any previous period. This principle / limitation, however, shall not apply in cases where a fresh application is being filed pursuant to a deficiency memo having been issued earlier.

Deficiency Memos

9. It may be noted that if the application for refund is complete in terms of sub-rule (2), (3) and (4) of rule 89 of the CGST Rules, an acknowledgement in FORM GST RFD-02 should be issued within 15 days of the filing of the refund application. The date of generation of ARN for FORM GST RFD-01 is to be considered as the date of filing of the refund application. Sub-rule (3) of rule 90 of the CGST Rules provides for communication of deficiencies in FORM GST RFD-03 where deficiencies are noticed within the aforesaid period of 15 days. It is clarified that either an acknowledgement or a deficiency memo should be issued within the aforesaid period of 15 days starting from the date of generation of ARN. Once an acknowledgement has been issued in relation to a refund application, no deficiency memo, on any grounds, may be subsequently issued for the said application.

10. After a deficiency memo has been issued, the refund application would not be further processed and a fresh application would have to be filed. Any amount of input tax credit/cash debited from electronic credit/ cash ledger would be re-credited automatically once the deficiency memo has been issued. It may be noted that the re-credit would take place automatically and no order in FORM GST PMT-03 is required to be issued. The applicant is required to rectify the deficiencies highlighted in deficiency memo and file fresh refund application electronically in FORM GST RFD-01 again for the same period and this application would have a new and distinct ARN.

11. It is further clarified that once an application has been submitted afresh, pursuant to a deficiency memo, the proper officer will not serve another deficiency memo with respect to the application for the same period, unless the deficiencies pointed out in the original deficiency memo remain un-rectified, either wholly or partly, or any other substantive deficiency is noticed subsequently.

12. It is also clarified that since a refund application filed after correction of deficiency is treated as a fresh refund application, such a rectified refund application, submitted after correction of deficiencies, shall also have to be submitted within 2 years of the relevant date, as defined in the explanation after sub-section (14) of section 54 of the CGST Act.

Provisional Refund

13. Doubts get raised as to whether provisional refund would be given even in those cases where the proper officer prima-facie has sufficient reasons to believe that there are irregularities in the refund application which would result in rejection of whole or part of the refund amount so claimed. It is clarified that in such cases, the proper officer shall refund on a provisional basis ninety percent of the refundable amount of the claim (amount of refund claim less the inadmissible portion of refund so found) in accordance with the provisions of rule 91 of the CGST Rules. Final sanction of refund shall be made in accordance with the provisions of rule 92 of the CGST Rules.

14. It is further clarified that there is no prohibition under the law preventing a proper officer from sanctioning the entire amount within 7 days of the issuance of acknowledgement through issuance of FORM GST RFD-06, instead of grant of provisional refund of 90 per cent of the amount claimed through FORM GST RFD-04. If the proper officer is fully satisfied about the eligibility of a refund claim on account of zero-rated supplies, and is of the opinion that no further scrutiny is required, the proper officer may issue final order in FORM GST RFD-06 within 7 days of the issuance of acknowledgement. In such cases, the issuance of a provisional refund order in FORM GST RFD-04 will not be necessary.

15. Further, there are doubts on the procedure to be followed in situations where the final refund amount to be sanctioned in FORM GST RFD-06 is less than the amount of refund sanctioned provisionally through FORM GST RFD-04. For example, consider a situation where an applicant files a refund claim of Rs.100/- on account of zero-rated supplies. The proper officer, after prima-facie examination of the application, sanctions Rs. 90 as provisional refund through FORM GST RFD-04 and the same is electronically credited to his bank account. However, on detailed examination, it appears to the proper officer that only an amount of Rs. 70 is admissible as refund to the applicant. In such cases, the proper officer shall have to issue a show cause notice to the applicant, in FORM GST RFD-08, under section 54 of the CGST Act, read with section 73 o r 74 of the CGST Act, requiring the applicant to show cause as to why:

(a) the amount claimed of Rs. 30/- should not be rejected as per the relevant provisions of the law; and
(b) the amount of Rs. 20/- erroneously refunded should not be recovered under section 73 or section 74 of the CGST Act, as the case may be, along with interest and penalty, if any.

16. The proper officer for adjudicating the above case shall be the same as the proper officer for sanctioning refund under section 54 of the CGST Act. The above notice shall be adjudicated following the principles of natural justice and an order shall be issued, in FORM GST RFD-06, under section 54 of the CGST Act, read with section 73 or section 74 of the CGST Act, as the case may be. If the adjudicating authority decides against the applicant in respect of both points (a) and (b) above, then an amount of Rs. 70/- will have to be sanctioned in FORM GST RFD-06, and an amount of Rs. 20/-, along with interest and penalty, if any, shall be entered by the officer in the electronic liability register of the applicant through issuance of FORM GST DRC-07. Further, if the application pertains to refund of unutilized/accumulated ITC, then Rs. 30/-, i.e. the amount rejected, shall have to be re-credited to the electronic credit ledger of the applicant through FORM GST PMT-03. However, this re-credit shall be done only after the receipt of an undertaking from the applicant to the effect that he shall not file an appeal or in case he files an appeal, the same has been finally decided against the applicant. In such cases, it may be noted that FORM GST RFD- 08 and FORM GST RFD-06, are to be considered as show cause notice and adjudication order respectively, under both section 54 (for rejection of refund) and section 73/74 of the CGST Act as the case may be (for recovery of erroneous refund).

17. It is further clarified that no adjustment or withholding of refund, as provided under sub- sections (10) and (11) of section 54 of the CGST Act, shall be allowed in respect of the amount of refund which has been provisionally sanctioned. In cases where there is an outstanding recoverable amount due from the applicant, the proper officer, instead of granting refund on provisional basis, may process and sanction refund on final basis at the earliest and recover the amount from the amount so sanctioned.

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Changes made in GST Annual Return-At Glance

Changes made in GST Annual Return-At Glance

Considering the problems faced by several tax payers who were struggling to file their annual returns for financial year 2017-18, Notification No. 56/2019- Central Tax dated 14-11-2019 has been issued wherein several tables in GSTR 9 have been made optional for FY 2017-18 and 2018-19.

The Changes are given below at glance:

• Taxpayers not required to provide

• split of input tax credit availed on inputs, input services and capital goods and

• HSN level information of outputs or inputs, etc. for the financial year 2017-18 and 2018-19.

• Following fields in GSTR-9 made optional –

• Table 12 & 13( Amendments), 15A to 15D( Refund details), 15E to 15G( Demands), 16A( Supplies received from composition taxpayer), 16B( Deemed supplies from principle to job worker), 16C( Deemed supplies which were sent on approval basis)

• 4B to 4E; 5A to 5F- Option to fill net of credit/debit notes and amendments

• 5D, 5E & 5F- Option to fill all( exempt, nil rated and non GST) in exempt category

• 6A to 6E- Option to fill all credit in input only; split of input tax credit availed on inputs, input services and capital goods not required

• 6C & 6D- Option to fill details( RCM ITC) in table 6D only

• 7A to 7H- Option to fill all details ( Credit reversal) in table 7H only

• 8A to 8D- Option to upload details of these tables ( Details of ITC) in pdf format in GSTR-9C

• 17 & 18( HSN wise details of inputs or outputs)

• For 2018-19, GSTR-2A as on 01.11.2019 will be auto-populated

• Following fields in GSTR-9C made optional –

• 5B to 5N; Make adjustments in 5O

• 12B( ITC booked in earlier FY but availed in current FY), 12C (ITC booked in current FY but not availed) and 14-Optional

• In Part B- certification words “true and correct” replaced by “true and fair”

• Part B of GSTR-9C

• In 1C, Cash flow statement is to be submitted only if available

• Certification by CA amended as under-

• In My/our opinion and to the best of my/our information and according to examinations of books of accounts including other relevant documents and explanations given to me/us, the particulars given in the said Form No GSTR9C are true and fair correct subject to…………………..

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Cabinet approves Taxation Laws (Amendment) Bill, 2019

Cabinet approves Taxation Laws (Amendment) Bill, 2019

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the proposal for introducing the Taxation Laws (Amendment) Bill, 2019 in order to replace the Ordinance.

Economic developments after the enactment of the Finance (No. 2) Act, 2019 (Finance Act) along with reduction of rate of corporate income tax by many countries world over necessitated the provision of additional fiscal stimulus to attract investment, generate employment and boost the economy. As these could have been achieved through amendment to the Income-tax Act, 1961 (IT Act) or to the Finance Act and the Parliament was not in session, it was done through promulgation of The Taxation Laws (Amendment) Ordinance 2019 (the Ordinance) in September, 2019. Salient features of the amendments made by the Ordinance are provided in the following paras.

In order to promote growth and investment, a new provision was inserted in the IT Act to provide that with effect from the current financial year 2019-20, an existing domestic company may opt to pay tax at 22% plus surcharge at 10% and cess at 4%, if it does not claim any incentive/deduction. The effective tax rate for these companies comes to 25.17% for these companies. They would also not be subjected to Minimum Alternate Tax (MAT).

In order to attract fresh investment in manufacturing and provide boost to ‘Make-in India’ initiative of the Government, another provision was inserted to the IT Act, to provide that a domestic manufacturing company set up on or after 1st October, 2019 and which commences manufacturing by 31st March, 2023, may opt to pay tax at 15% plus surcharge at 10% and cess at 4% if it does not claim any incentive/deduction. The effective rate of tax comes to 17.16% for these companies. They would also not be subjected to MAT.

A company which does not opt for the concessional tax regime and avails the tax exemption/incentive shall continue to pay tax at the pre-amended rate. However, these companies can opt for the concessional tax regime after expiry of their tax holiday/exemption period. After the exercise of the option they shall be liable to pay tax at the rate of 22%. Further, in order to provide relief to companies which continue to avail exemptions/incentive, the rate of MAT was reduced from existing 18.5% to 15%.

In order to provide relief to listed companies, the buy-back tax on shares of listed companies introduced through the Finance Act will not apply to buy-backs in respect of which public announcement were made before 5th July, 2019.

In order to stabilise the flow of funds into the capital market, it was provided that the enhanced surcharge introduced through the Finance Act on capital gains arising on account of transfer of listed equity share or certain units which are liable to securities transaction tax will not apply. Further, it was also provided that the enhanced surcharge will not apply to capital gains income of FPIs arising out of transfer of any security including derivatives, having concessional tax regime.

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Related Party Transaction Criteria Amended by MCA

Ministry of Corporate Affairs (MCA) had notified amendment in the Companies (Meeting of Board and its Powers) Rules, 2014 and amended criteria for Related Party Transactions (RPT) by amending Rule 15 (3) (a) (i) to (iv) of these Rule via Notification dated 18.11.2019

Following are the amendments in threshold limits for entering into any transaction by any Company with its Related Party, as prescribed under section 188(1) (a ) to (e ) of the Companies Act 2013 , only with the approval of members by way of an Ordinary Resolution.

(i) sale, purchase or supply of any goods or material, directly or through appointment of agent, amounting to ten percent or more of the turnover of the company [or rupees one hundred crore, whichever is lower].

(ii) selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent, amounting to ten percent or more of net worth of the company [or rupees one hundred crore, whichever is lower];

(iii) leasing of property any kind [amounting to ten per cent or more of the turnover of the company];

(iv) availing or rendering of any services, directly or through appointment of agent, amounting to ten percent or more of the turnover of the company [or rupees fifity crore, whichever is lower] :

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Incorrect Data in certain Import Export Code number [IEC]

Incorrect Data in certain Import Export Code number [IEC]

On analysis of the DGFT IEC database, it has been observed that there are certain data mismatch issues which require immediate corrective action. Following two broad categories of data mismatch in IECs (Import Export Code number) have been reported:

i. Incorrect Permanent Account Number (PAN)
ii. More than one IEC against same PAN

2. The details of mismatch in lECs under these two categories are at Annexure -I and Annexure – II. The lECs with incorrect Permanent Account Number (PAN) (22,893 Nos.) are at AnnexureI and more than one IEC against same PAN (8353 Nos.) are at Annexure – II of this Trade Notice.

3. IEC holders as mentioned in the two Annexures of this Trade Notice are requested to take immediate steps to correct their IEC data before 15 December 2019, failing which these IECs will be suspended by the jurisdictional DGFT Regional Authority (RA).

4. IECs, which have an incorrect PAN, as mentioned in Annexure-I are required to ensure that their correct PAN number is updated and reflected correctly in the DGFT database. For making changes in PAN, the IEC holder will need to make a written submission on the letter head of the IEC holder to the jurisdictional DGFT RAs along with a self-certified copy of the PAN.

Changes in the PAN cannot be made through the online IEC application module.

5. IEC holders, whose same PAN exists in more than one IEC, as mentioned in Annexure-II, are required to ensure that only one active IEC exists against each PAN. For this, the IEC holder will need to make a separate written request on the letterhead of each IEC holder(s) to the jurisdictional DGFT RA concerned, to suspend/cancel the other IEC(s). RAs need to take suitable action accordingly after observing due diligence. In case of situation where multiple IECs having same PAN exist and the IEC holder has not approached the RA, then the RA will suspend all the multiple IECs having the same PAN after 15 December 2019. Only on a written request with submission of required documents the IEC [on which import/export takes place] may be allowed to be reactivated.

6. If the IEC holder considers for reason(s) that the IEC cannot be corrected before the due date but should not be suspended, the person may submit a representation in writing to the concerned RA, DGFT, or, if that person so desires, appear for a personal hearing before the concerned RA, DGFT. The concerned RAs are requested to take on record all such submissions, and provide a report to DGFT (HQ) along with their recommendations (if any) for non-suspension of such IECs by 15 December 2019.

7. The time period till 15 December 2019 is provided as an opportunity for making a representation in writing or, if that person so desires, of being heard, as per Section 8(1)(b) of Foreign Trade (Development and Regulation) Amendment Act, 2010.

8. IEC holders are also requested to update their IEC database periodically so as to reflect the correct particulars including email/mobile which is used for communication purposes. These changes/amendments can be made directly through the ‘Online JEC Application’ amendment module available on the DGFT Website under the ‘Services’ link.

9. This issues with the approval of Competent Authority

Trade Notice 39

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CBDT notifies Form 26QD (challan-cum statement) for deposit of TDS Sec-194M

CBDT notifies Form 26QD (challan-cum statement) for deposit of TDS Sec-194M

The CBDT has notified Form no. 26QD (challan-cum statement) for deposit of tax deducted at source (TDS) as per the provisions of section 194M. Section 194M provides for levy of TDS, at the rate of 5% on the sum paid or credited, to a resident, in a year on account of contractual work, commission, brokerage or professional fees, by an individual or a HUF, if aggregate of such sum exceeds Rs. 50 lakhs in a year.

Notification is given below for reference:

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 18th November, 2019
INCOME-TAX

G.S.R.858(E).-In exercise of the powers conferred by section 295 read with section 194M and 194N of the Income- tax Act, 1961, the Central Board of Direct Taxes, hereby, makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. Short title and commencement.- (1) These rules may be called the Income-tax (14th Amendment) Rules, 2019.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), in rule 30, –

(a) after sub-rule (2B), the following sub-rule shall be inserted, namely:-

“ (2C) Notwithstanding anything contained in sub-rule (1) or sub-rule (2), any sum deducted under section 194M shall be paid to the credit of the Central Government within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cumstatement in Form No. 26QD.”;

(b) after sub-rule (6B), the following sub-rule shall be inserted, namely:—

“(6C) Where tax deducted is to be deposited accompanied by a challan-cum-statement in Form No. 26QD, the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it electronically within the time specified in sub-rule (2C) into the Reserve Bank of India or the State Bank of India or any authorised bank.”.

3. In the principal rules, in rule 31, after sub-rule (3B), the following sub-rule shall be inserted , namely:— ”

“(3C) Notwithstanding anything contained in sub-rule (1) or sub-rule (2) or sub-rule (3), every person responsible for deduction of tax under section 194M shall furnish the certificate of deduction of tax at source in Form No.16D to the payee within fifteen days from the due date for furnishing the challan-cum-statement in Form No.26QD under rule 31A after generating and downloading the same from the web portal specified by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) or the person authorised by him.”

4. In the principal rules, in rule 31A, in sub-rule (4), after clause (viii) the following clause shall be inserted, namely:—

“(ix) furnish particulars of amount paid or credited on which tax was not deducted in view of the exemption provided in clause (iii) or clause (iv) of the proviso to section 194N or in view of the notification issued under clause (v) of the proviso to section 194N.”

5. In the principal rules in rule 31A, after sub-rule(4B), the following sub-rule shall be inserted, namely: –

“(4C) Notwithstanding anything contained in sub-rule (1) or sub-rule (2) or sub-rule (3) or sub-rule (4), every person responsible for deduction of tax under section 194M shall furnish to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (System) or the person authorised by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) a challan-cum statement in Form No.26 QD electronically in accordance with the procedures, formats and standards specified under sub-rule (5) within thirty days from the end of the month in which the deduction is made.”

6. In the principal rules, in Appendix II —

(a) after Form No.16C, the following Form shall be inserted, namely: —

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Company Law Committee-2019 submits its report to Finance Minister

Company Law Committee-2019 submits its report to Finance Minister

The Company Law Committee was constituted by the Ministry of Corporate Affairs in September, 2019, inter alia, to further decriminalise the provisions of the Companies Act, 2013 based on their gravity and to take other concomitant measures to provide further Ease of Living for corporates in the country.

The report of the Committee was presented today to the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman by Shri Injeti Srinivas, Secretary, Ministry of Corporate Affairs, who chaired the Committee. The other members of the Committee included Shri T. K. Viswanathan, Ex- Secretary General, Lok Sabha; Shri Uday Kotak, MD, Kotak Mahindra Bank; Shri Shardul S Shroff, Executive Chairman, Shardul Amarchand Mangaldas & Co; Shri Amarjit Chopra, Senior Partner, GSA Associates; Shri Rajib Sekhar Sahoo, Principal Partner, SRB & Associates; Shri Ajay Bahl, Founder and Managing Partner, AZB & Partners; Shri G. Ramaswamy, Partner, G. Ramaswamy & Co.; Shri Sidharth Birla, Chairman, Xpro India Limited; Ms. Preeti Malhotra, Group President, Corporate Affairs & Governance, Smart Group and Shri K.V.R. Murty, Joint Secretary, Ministry of Corporate Affairs (Member Secretary of the Committee).

The Committee took note of the progress made consequent to the Companies (Amendment) Act, 2019, which had resulted in de-criminalisation of 16 minor procedural/technical lapses under the Companies Act, 2013 into ‘civil wrongs’, and adopted a principle based approach to further remove criminality, in case of defaults which can be determined objectively and which, otherwise, lack the element of fraud or do not involve larger public interest. Alternative methods of imposing sanctions have also been explored and recommended by the Committee, in some cases.

In Chapter I of the report, the Committee has proposed amendments in 46 penal provisions, so as to either remove criminality, or to restrict the punishment to only fine, or to allow rectification of defaults through alternative methods, which would lead to further de-clogging of the criminal justice system in the country. The main recommendations of the Committee in Chapter 1 are as follows:

• Re-categorising 23 offences out of the 66 remaining compoundable offences under the Act, to be dealt with in the in-house adjudication framework wherein these defaults would be subject to a penalty levied by an adjudicating officer. In addition, the quantum of penalties recommended are lower than the quantum of fines presently provided in the Act.
• Omitting, altogether, 7 compoundable offences; limiting punishment for 11 compoundable offences to only fine by removing provision for imprisonment and recommending that 5 offences be dealt under alternative frameworks;
• Reducing the quantum of penalties in respect of 6 provisions, which were shifted to the in-house adjudication framework through the recently passed Companies (Amendment) Act, 2019;
• Retention of status-quo in case of the non-compoundable offences.

In Chapter 2, the Committee has made recommendations targeted towards providing further ease of living for law abiding corporates, which are as follows:

1. Power to exclude certain class of companies from the definition of ‘listed company’, mainly for listing of debt securities, in consultation with SEBI;
2. Clarifying the trial court’s jurisdiction on the basis of place of commission of offence under Section 452, for wrongful withholding of property of a company by its officers/employees;
3. Including the provisions of Part IXA (Producer Companies) of the Companies Act, 1956 in the Companies Act, 2013;
4. Proposing benches of the National Company Law Appellate Tribunal;
5. Provisions for allowing payment of adequate remuneration to non-executive directors in case of inadequacy of profits, by aligning the same with the provisions for remuneration to executive directors in such cases;
6. Relaxing provisions related to imposition of higher additional fees under third proviso to Section 403(1);
7. Extending applicability of Section 446B (lower penalties for small companies and one person companies) to all provisions which attract monetary penalties and extending the benefit to producer companies and start-ups also;
8. Excluding certain companies/bodies corporate from applicability of Section 89 (declaration of beneficial interest in shares) and Chapter XXII (companies incorporated outside India);
9. Reducing timelines so as to speed up rights issues under Section 62;
10. Extending exemptions from filing of certain resolutions to certain classes of non-banking financial companies under Section 117 in consultation with RBI;
11. Providing power to enhance the thresholds which trigger applicability of Corporate Social Responsibility provisions;
12. Non-levy of penalties for delay in filing the annual returns and financial statements in certain cases.

In addition, the committee while deliberating on certain other issues, felt that wider consultation would be necessary and recommended that the following be taken up in due course, at a later stage;

• Providing for appeal against the orders of the Regional Directors before the NCLT after due examination;
• Exempting certain private placement requirements for Qualified Institutional Placements (QIPs) after due consultation with SEBI;
• Reviewing provisions on disqualification of directors after due consultation and examination;
• Reviewing provisions in respect of debarment of audit firms after due consultation and examination;

Link of Report

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