Bankruptcy Code Amendments

PIB press release dated 25th July, 2019

The Insolvency and Bankruptcy Board India (IBBI) notified regulations related to the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2019, and the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2019.

The salient amendments effected by the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2019 are:

1. 1. An insolvency professional shall not accept or undertake any assignment as interim resolution professional, resolution professional, liquidator, bankruptcy trustee, authorised representative or in any other role under the Insolvency and bankruptcy Code, 2016 unless he holds an ‘Authorisation for Assignment’ issued by his Insolvency Professional Agency. This is effective from 1^st January, 2020.
   2. An insolvency professional shall not engage in any employment when he holds an Authorisationfor Assignment or when he is undertaking an assignment. This would enable an individual to seek registration as an insolvency professional even when he is in employment. He must, however, discontinue employment when he wishes to have an Authorisation for Assignment. He may surrender Authorisation for Assignment when he wishes to take up employment.
   3. Where an insolvency professional has  conducted a corporate insolvency resolution process, he and his relatives shall not accept any employment, other than an employment secured through open competitive recruitment, with, or render professional services, other than services under the Code to a creditor having more than ten percent voting power, the successful resolution applicant, the corporate debtor or any of their related parties, until a period of one year has elapsed from the date of his cessation from such process.
   4. An insolvency professional shall not engage or appoint any of his relatives or related parties, for or in connection with any work relating to any of his assignment.

The salient amendments effected by the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2019 are:

1. 1. An Insolvency Professional Agency shall issue/renew an Authorisation for Assignment to insolvency professionals in accordance with its Bye-laws.
   2. Subject to meeting other requirements, an insolvency professional shall be eligible to obtain an Authorisation of Assignment if he has not attained the age of seventy years.
   3. Subject to meeting other requirements, an individual may serve as an independent director on the Governing Board of an Insolvency Professional Agency up to the age of seventy-five years.

These amendment regulations are effective from 23^rd July, 2019. These are available atwww.mca.gov.in and www.ibbi.gov.in.

Code on Occupational Safety, Health & Working Conditions

PIB press release dated 23rd July, 2019

The Minister of State (I/C) for Labour and Employment Shri Santosh Kumar Gangwar introduced The Code on Occupational Safety, Health and Working Conditions Bill, 2019 in Lok Sabha today to amend the laws regulating the Occupational Safety, Health and Working Conditions of the persons employed in an establishment. Shri Gangwar said that the proposed bill is being introduced after wide consultations with Trade Unions, employers and all the other stakeholders. 

Safety, Health, welfare and improved Working Conditions are pre-requisite for well being of the worker and also for economic growth of the country as healthy workforce of the country would be more productive and occurrence of less accidents and unforeseen incidents would be economically beneficial to the employers also.

With the ultimate aim of extending the safety and healthy working conditions to all workforce of the country, the Code enhances the ambit of provisions of safety, health, welfare and working conditions from existing about 9 major sectors to all establishments having 10 or more employees. The proposed Code enhances the coverage of workers manifold as it would be applicable to all establishments employing 10 or more workers, where any industry, trade, business, manufacture or occupation is carried on, including, IT establishments or establishments of service sector. Further the varying threshold of applicability has been made uniform at 10 workers for all establishments except mines and dock where the Code would be applicable even with 1 worker. In order to ensure wider coverage, the definitions of Working Journalists and Cine worker have also been modified to include workers employed in electronic media and all forms of audio visual production. Similarly, the definition of inter-state migrant worker has also been proposed to be modified to include those migrant workers who are being employed directly by the employer from other States without contractor or agent. This proposal would enhance the coverage of the safety, health and working conditions provisions manifold as compared to the present scenario.

Besides, extending the ambit of Occupational safety, Health and Working conditions to all sectors, other salient features of the Code on Occupational Safety, Health and Working Conditions are as under:

i. The Code provides basic broad legislative framework with enabling provisions for framing rules, regulations, standards, and bye-laws as per the requirements of different sectors which has Resulted in reduction of 622 sections to 134 sections in the Code. This would result in simple legislation with flexibility in changing the provisions in tune with emerging technologies and makes the legislation dynamic.

ii. The Bill proposes one registration for an establishment instead of multiple registrations. Presently 6 labour acts out of 13 provide for separate registration of the establishment. This will create a centralized data base and promote ease of doing business. At present, separate registration is required to be obtained under 6 Acts.

iii. Employer to provide free of cost annual health checks-up for employees above prescribed age for prescribed tests and for prescribed establishments. Increases productivity as it would be possible to detect diseases. Coverage of employees above a certain age for health check-up would promote inclusion.

iv. First time statutory provision to issue appointment letter to every employee of the establishment with the minimum information prescribed by the appropriate government. The provision of appointment letter will result in formalization of employment and prevent exploitation of the worker.

v. The multiple committees under five labour Acts have been substituted by one National Occupational Safety and Health Advisory Board. The National Board is of tripartite nature and has representation from trade unions, employer associations, and State governments. This will result in reduction in multiplicity of bodies/committees in various Acts and simplified and coordinated policy-making.

vi. Enabling provision for constituting a bi-partite Safety Committee in any class of establishment by appropriate government. It will promote safe and healthy working conditions in an establishment. The participatory nature of the committee will encourage implementation of decisions taken by the management.

vii. A part of the penalty for contravention of provisions relating to duties of employer leading to death or serious bodily injury to any person may be given to the victim or the legal heirs of the victim by the Court. The part of penalty would help in rehabilitation of injured worker or would provide financial support to the family of deceased.

viii. Presently, different applicability thresholds exists for welfare provisions like crèche, canteen, first aid, welfare officer etc in different Acts. The proposed Code has envisaged uniform threshold for welfare provisions for all establishment as far as practicably feasible.

ix. Women permitted to work beyond 7 PM and before 6 AM subject to the safety, holidays, working hours or any other condition as prescribed by appropriate government in respect of prescribed establishments. However, only after taking their consent for night work. This will promote gender equality and is in tune with demands from the various forums including international organizations as it leads to protective discrimination. Further, the condition of taking consent/ willingness of the women employee for night work would avoid any kind of misuse of the provision.

x. The provision of one license and one return in place of multiple licenses and returns in existing 13 labour laws subsumed in this Code to save time, resources and efforts of establishments.

From the above salient features of the Code, it is evident that the Occupational Safety, Health and Working Conditions has some unique new initiatives for both workers and employers. It promotes health, safety, welfare and better working conditions of workforce by enhancing the ambit of a dynamic legislation as compared to the existing sectoral approach limited to few sectors. Besides, it also drastically rationalises the compliance mechanism with one license, one registration and one return for the establishments under the ambit of the Code thereby saving resources and efforts of the employers. Thus it balances the requirements of worker and employer and is beneficial to both the constituents of the world of work.

The Code has been drafted after amalgamation, simplification and rationalisation of the relevant provisions of the 13 Central Labour Acts viz. The Factories Act, 1948;The Mines Act, 1952;The Dock Workers (Safety, Health and Welfare) Act, 1986 ;The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 -,The Plantations Labour Act, 1951; The Contract Labour (Regulation and Abolition) Act, 1970; The Inter-State Migrant workmen (Regulation of Employment and Conditions of Service) Act, 1979; The Working Journalist and other News Paper Employees (Conditions of Service and Misc. Provision) Act, 1955; The Working Journalist (Fixation of rates of wages) Act, 1958; The Motor Transport Workers Act, 1961; Sales Promotion Employees (Condition of Service) Act, 1976; The Beedi and Cigar Workers (Conditions of Employment)Act, 1966 and The Cine Workers and Cinema Theatre Workers Act, 1981. After the enactment of the Code, all these Acts being subsumed in the Code will be repealed.

Code on Wages Bill 2019

PIB press release dated 23rd July, 2019

The Minister of State (I/C) for Labour and Employment Shri Santosh Kumar Gangwar introduced The Code on Wages Bill, 2019 in Lok Sabha today to amend and consolidate the laws relating to wages and bonus and matters connected therewith.

The Code on Wages Bill, 2019 subsumes relevant provisions of The Minimum Wages Act, 1948, The Payment of Wages Act, 1936, The Payment of Bonus Act, 1965 and The Equal Remuneration Act, 1976. After the enactment of the Code on Wages, all these four Acts will get repealed. The salient features of the Code are as following:

• The Code on Wage universalizes the provisions of minimum wages and timely payment of wages to all employees irrespective of the sector and wage ceiling. At present, the provisions of both Minimum Wages Act and Payment of Wages Act apply on workers below a particular wage ceiling working in Scheduled Employments only. This would ensure "Right to Sustenance" for every worker and intends to increase the legislative protection of minimum wage from existing about 40% to 100% workforce. This would ensure that every worker gets minimum wage which will also be accompanied by increase in the purchasing power of the worker thereby giving fillip to growth in the economy. Introduction of statutory Floor Wage to be computed based on minimum living conditions, will extend qualitative living conditions across the country to about 50 crore workers. It is envisaged that the states to notify payment of wages to the workers through digital mode.

• There are 12 definitions of wages in the different Labour Laws leading to litigation besides difficulty in its implementation. The definition has been simplified and is expected to reduce litigation and will entail at lesser cost of compliance for an employer. An establishment will also be benefited as the number of registers, returns, forms etc., not only can be electronically filed and maintained, but it is envisaged that through rules, not more than one template will be prescribed.

• At present, many of the states have multiple minimum wages. Through Code on Wages, the methodology to fix the minimum wages has been simplified and rationalised by doing away with type of employment as one of the criteria for fixation of minimum wage. The minimum wage fixation would primarily based on geography and skills. It will substantially reduce the number of minimum wages in the country from existing more than 2000 rates of minimum wages.

• Many changes have been introduced in the inspection regimes including web based randomised computerised inspection scheme, jurisdiction-free inspections, calling of information electronically for inspection, composition of fines etc. All these changes will be conducive for enforcement of labour laws with transparency and accountability.

 • There were instances that due to smaller limitation period, the claims of the workers could not be raised. To protect the interest of the workers, the limitation period has been raised to 3 years and made uniform for filing claims for minimum wages, bonus, equal remuneration etc., as against existing varying period between 6 months to 2 years.

• It can be said that a historical step for ensuring statutory protection for minimum wage and timely payment of wage to 50 crore worker in the country has been taken through the Code on Wages besides promoting ease of living and ease of doing business.

The Code on Wages Bill was earlier introduced in the Lok Sabha on 10^th August 2017 and was referred to Parliamentary Standing Committee which submitted its Report on 18^th December 2018. However, owing to dissolution of 16^th Lok Sabha, the Bill has lapsed. Therefore, a fresh Bill namely The Code on Wages Bill, 2019 has been drafted inter alia, after considering the recommendations of the Parliamentary Standing Committee and other suggestions of the stakeholders.

Income Tax Returns

PIB press release dated 23rd July, 2019

The due date for filing of Income Tax Returns for Assessment Year 2019-20 is 31.07.2019 for certain categories of taxpayers. Upon consideration of the matter, the Central Board of Direct Taxes(CBDT) extends the ‘due date’ for filing of Income Tax Returns from 31st July, 2019 to 31st August, 2019 in respect of the said categories of taxpayers.

GST - exhibition goods

Clarification in respect of goods taken out of India for exhibition or on consignment basis for export promotion

Posted On: 22 JUL 2019 1:18PM by PIB Delhi

Several goods are taken out of India on consignment basis for exhibitions or other export promotion events. These goods are sold only when approved by the prospective customers abroad. The unsold goods are then brought back to India. This is a widespread practice in various sectors, including the gems and jewellery industry. Exporters of these items were facing problems due to the the lack of clarity on the procedure to be followed under GST at the time of taking these goods out of India and at the time of their subsequent sale or return to India. Taking cognizance of these problems and in order to help exporters, the Central Board of Indirect Taxes and Customs (CBIC) has now issued a comprehensive clarification in this regard vide Circular No. 108/27/2019-GST dated 18.07.2019. The key points clarified in the Circular are the following:

1. The activity of taking goods out of India on consignment basis for exhibition would not in itself constitute a supply under GST since there is no consideration received at this time.
2. The movement of these goods out of India shall be accompanied by a delivery challan issued in accordance with the provisions contained in rule 55 of the CGST Rules.
3. Since taking such goods out of India is not a supply, it necessarily follows that it is also not a zero-rated supply. Therefore, execution of a bond or LUT, as required under section 16 of the IGST Act, is not required.
4. The goods taken out of India in this manner are required to be either sold or brought back within a period of six months from the date of removal.
5. The supply would be deemed to have taken place if the goods are neither sold abroad nor brought back within the period of six months. In this case, the sender shall issue a tax invoice on the date of expiry of six months from the date of removal, in respect of the quantity of goods which have neither been sold nor brought back. The benefit of zero-rating, including refund, shall not be available in respect of such supplies.
6. If the specified goods are sold abroad, fully or partially, within the period of six months, the supply shall be held to have been effected, in respect of the quantity so sold, on the date of such sale. In this case, the sender shall issue a tax invoice in respect of such quantity of goods which has been sold. These supplies shall become zero-rated supplies at the time of issuance of invoice. However, refund in relation to such supplies shall be available only as refund of unutilized ITC and not as refund of IGST.
7. No tax invoice is required to be issued in respect of goods which are brought back to India within the period of six months.

The above points are informative in nature and have been presented in this release in simple language for benefit of all stakeholders. The Circular issued in this regard, i.e. Circular No. 108/27/2019-GST dated 18.07.2019, may be referred which alone shall have the force of law.

Insolvency Code Amendment

MCA press release dated 17th july, 2019


The Union Cabinet today approved the proposal to introduce a Bill in the Parliament to carry out 08 amendments to the Insolvency and Bankruptcy Code, 2016. The amendments aim to fill critical gaps in the corporate insolvency resolution framework as enshrined in the Code, while simultaneously maximizing value from the Corporate Insolvency Resolution Process (CIRP).

2. The Government intends to ensure maximization of value of a corporate debtor as a going concern while simultaneously adhering to strict timelines.

3. The salient features of the amendments are:

a) Clarity on allowing comprehensive corporate restructuring schemes such as mergers, demergers, amalgamations etc as part of the resolution plan.
b) Greater emphasis on the need for time bound disposal at application stage.
c) A deadline for completion of CIRP within an overall limit of 330 days, including litigation and other judicial processes.
d) Votes of all financial creditors covered under section 21(6A) shall be cast in accordance with the decision approved by the highest voting share (more than 50%) of financial creditors on present and voting basis.
e) A specific provision that financial creditors who have not voted in favor of the resolution plan and operational creditors shall receive at least the amount that would have been received by them if the amount to be distributed under the resolution plan had been distributed in accordance with section 53 of the Code or the amount that would have been received if the liquidation value of the corporate debtor had been distributed in accordance with section 53 of the Code, whichever is higher. This will have retrospective effect where the resolution plan has not attained finality or has been appealed against.
f) Inclusion of commercial consideration in the manner of distribution proposed in resolution plan, within the powers of the Committee of Creditors.
g) Clarity that the plan shall be binding on the all stakeholders including the Central Government, any State Government or local authority to whom a debt in respect of the payment of the dues may be owed.
h) Clarity that the Committee of Creditors may take the decision to liquidate the corporate debtor, any time after constitution of the Committee of Creditors and before preparation of Information Memorandum.

5. The changes are expected to lead to timely admission of applications and timely completion of the Corporate Insolvency Resolution Process, greater clarity on permissibility of corporate restructuring schemes, manner of distribution of amounts amongst financial and operational creditors, clarity on rights and duties of authorized representatives of voters and applicability of the resolution plan on all statutory authorities. 6. Analysis of data available demonstrates that there

FLA Return

RBI circular dated 28th June, 2019

Attention of Authorised Dealer Category – I banks is invited to A.P. (DIR Series) Circular No.133 dated June 20, 2012 which stipulated that all Indian companies which have received FDI and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year, should file the annual return on Foreign Liabilities and Assets (FLA) in the soft form which can be duly filled-in, validated and sent by e-mail to the Reserve Bank by July 15 of every year. The coverage was enhanced to reporting of inward and outward foreign affiliate trade statistics (FATS) and reporting by the limited liability partnerships (LLPs) through the subsequent circulars {A .P. (DIR Series) Circular No. 145 dated June 18, 2014, A.P. (DIR Series) Circular No.22, dated October 21, 2015, and A.P. (DIR Series) Circular No. 29, dated February 02, 2017}.

2. With the objective to enhance the security-level in data submission and further improve the data quality, the present email-based reporting system for submission of the FLA return will be replaced by the web-based system online reporting portal. It would facilitate data submission by eligible entities {including the alternative investment funds (AIF) registered with the Securities and Exchange Board of India (SEBI) as also the reporting of foreign investment in the form of capital/profit share contribution received/transferred in case of LLPs and investment by persons resident outside India in an investment vehicle and as defined in Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations 2017, dated November 7, 2017}.

3. Following are the main features of the revised Foreign Liabilities and Assets Information Reporting (FLAIR) system:

1. Reserve Bank would provide a web-portal interface https://flair.rbi.org.in to the reporting entities for submitting “User Registration Form” (containing entity identification and business user details, where LLPs and AIFs will no longer required to use dummy CIN). The successful registration on web-portal will enable users to generate RBI-provided login-name and password for using FLA submission gateway and would include system-driven validation checks on submitted data.
2. The form will seek investor-wise direct investment and other financial details on fiscal year basis as hitherto, where all reporting entities are required to provide information on FATS related variables (it was mandatory only for subsidiary companies earlier). In addition, the revised form seeks information on first year of receipt of FDI/ODI and disinvestment.
3. Reporting entities will get system-generated acknowledgement receipt upon successful submission of the form.
4. They can revise the data, if required, and view/download the information submitted.
5. Entities can submit FLA information for earlier year/s after receiving RBI confirmation on their request email.
6. The existing mechanism of email-based submission of FLA forms will be discontinued.

5. Indian entities not complying with above, will be treated as non-compliant with Foreign Exchange Management Act, 1999 and regulations made thereunder.

6. These directions will come into force with immediate effect and would be applicable for reporting of information for the year 2018-19. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

7. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.