MSME - trade receivables

Vide a notification issued by the Govt. of India on 2nd November, 2018, all companies with a turnover of more than Rs.500 crores, and all Central Public Sector Enterprises shall get themselves registered at the Trade Receivables Discounting System Platform set up by the RBI. The Registrar of Companies in each state shall be the competent authority to monitor the compliance of these instructions in respect of companies under its respective jurisdiction and Department of Public Enterprises is the authority for the public sector enterprises.

The RBI guidelines in respect of the Trade Receivables Discounting Sytem (TReDS) is given here

So this is another set of compliances to be done by these big companies. 

CERSAI

Gist of RBI notification dated 27th December, 2018 follows

It is now mandatory for banks/ NBFCs etc. to file security interest created on immoveable property (other than equitable mortgage by deposit of title deeds), moveable and intangeable assets in CERSAI.

CERSAI is central registry of securitisation asset reconstruction and security interest of India. It is an online platform for registration of transaction of securitisation, asset reconstruction of financial assets, and creation of security interest over property as contemplated in the SARFAESI Act.

Please refer to circulars DBOD.Leg.No.BC.86/09.08.011/2010-11 dated April 21, 2011, RPCD.CO.RRB.BC.No.72/03.05.33/2010-11 dated May 19, 2011, DNBS.(PD). CC.No.24/SCRC/26.03.001/2010-2011 dated May 25, 2011 and RPCD.CO.RCB.BC. No.73/07.38.03/2010-11 dated May 26, 2011 advising banks/financial institutions(FIs) to register the transactions relating to securitization and reconstruction of financial assets and those relating to mortgage by deposit of title deeds with CERSAI.

2. The Government of India has subsequently issued a Gazette Notification dated January 22, 2016 for filing of the following types of security interest on the CERSAI portal:

1. Particulars of creation, modification or satisfaction of security interest in immovable property by mortgage other than mortgage by deposit of title deeds.
2. Particulars of creation, modification or satisfaction of security interest in hypothecation of plant and machinery, stocks, debts including book debts or receivables, whether existing or future.
3. Particulars of creation, modification or satisfaction of security interest in intangible assets, being know how, patent, copyright, trademark, licence, franchise or any other business or commercial right of similar nature.
4. Particulars of creation, modification or satisfaction of security interest in any ‘under construction’ residential or commercial or a part thereof by an agreement or instrument other than mortgage.

3. CERSAI had started registration of the data in respect of paragraphs 2 (a) to (c) above, for the security interests created on or after January 22, 2016, w.e.f. May 25, 2016 for Scheduled Commercial Banks and w.e.f. July 1, 2016 for all other entities registered with them. Further, the registration of data in respect of paragraph 2(d) above has commenced since June 8, 2017 for all banks and FIs registered with CERSAI. Meanwhile, the banks/ FIs have also started registering the security interests created before January 22, 2016 (subsisting records). However, it is observed that the extent of registration on the CERSAI portal is very low, both for current and subsisting records.

4. Banks/FIs are therefore advised to complete filing the charges pertaining to subsisting transactions by March 31, 2019. Banks/FIs are also advised to file the current charges relating to all transactions with CERSAI on an ongoing basis.

GSTR3B -waiver of late fee

The Central Government has vide a notification click here waived the late fee on delayed filing of form GSTR3B. Any amount of late fee which is in excess of Rs.25/- per day is waived. Similarly where the tax payable is NIL and still the registered person has to file the return, any excess late fee over Rs.10 per day is waived off. This is applicable for all GSTR3B returns from July, 2017 onwards i.e. from the inception of GST system.

So here it is only a partial waiver. But where the registered person has failed to furnish the return for the periods July 2017 to September, 2018 but has subsequently filed the same between 22nd December, 2018 and 31st March, 2019, the entire late fee is waived off.

This sounds ridiculous unless I am missing some thing here. That means if you have not filed at all but are filing now between those above dates, then you get full waiver, otherwise only partial waiver.

This begs a major question - why the hell did the government deem it so bloody important to levy a late fee and penalty in the first place if they have to go back and waive it from retrospective effect. Sounds like poor governance from the government.

CRZ notification

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved the Coastal Regulation Zone (CRZ) Notification, 2018 which was last reviewed and issued in 2011, with periodic amendments to some clauses. The move comes in the backdrop of a series of representations received by the Ministry of Environment, Forest & Climate Change from various Coastal States/UTs, besides other stakeholders, for a comprehensive review of the provisions of the CRZ Notification, 2011, particularly related to the management and conservation of marine and coastal eco-systems, development in coastal areas, eco-tourism, livelihood option and sustainable development of coastal communities etc.

Benefits

The proposed CRZ Notification, 2018 will lead to enhanced activities in the coastal regions thereby promoting economic growth while also respecting the conservation principles of coastal regions. It will not only result in significant employment generation but also to better life and add value to the economy of India. The new notification is expected to rejuvenate the coastal areas while reducing their vulnerabilities.

Salient Features:

(i)         Allowing FSI as per current norms in CRZ areas: As per CRZ, 2011 Notification, for CRZ-II (Urban) areas, Floor Space Index (FSI) or the Floor Area Ratio (FAR) had been frozen as per 1991 Development Control Regulation (DCR) levels. In the CRZ, 2018 Notification, it has been decided to de-freeze the same and permit FSI for construction projects, as prevailing on the date of the new Notification. This will enable redevelopment of these areas to meet the emerging needs.

(ii)        Densely populated rural areas to be afforded greater opportunity for development: For CRZ-III (Rural) areas, two separate categories have now been stipulated as below:

(a)  CRZ-III A - These are densely populated rural areas with a population density of 2161 per square kilometre as per 2011 Census. Such areas shall have a No Development Zone (NDZ) of 50 meters from the HTL as against 200 meters from the High Tide Line stipulated in the CRZ Notification, 2011 since such areas have similar characteristics as urban areas.

(b)  CRZ-III B - Rural areas with population density of below 2161 per square kilometre as per 2011 Census. Such areas shall continue to have an NDZ of 200 meters from the HTL.

(iii)       Tourism infrastructure for basic amenities to be promoted: Temporary tourism facilities such as shacks, toilet blocks, change rooms, drinking water facilities etc. have now been permitted in Beaches. Such temporary tourism facilities are also now permissible in the "No Development Zone" (NDZ) of the CRZ-III areas as per the Notification. However, a minimum distance of 10 m from HTL should be maintained for setting up of such facilities.

(iv)      CRZ Clearances streamlined: The procedure for CRZ clearances has been streamlined. Only such projects/activities, which are located in the CRZ-I (Ecologically Sensitive Areas) and CRZ IV (area covered between Low Tide Line and 12 Nautical Miles seaward) shall be dealt with for CRZ clearance by the Ministry of Environment, Forest and Climate Change. The powers for clearances with respect to CRZ-II and III have been delegated at the State level with necessary guidance.

(v)       A No Development Zone (NDZ) of 20 meters has been stipulated for all Islands: For islands close to the main land coast and for all Backwater Islands in the main land, in wake of space limitations and unique geography of such regions, bringing uniformity in treatment of such regions, NDZ of 20 m has been stipulated.

(vi)       All Ecologically Sensitive Areas have been accorded special importance: Specific guidelines related to their conservation and management plans have been drawn up as a part of the CRZ Notification.

(vii)      Pollution abatement has been accorded special focus: In order to address pollution in Coastal areas treatment facilities have been made permissible activities in CRZ-I B area subject to necessary safeguards.

(viii)     Defence and strategic projects have been accorded necessary dispensation. 

Background:

With the objective of conservation and protection of the coastal environment, Ministry of Environment and Forest and Climate Change notified the Coastal Regulation Zone Notification in 1991, which was subsequently revised in 2011. The notification was amended from time to time based on representations received.

A need was felt overtime to undertake a comprehensive revision of the notification on the basis of number of representations from various Coastal States/UTs, besides other stakeholders particularly related to the management and conservation of marine and coastal eco-systems, development in coastal areas, eco-tourism, livelihood options and sustainable development of coastal communities etc. Therefore, the Ministry of Environment, Forest & Climate Change constituted a Committee in June 2014 under the Chairmanship of Dr. Shailesh Nayak (Secretary, Ministry of Earth Sciences) to examine the various issues and concerns of Coastal States/UTs and other stakeholders for recommending appropriate changes in the CRZ Notification, 2011.

The Shailesh Nayank Committee held wide ranging consultations with State Governments and other stakeholders and submitted its recommendations in 2015. The recommendations were further examined in consultation with Members of Parliament of Coastal States and Union Territories besides other concerned Ministries of Government of India. A draft notification was issued in April, 2018 for inviting comments from public at large.

A number of suggestions and comments were received by the Government and based on overall imperative of sustainable development of Coastal areas and need for conserving the Coastal environment, Government has approved the Coastal Regulation Zone Notification 2018 which is expected to go a long way in meeting the aspirations of Coastal communities besides ensuring welfare of poor and vulnerable populations.

The changes brought about in the CRZ Notification will further add to creating additional opportunities for affordable housing. This will benefit not only the housing sector but the people at large looking for shelter. The Notification is so designed that it balances the needs in such a way that both are fulfilled. Tourism has been one of the greatest creators of livelihood and jobs. The new Notification will boost tourism in terms of more activities, more infrastructure and more opportunities and will certainly go a long way in creating employment opportunities in various aspects of tourism. This will also give boost to people, desirous of seeing and enjoying the beauty of the mighty seas.

FDI in e-commerce

Review of the FDI policy in e-commerce issued by the DIPP on 26th December, 2018

1.0       To provide clarity to FDI policy on e-commerce sector, Para 5.2.15.2 of the Consolidated FDI Policy Circular 2017 will now read as under:

5.2.15.2 E-commerce activities

Sector/Activity	% of Equity/FDI Cap	Entry Route
E-commerce activities	100%	Automatic

5.2.15.2.1 Subject to provisions of FDI Policy, e-commerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce.

5.2.15.2.2 Definitions:

i)    E-commerce- E-commerce means buying and selling of goods and services including digital products over digital & electronic network.

ii)   E-commerce entity-     E-commerce entity means a company incorporated under the Companies Act 1956 or the Companies Act 2013 or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in section 2 (v) (iii) of FEMA 1999, owned or controlled by a person resident outside India and conducting the e-commerce business.

iii)  Inventory based model of e-commerce- Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly. 

iv)  Marketplace based model of e-commerce- Marketplace based model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller.

5.2.15.2.3 Guidelines for Foreign Direct Investment on e-commerce sector

i)          100% FDI under automatic route is permitted in marketplace model of e-commerce.

ii)         FDI is not permitted in inventory based model of e-commerce.

5.2.15.2.4          Other Conditions

i)          Digital & electronic network will include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles etc.

ii)         Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis.

iii)        E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfillment, call centre, payment collection and other services.

iv)        E-commerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. Such an ownership or control over the inventory will render the business into inventory based model. Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies. 

 v)        An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.

vi)        In marketplace model goods/services made available for sale electronically on website should clearly provide name, address and other contact details of the seller. Post sales, delivery of goods to the customers and customer satisfaction will be responsibility of the seller.

vii)       In marketplace model, payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India.

viii)      In marketplace model, any warrantee/ guarantee of goods and services sold will be responsibility of the seller.

ix)        E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner. Such services will include but not limited to fulfilment, logistics, warehousing, advertisement/ marketing, payments, financing etc. Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory.

  x)       Guidelines on cash and carry wholesale trading as given in para 5.2.15.1.2 of Consolidated FDI Policy Circular 2017 will apply on B2B e-commerce.

xi)        e-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.

xii)       e-commerce marketplace entity will be required to furnish a certificate along with a report of statutory auditor to Reserve Bank of India, confirming compliance of above guidelines, by 30th of September of every year for the preceding financial year.

            Subject to the conditions of FDI policy on services sector and applicable laws/regulations, security and other conditionalities, sale of services through e-commerce will be under automatic route.

3.0       The above decision will take effect from 01 February, 2019.

form NFRA-1

MCA has vide its notification dated 13th December, 2018 extended the last date for filing of form NFRA-1. The new date is 30 days from the date on which the form is deployed on the website of the ministry.

Form NFRA-1 is a new form for giving particulars of auditors of listed companies as per the new NFRA regulations. NFRA will be regulator of the auditors of the listed companies, for the time being. Later on it might extend to auditors of other unlisted big companies as well.

Ostensibly the form is not ready at the MCA side which is why they have extended the last date. This has happened with other forms also such as BEN-1, BEN-2 and the form for intimating commencement of business. One would have thought that MCA should do all its homework before introducing new regulations or changes in the existing regulations. Shows MCA in poor light in this regard.

http://www.mca.gov.in/Ministry/pdf/NoticeAndCirculars_13122018.pdf

GST annual return

The Ministry of Finance vide its notification dated 11th December, 2018 has extended the last date for filing of the annual return of GST for the period from 1st July, 2017 to 31st March, 2018 to 31st March, 2019. The annual return is required to be filed online, but the system is not yet ready at their end, so the extension.

Every registered person,  a casual taxable person and a non resident taxable person is required to file this annual return electronically.

The form for the annual return is not ready, so one does not know the contours of this return. Already taxpayers are burdened with two returns GSTR3B and GSTR1. The latter could be quarterly for taxpayers who have less than Rs.1.5 crore turnover and they have to opt for quarterly method of filing.

One does not know what is the reason for one more return under the GST regime. It does not help in "ease of doing business"