Monthly Archives: May 2016

Impact of Audit Qualifications

SEBI has vide its circular dated 27th May, 2016 clarified that there will be a Statement of Impact of Audit Qualifications in lieu of Form A or B that will be required to be attached to the annual audited financial statements to the stock exchanges. This Statement will be applicable only if the audit report is with modified opinion.

If the audit report is with unmodified opinion, then the company has merely to furnish a declaration to that effect.

The format of Statement of Impact of Audit Qualifications is given in Annexure I to the said circular.

The procedures to be followed if the Audit Report is with modified opinion is as follows:

4.3.The management of the listed entity shall have the option to explain its views on the audit qualifications;

4.4.Where the impact of the audit qualification is not quantified by the auditor, the management shall make an estimate. In case the management is unable to make an estimate, it shall provide reasons for the same. In both the scenarios, the auditor shall review and give the comments.

4.5.The aforesaid statements on impact of audit qualifications filed by the listed entities shall be a part of regular monitoring by the stock exchanges as specified in Regulation 97 of the Listing Regulations. In case of non-compliance, the stock exchanges shall take action against such entities as deemed fit and report to SEBI on a regular basis.

The stock exchanges shall coordinate with one another in case the scrip is listed on more than one stock exchange.

This will come into effect for the financial year ended 31st March, 2016.


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Draft Trafficking Bill 2016

PIB press release dated 30th May, 2016

The Minister of Women & Child Development Smt Maneka Sanjay Gandhi released the draft “Trafficking of Persons (Prevention, Protection and Rehabilitation) Bill, 2016” in New Delhi today for further stakeholders consultations and comments. The Bill aims to create a strong legal, economic and social environment against trafficking of persons and related matters.

Speaking on the occasion, Smt Maneka Sanjay Gandhi said that the Bill is victim oriented and makes clear the distinction between the ‘trafficker’ and the ‘trafficked’. The WCD Minister said that the draft Bill plugs loopholes in existing laws and brings within its fold additional crimes pertaining to trafficking which don’t find a place in the existing laws. It also envisages creation of a fund for rehabilitation of victims of trafficking, she said. Under the Bill, an institutional mechanism is also sought to be set up to deal with this highly specialized subject which will also include members from Civil Society Organizations, the Minister explained. Since the problem is trans-border with our neighbouring countries, protocols will also be worked out for those trafficked from other countries. Smt Maneka Gandhi also highlighted the major initiatives taken up by the Government to deal with the problem of trafficking and that of missing children including the new Khoya-Paya web portal, unique initiative with Railways, pasting of posters in railway coaches, expansion of Children helpline-Childline 1098 among others.

Secretary WCD, Shri V. Somasundaran highlighted the enormity of the problem of trafficking in the country. He disclosed that trafficking is the third largest organized crime and time has now come to deal with it through a single comprehensive Act.

The draft Bill has taken into account the various aspects of trafficking and its punishments as defined in section 370- 373 of Indian Penal Code, 1860 and aims to include other offences/ provisions which are not dealt with in any other law for the purpose of trafficking, such as (1) penal provisions for the disclosure of identity of the victim of trafficking and witness (2) use of narcotic drug or psychotropic substance or alcohol for the purpose of trafficking (3) use of chemical substance or hormones for the purpose of exploitation. The draft Bill has also taken into its ambit the ‘placement agencies’ by making mandatory for them to also register for the purposes of this Act.

The proposed draft Bill aims to place dedicated institutional mechanisms at District, State and Central level. It also envisages a designated Agency for the investigation of offences. It provides for Protection Homes and Special Homes for short term and long term rehabilitation support. For speedy trial with a view to increase prosecution and to reduce the trauma faced by the victims, the proposed draft Bill provides for establishing Special Courts in each district and experienced Special Prosecutors. Recovery of back wages and other monetary losses of the victim of trafficking is also proposed.

The draft Bill provides for mandatory reporting within 24 hours by a Police Officer, Public servant, any officer or employee of Protection Home or Special Home having custody of the victim of trafficking to the District Anti-Trafficking Committee or in case of child victim to the Child Welfare Committee. For the effective implementation of the proposed Act and for the welfare and rehabilitation of the victims an Anti-Trafficking Fund will be created.

The details of draft Bill are available at

The draft Trafficking of Persons Bill 2016 has also been posted on the MyGov portal – a platform for citizen engagement with the government. Citizens are requested to submit their inputs at by 30th June 2016.

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Investment in Credit Information Companies

RBI notification dated 19th May, 2016

In exercise of the powers conferred by sub-section (1) of Section 11 of Credit Information Companies (Regulation) Act, 2005, and in supersession of its direction on Investment in Credit Information Companies (CICs) dated November 29, 2013, Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest to do so, hereby directs that investments directly or indirectly by any person, whether resident or otherwise, in a CIC, shall not exceed ten percent of the equity capital of the investee company.

2. Notwithstanding the above, the Reserve Bank may consider allowing higher FDI limits as under to entities which have an established track record of running a Credit Information Bureau in a well regulated environment:

  1. up to 49% if their ownership is not well diversified (i.e., one or more shareholders each hold more than 10% of voting rights in the company)
  2. up to 100% if their ownership is well diversified


    If their ownership is not well diversified, at least 50% of the directors of the investee CIC in India are Indian nationals/ Non-Resident Indians/ Persons of Indian Origin subject to the condition that one third of the directors are Indian nationals resident in India.

  3. The investor company should preferably be a listed company on a recognised stock exchange.

3. FII/FPI investment would be permitted subject to the conditions that:

  1. A single entity should directly or indirectly hold below 10% equity;
  2. Any acquisition in excess of 1% will have to be reported to RBI as a mandatory requirement;
  3. FIIs/FPIs investing in CICs shall not seek a representation on the Board of Directors based upon their shareholding.

4. In case the investor in a Credit Information Company in India is a wholly owned subsidiary (directly or indirectly) of an investment holding company, the conditions as at (2) and (3) above will be applied to the operating group company that is engaged in credit information business and has undertaken to provide technical know-how to the Credit Information Company in India.

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Income Declaration Scheme 2016

The Income Declaration Scheme, 2016 incorporated as Chapter IX of the Finance Act 2016 provides an opportunity to all persons who have not declared income correctly in earlier years to come forward and declare such undisclosed income(s).

Under the Scheme, such income as declared by the eligible persons, would be taxed at the rate of 30% plus a ‘Krishi Kalyan Cess’ of 25% on the taxes payable and a penalty at the rate of 25% of the taxes payable, thereby totalling to 45% of the income declared under the scheme.

The scheme shall remain in force for a period of 4 months from 1st June, 2016 to 30th September, 2016 for filing of declarations and payments towards taxes, surcharge & penalty must be made latest by 30th November, 2016. Declarations can be filed online or with the jurisdictional Pr. Commissioners of Income-tax across the country.

  • The scheme shall apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to Financial Year 2015-16 or earlier.
  • Where the declaration is in the form of investment in assets, the Fair Market Value of such asset as on 1st June 2016 shall be deemed to be the undisclosed income under the Scheme. However, foreign assets or income to which the Black Money Act 2015 applies are not eligible for declaration under this scheme.
  • Assets specified in the declaration shall be exempt from Wealth tax.
  • No Scrutiny and enquiry under the Income-tax Act or the Wealth tax Act shall be undertaken in respect of such declarations.
  • Immunity from prosecution under the Income-tax Act and Wealth Tax Act is also provided along with immunity from the Benami Transactions (Prohibition) Act, 1988 subject to transfer of asset to actual owner within the period specified in the Rules.
  • Non-payment of total taxes, surcharge & penalty in time or declaration by misrepresentation or suppression of facts shall render the declaration void.
  • The circumstances in which the Scheme shall not apply or where a person is held to be ineligible are specified in section 196 (Chapter IX) of the Finance Act, 2016.
  • Non declaration of undisclosed income under the Scheme, will render such undisclosed income liable to tax in the previous year in which it is detected by the Income tax Department. Other penal consequences will also follow accordingly.

The full text of the Scheme is available on the departmental website for viewing. The relevant rules and forms for the same are to be notified shortly.

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Service tax i/r arbitral tribunal – clarification reg

Circular No.193/03/2016-Service Tax dated 18th May, 2016

1. It has come to the notice of the Board that there is some confusion regarding the legal position with respect to continuance of reverse charge mechanism for services provided by arbitral tribunals and individual arbitrators on the arbitral tribunal, with effect from 1.4.2016.

2.1 Services provided by an arbitral tribunal to (i) any person other than a business entity; or (ii) a business entity with a turnover up to rupees ten lakh in the preceding financial year, are exempt from services tax [Entry 6(a) of Notification No. 25/2012 – ST refers]. “Arbitral tribunal” has been assigned the same meaning in the exemption notification No. 25/2012 – ST [paragraph 2(c)] as in clause (d) of Section 2 of the Arbitration and Conciliation Act 1996, which is as follows:- “arbitral tribunal means a sole arbitrator or a panel of arbitrators”

2.2 In the Budget 2016-17, the entry at (c) of Sl. No. 6 of notification No.25/2012-ST, has been omitted with effect from 1.4.2016. It read as: “Services provided by a person represented on an arbitral tribunal to an arbitral tribunal.”

3. The matter has been examined. It may be noted that the services provided or agreed to be provided by an arbitral tribunal to a business entity (turnover exceeding Rs 10 lakh) located in the taxable territory, is taxable under reverse charge mechanism and recipient of service is liable to discharge service tax liability [Rule 2(d)(D)(I) of Service Tax Rules, 1994 and Notification No. 30/3012 – ST (Sl. No. 4) refer]. There is no change in the Budget 2016-17 with respect to the said provisions.

4. It could be argued that service provided by an arbitrator on the panel of arbitrators, to the arbitral tribunal is taxable under forward charge. However, this does not appear to be a correct interpretation of law. Any reference in Service Tax law to an “arbitral tribunal” necessarily includes the natural persons on the arbitral tribunal, by virtue of clause (d) of Section 2 of the Arbitration and Conciliation Act, 1996. Services are provided or agreed to be provided by the panel of arbitrators, as comprising the several natural persons on the said panel, to the business entity or to the arbitration institution approached by the business entity for purposes of arbitration. The liability to discharge service tax is on the service recipient, if it is a business entity located in the taxable territory with a turnover exceeding rupees ten lakh in the preceding financial year.

5. In view of the above, it is clarified that Service Tax liability for services provided by an arbitral tribunal (including the individual arbitrators of the tribunal) shall be on the service recipient if it is a business entity located in the taxable territory with a turnover exceeding rupees ten lakh in the preceding financial year.

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Indian controlled vessels to pay one time licence fee

PIB press release dated 23rd May, 2016

Vessels of Indian Controlled Tonnage, will now be required to pay only one time processing fee of Rs.20,000 towards issue of licence. Till now they were being charged Rs. 20,000 on a monthly basis by the Directorate General of Shipping as processing fee for issue of licence under section 406 of Merchant Shipping Act, 1958 . This initiative will boost the Indian Controlled Tonnage Scheme and be a step towards promoting “Ease of doing Business” in the maritime sector.

Further, to bring in transparency in ocean-freight charged by different service providers, Container Shipping Line Association (India), an association of foreign container shipping lines operating in India, have informed that all their 31 member-lines have implemented e-Payment mode by way of RTGS/NEFT for collection of all type of ocean freight charges.

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Reforms in major ports to promote “ease of doing business”

PIB press release dated 24th May, 2016

The Ministry of Shipping in the past year has taken up several initiatives to promote trade and improve India’s ranking in the “Trading Across Borders’ indicator of World Bank’s Doing Business Report. Following steps have been taken by the Ministry to facilitate ease of doing business:

  1. From manual to electronic interface: Form 11&13 in manual form have been eliminated at all three terminals at JNPT and replaced by web based e-form-13, which is now done electronically. Apart from JNPT, other Major Ports are also using electronic forms.
  1. Accommodation for laboratories of regulatory agencies within port premises: The Ministry has issued instructions to all Major Ports to facilitate and provide land area for setting up of laboratories for animal/ plant quarantine, for textile and the Food Safety and Standards Authority of India (FSSAI).
  1. Implementation of Direct Port Delivery Scheme: – The Ministry has directed all Major Ports to extend the Direct Port Delivery facility to all Accredited Client Programme (ACP) clients and to provide additional land area for parking of DPD containers. JNPT has issued a TRADE NOTICE on 09.02.2016 extending DPD facility to all ACP clients. The earlier conditions for providing DPD have been waived. At present, 15 ACP clients are utilizing the DPD facility at JNPCT and DPD and TEUs showing increasing trend. In March, 2016, 1401 TEUs were handled through DPD which is highest in the last one year in a month.
  1. Reduction in Fee and Charges for non peak hours in all Ports: In order to decongest Major Port, the Ministry has taken up the issue of reduction of fee and charges with Tariff Authority for Major Ports to issue direction to all Major Ports/ BOT Operators operating there at, to fix separate lower charges for cargo and vessels related services and also give a special discount for the services rendered to exporter and importers after regular hours. Accordingly, Tariff Authority for Major Ports (TAMP) vide its Order No. TAMP/14/2016-Misc has issued direction to all Major Ports/ BOT Operators to prescribe lower charges for cargo/ vessels related services and also give a special discount for the services rendered after regular hours.
  1. Installation of container scanners at Major Ports: Earlier, the work of installation of container scanners was being dealt by CBEC. As decided, in the meeting chaired by Revenue Secretary at JNPT on 24.10.2015 and followed by the decision taken in CoS meeting held on 23.12.2015, the Ministry has initiated the process for procurement of container scanners. Indian Port Association has been asked to undertake the process of procurement of the scanners based on the specifications received from CBEC. IPA has already initiated the process and the work order for the procurement shall be issued by November, 2016. 
  1. Automation of Issuance of Delivery Orders: All the Shipping Lines (31) at JNPT are compliant with E-Delivery capability and implemented issuance of E-Delivery Orders. Other Major Ports were also directed to implement of issuance of E-delivery Orders. MoPT & NMPT have informed that all the financial transactions pertaining to vessel and cargo related activities are through e-payment and system has been introduced for accepting e-delivery order from the Shipping Agents.
  1. Implementation of RFID Scheme for gate automation: All the Major Ports are in process of implementing RFID Gate Automation System. The tendering process to procure RFID is in progress and all the ports are expected to complete this process by the end of this year. Four Major Ports namely KoPT, ChPT, CoPT and PPT have completed tender and work order has been issued for supply and installation of the RFID system.
  1. Integration of Major Ports filing system with Customs software:

Major Ports are using advance information of import cargo online by way of accessing IGM message through (PCS) integration with Customs software ICEGATE. This process has cut down dwell time significantly.

At JNPT, an advance single interface to integrate IGM, out of charge and entry inwards with Import Advance list (IAL) will be operational by the end of May, 2016.

  1. Measures to remove congestion at ports on war footing:

To remove  bottlenecks in rail/ road connectivity (like widening of roads, development of parking areas) for faster evacuation of cargo, all Major Ports have been directed to take necessary corrective measures. JNPT has taken the following measures in this regard:

(i)         Development of Parking Areas: JNPT has undertaken development of Centralized Parking Plaza covering 45 hectares area which can accommodate about 2000 Tractor/ Trailers (TTs). Phase-I of the project has been completed and area is developed as pay & park facility for trucks.            Two dedicated parking plots measuring 6.3 hectares & 5 hectares have been allotted to two other private terminal operators namely APMT & NSICT, respectively. Both the terminal operators have started operation of parking facility. Further, 3 hectares of area near Y junction has been developed to enable parking of undocumented factory stuffed containers of JNPCT.

(ii)        Widening of Roads: The Y junction is widened on BPCL side about 3000 Sq. Mtrs. for smooth traffic movement at junction. This year the concretization of this junction has also been taken up which will start after monsoon. Roads from Y junction to JNP CFS, CFS junction to SH-54 and Karal junction to CFS junction have been widened.

(iii)       Inter-Terminal movement of trailers:-  Inter Terminal transfer of TTs between JNPCT & GTI and between JNPCT & NSICT has already started.

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e-tourist visa facility

PIB press release dated 22nd May, 2016

The Ministry of Tourism has been working very closely with Ministry of Home Affairs and Ministry of External Affairs for easing of the Visa Regime in the country over a period of time. The Ministry supported the initiative regarding the implementation of Tourist Visa on Arrival enabled with Electronic Travel Authorisation (ETA) (renamed as e-Tourist Visa) strongly and committed all support to Ministry of Home Affairs and Ministry of External Affairs and Ministry of Civil Aviation for implementing this programme.

How e-Tourist Visa Work

The e-Tourist Visa enables the prospective visitor to apply for an Indian Visa from his/her home country online without visiting the Indian Mission and also pay the visa fee online. Once approved, the applicant receives an email authorizing him/her to travel to India and he/she can travel with a print out of this authorisation. On arrival, the visitor has to present the authorisation to the immigration authorities who would then stamp the entry into the country.

This facility is available to Foreigners whose sole objective of visiting India is recreation, sight-seeing, short duration medical treatment, casual business visit, etc. and not valid for any other purpose/activities. This will allow entry into India within 30 days from the date of approval of e-Tourist Visa and will be valid for 30 days stay in India from the date of arrival in India. The e-Tourist Visa cannot be availed more than twice in a calendar year. The facility will encourage people to travel with short-term planning, take via routes while travelling to other countries and bring family members while on business visits.

e-Tourist Visa Fee

Government of India w.e.f November 2015 has also revised the e-Tourist Visa (e-TV) fee in four slabs of 0, US$ 25, US$ 48, and US$ 60 from November 3, 2015. Presently e-TV application fee is US$ 60 and bank charge is US$ 2 which is uniform for all the countries. The revision of Visa fee has been done on the principle of reciprocity. Bank charges have also been reduced from US$ 2 to 2.5% of the e-TV fee. There is no bank charge for zero visa fees.

List of countries eligible for e-Tourist Visa on Arrival Scheme in India

Commencing from 27th November 2014, e-Tourist Visa facility was available until 25th February 2016 for citizens of 113 countries. The Government of India has extended this scheme for citizens of 37 more countries w.e.f 26th February 2016 taking the tally to 150 countries. The list of 150 countries eligible for e-Tourist Visa as on 26.02.2016 is given below:-

Albania, Andorra, Anguilla, Antigua & Barbuda, Argentina, Armenia, Aruba, Australia, Austria, Bahamas, Barbados, Belgium, Belize, Bolivia, Bosnia & Herzegovina, Botswana, Brazil, Brunei, Bulgaria, Cambodia, Canada, Cape Verde, Cayman Island, Chile, China, China- SAR Hongkong, China- SAR Macau, Colombia, Comoros, Cook Islands, Costa Rica, Cote d’lvoire, Croatia, Cuba, Czech Republic, Denmark, Djibouti, Dominica, Dominican Republic, East Timor, Ecuador, El Salvador, Eritrea, Estonia, Fiji, Finland, France, Gabon, Gambia, Georgia, Germany, Ghana, Greece, Grenada, Guatemala, Guinea, Guyana, Haiti, Honduras, Hungary, Iceland, Indonesia, Ireland, Israel, Jamaica, Japan, Jordan, Kenya, Kiribati, Laos, Latvia, Lesotho, Liberia, Liechtenstein, Lithuania, Luxembourg, Madagascar, Malawi, Malaysia, Malta, Marshall Islands, Mauritius, Mexico, Micronesia, Moldova, Monaco, Mongolia, Montenegro, Montserrat, Mozambique, Myanmar, Namibia, Nauru, Netherlands, New Zealand, Nicaragua, Niue Island, Norway, Oman, Palau, Palestine, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, Portugal, Republic of Korea, Republic of Macedonia, Romania, Russia, Saint Christopher and Nevis, Saint Lucia, Saint Vincent & the Grenadines, Samoa, San Marino, Senegal, Serbia, Seychelles, Singapore, Slovakia, Slovenia, Solomon Islands, South Africa, Spain, Sri Lanka, Suriname, Swaziland, Sweden, Switzerland, Taiwan, Tajikistan, Tanzania, Thailand, Tonga, Trinidad & Tobago, Turks & Caicos Island, Tuvalu, UAE, Ukraine, United Kingdom, Uruguay, USA, Vanuatu, Vatican City-Holy See, Venezuela, Vietnam., Zambia & Zimbabwe.

List of Airports where e-Tourist Visa facility is available

e-Tourist Visa facility is now available in the following 16 airports (as on 26.02.2016) – Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Bengaluru, Thiruvananthapuram, Kochi, Goa, Varanasi, Gaya, Ahmadabad, Amritsar, Tiruchirapalli, Jaipur and Lucknow.

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National IPR Policy

PIB Press Release dated 13th May, 2016

The Union Cabinet yesterday approved the National Intellectual Property Rights (IPR) Policy that will lay the future roadmap for intellectual property in India. The Policy recognises the abundance of creative and innovative energies that flow in India, and the need to tap into and channelise these energies towards a better and brighter future for all.

The National IPR Policy is a vision document that aims to create and exploit synergies between all forms of intellectual property (IP), concerned statutes and agencies. It sets in place an institutional mechanism for implementation, monitoring and review. It aims to incorporate and adapt global best practices to the Indian scenario. This policy shall weave in the strengths of the Government, research and development organizations, educational institutions, corporate entities including MSMEs, start-ups and other stakeholders in the creation of an innovation-conducive environment, which stimulates creativity and innovation across sectors, as also facilitates a stable, transparent and service-oriented IPR administration in the country.

The Policy recognizes that India has a well-established TRIPS-compliant legislative, administrative and judicial framework to safeguard IPRs, which meets its international obligations while utilizing the flexibilities provided in the international regime to address its developmental concerns.  It reiterates India’s commitment to the Doha Development Agenda and the TRIPS agreement.

While IPRs are becoming increasingly important in the global arena, there is a need to increase awareness on IPRs in India, be it regarding the IPRs owned by oneself or respect for others’ IPRs. The importance of IPRs as a marketable financial asset and economic tool also needs to be recognised. For this, domestic IP filings, as also commercialization of patents granted, need to increase. Innovation and sub-optimal spending on R&D too are issues to be addressed.

The broad contours of the National IPR Policy are as follows:

Vision Statement: An India where creativity and innovation are stimulated by Intellectual Property for the benefit of all; an India where intellectual property promotes advancement in science and technology, arts and culture, traditional knowledge and biodiversity resources; an India where knowledge is the main driver of development, and knowledge owned is transformed into knowledge shared.

Mission Statement:

Stimulate a dynamic, vibrant and balanced intellectual property rights system in India to:

o   foster creativity and innovation and thereby, promote entrepreneurship and enhance socio-economic and cultural development, and

o   focus on enhancing access to healthcare, food security and environmental protection, among other sectors of vital social, economic and technological importance.


The Policy lays down the following seven objectives:

  1. IPR Awareness: Outreach and Promotion – To create public awareness about the economic, social and cultural benefits of IPRs among all sections of society.
  2. Generation of IPRs – To stimulate the generation of IPRs.

iii.            Legal and Legislative Framework – To have strong and effective IPR laws, which balance the interests of rights owners with larger public interest.

  1. Administration and Management – To modernize and strengthen service-oriented IPR administration.
  2. Commercialization of IPRs – Get value for IPRs through commercialization.
  3. Enforcement and Adjudication – To strengthen the enforcement and adjudicatory mechanisms for combating IPR infringements.

vii.            Human Capital Development – To strengthen and expand human resources, institutions and capacities for teaching, training, research and skill building in IPRs.

These objectives are sought to be achieved through detailed action points. The action by different Ministries/ Departments shall be monitored by DIPP which shall be the nodal department to coordinate, guide and oversee implementation and future development of IPRs in India.

The National Intellectual Property Rights (IPR) Policy will endeavor for a “Creative India; Innovative India:रचनात्मक भारत; अभिनव भारत”.

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Amendment to India Mauritius Double taxation treaty

PIB press release dated 10th May, 2016

The Protocol for amendment of the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains between India and Mauritius was signed by both countries today at Port Louis, Mauritius. The key features of the Protocol are as under:

  1. Source-based taxation of capital gains on shares: With this Protocol, India gets taxation rights on capital gains arising from alienation of shares acquired on or after 1st April, 2017 in a company resident in India with effect from financial year 2017-18, while simultaneously protection to investments in shares acquired before 1st April, 2017 has also been provided. Further, in respect of such capital gains arising during the transition period from 1st April, 2017 to 31st March, 2019, the tax rate will be limited to 50% of the domestic tax rate of India, subject to the fulfillment of the conditions in the Limitation of Benefits Article. Taxation in India at full domestic tax rate will take place from financial year 2019-20 onwards.
  2. Limitation of Benefits (LOB): The benefit of 50% reduction in tax rate during the transition period from 1st April, 2017 to 31st March, 2019 shall be subject to LOB Article, whereby a resident of Mauritius (including a shell / conduit company) will not be entitled to benefits of 50% reduction in tax rate, if it fails the main purpose test and bonafide business test. A resident is deemed to be a shell/ conduit company, if its total expenditure on operations in Mauritius is less than Rs. 2,700,000 (Mauritian Rupees 1,500,000) in the immediately preceding 12 months.

Iii         Source-based taxation of interest income of banks: Interest arising in India to Mauritian resident banks will be subject to withholding tax in India at the rate of 7.5% in respect of debt claims or loans made after 31st March, 2017. However, interest income of Mauritian resident banks in respect of debt-claims existing on or before 31st March, 2017 shall be exempt from tax in India.

iv         The Protocol also provides for updation of Exchange of Information Article as per international standard, provision for assistance in collection of taxes, source-based taxation of other income, amongst other changes.


Major impact: The Protocol will tackle the long pending issues of treaty abuse and round tripping of funds attributed to the India-Mauritius treaty, curb revenue loss, prevent double non-taxation, streamline the flow of investment and stimulate the flow of exchange of information between India and Mauritius. It will improve transparency in tax matters and will help curb tax evasion and tax avoidance. At the same time, existing investments, i.e. investments made before 1.4.2017 have been grand-fathered and will not be subject to capital gains taxation in India.

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Insolvency and Bankruptcy Code

PIB press release dated 11th May, 2016

Today is a historical day for economic reforms in India when the Rajya Sabha passed the major economic reform Bill moved by the Government i.e. ‘Insolvency and Bankruptcy Code, 2016’. This is considered as the biggest economic reform next only to GST. The Lok Sabha had earlier passed the Bill on 5th May, 2016.

In India, the legal and institutional machinery for dealing with debt default has not been in line with global standards. The recovery action by creditors, either through the Contract Act or through special laws such as the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has not had desired outcomes. Similarly, action through the Sick Industrial Companies (Special Provisions) Act, 1985 and the winding up provisions of the Companies Act, 1956 have neither been able to aid recovery for lenders nor aid restructuring of firms. Laws dealing with individual insolvency, the Presidential Towns insolvency Act, 1909 and the Provincial Insolvency Act. 1920, are almost a century old. This has hampered the confidence of the lender. When lenders are unconfident, debt access for borrowers is diminished. This reflects in the state of the credit markets in India. Secured credit by banks is the largest component of the credit market in India. The corporate bond market is yet to develop.

The objective of the new law is to promote entrepreneurship, availability of credit, and balance the interests of all stakeholders by consolidating and amending the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner and for maximization of value of assets of such persons and matters connected therewith or incidental thereto.

The law aims to consolidate the laws relating to insolvency of companies and limited liability entities (including limited liability partnerships and other entities with limited liability), unlimited liability partnerships and individuals, presently contained in a number of legislations, into a single legislation. Such consolidation will provide for a greater clarity in law and facilitate the application of consistent and coherent provisions to different stakeholders affected by business failure or inability to pay debt.

The salient features of the law are as follows:

i- Clear, coherent and speedy process for early identification of financial distress and resolution of companies and limited liability entities if the underlying business is found to be viable.

ii- Two distinct processes for resolution of individuals, namely- “Fresh Start” and “Insolvency Resolution”.

iii- Debt Recovery Tribunal and National Company Law Tribunal to act as Adjudicating Authority and deal with the cases related to insolvency, liquidation and bankruptcy process in respect of individuals and unlimited partnership firms and in respect of companies and limited liabilities entities respectively.

iv- Establishment of an Insolvency and Bankruptcy Board of India to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and information utilities.

v- Insolvency professionals would handle the commercial aspects of insolvency resolution process. Insolvency professional agencies will develop professional standards, code of ethics and be first level regulator for insolvency professionals members leading to development of a competitive industry for such professionals.

vi- Information utilities would collect, collate, authenticate and disseminate financial information to be used in insolvency, liquidation and bankruptcy proceedings.

vii- Enabling provisions to deal with cross border insolvency.

The essential idea of the new law is that when a firm defaults on its debt, control shifts from the shareholders / promoters to a Committee of Creditors, who have 180 days in which to evaluate proposals from various players about resuscitating the company or taking it into liquidation. When decisions are taken in a time-bound manner, there is a greater chance that the firm can be saved as a going concern, and the productive resources of the economy (the labour and the capital) can be put to the best use. This is in complete departure with the experience under the SICA regime where there were delays leading to destruction of the value of the firm.

The vision of the new law is to encourage entrepreneurship and innovation. Some business ventures will always fail, but they will be handled rapidly and swiftly. Entrepreneurs and lenders will be able to move on, instead of being bogged down with decisions taken in the past.

A key innovation of the Insolvency and Bankruptcy Code is four pillars of institutional infrastructure.

The first pillar of institutional infrastructure is a class of regulated persons, the ‘Insolvency Professionals’. They would play a key role in the efficient working of the bankruptcy process. They would be regulated by ‘Insolvency Professional Agencies’.

The second pillar of institutional infrastructure is a new industry of `Information Utilities’. These would store facts about lenders and terms of lending in electronic databases. This would eliminate delays and disputes about facts when default does take place.

The third pillar of institutional infrastructure is in adjudication. The NCLT will be the forum where firm insolvency will be heard and DRTs will be the forum where individual insolvencies will be heard. These institutions, along with their Appellate bodies, viz., NCLAT and DRATs will be adequately strengthened so as to achieve world class functioning of the bankruptcy process.

The fourth pillar of institutional infrastructure is a regulator viz., ‘The Insolvency and Bankruptcy Board of India’. This body will have regulatory over-sight over the Insolvency Professional, Insolvency Professional agencies and information utilities.

The Insolvency and Bankruptcy Code is thus a comprehensive and systemic reform, which will give a quantum leap to the functioning of the credit market. It would take India from among relatively weak insolvency regimes to becoming one of the world’s best insolvency regimes. It lays the foundations for the development of the corporate bond market, which would finance the infrastructure projects of the future. The passing of this Code and implementation of the same will give a big boost to ease of doing business in India.

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FEM (Deposits) Regulations

RBI has on 5th May, 2016 issued the revamped FEM (Deposits) Regulations, 2016. Salient features are:

These regulations seek to regulate deposits between a person resident in India and a person resident outside India:

3. Some of the key definitions under the regulations are given below:

(i) ‘Deposit’ includes deposit of money with a bank, company, proprietary concern, partnership firm, corporate body, trust or any other person.

(ii) A ‘Non-resident Indian (NRI)’ is a person resident outside India who is a citizen of India.

(iii) A ‘Person of Indian Origin (PIO)’ is a person resident outside India who is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified by the Central Government, satisfying the following conditions:

  1. Who was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
  2. Who belonged to a territory that became part of India after the 15th day of August, 1947; or
  3. Who is a child or a grandchild or a great grandchild of a citizen of India or of a person referred to in clause (a) or (b); or
  4. Who is a spouse of foreign origin of a citizen of India or spouse of foreign origin of a person referred to in clause (a) or (b) or (c)

Explanation: PIO will include an ‘Overseas Citizen of India’ cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955.

(iv) Permissible currency means a foreign currency which is freely convertible.

4. In terms of Regulation 4 of the Deposit Regulations, no restriction under these regulations shall be applicable for opening of rupee/ foreign currency deposit accounts by certain persons, viz.

(i) Rupee/ foreign currency accounts by foreign diplomatic missions and diplomatic personnel or their family members in India with an Authorised Dealer in India subject to conditions mentioned therein.

(ii) Deposits in rupees maintained by persons resident in Nepal and Bhutan with Authorised Dealer in India.

(iii) Deposits with Authorised Dealer in India maintained by any multilateral organization, of which India is a member nation, and the subsidiary/ affiliate bodies and officials of such organizations in India.

5. In terms of Regulations 5 and 6 of the Deposit Regulations, a person resident outside India may open deposit accounts with Authorized Dealer/ authorized bank/Indian company under various schemes. Details of the schemes have been specified in the respective schedules. The major features are highlighted below:

A) Non-Resident (External) Account (NRE) Scheme

i) NRIs and PIOs are permitted to open these accounts in Indian Rupee with Authorized Dealers and authorized banks in any form e.g saving, current, recurring or fixed deposit subject to the conditions specified in Schedule 1 of the Deposit Regulations.

ii) Inward remittances from outside India to the NRE account and remittances outside India from the NRE account are permitted.

iii) Authorised Dealers/ banks in India may grant loans against the security of the funds held in NRE accounts to the account holder/ third party in India, without any limits, subject to the usual margin requirements. The loan sanctioned to the account holder can be repaid either by adjusting the deposits or through inward remittances from outside India through banking channels or out of balances held in the NRO account of the account holder. The loan shall be used for the purpose laid down in the regulations and cannot be repatriated outside India.

iv) Authorised Dealers may allow their branches/ correspondents outside India to grant loans outside India to the non-resident depositor or to a third party against the security of deposits, subject to the conditions laid down in the regulations.

v) The facility for premature withdrawal of the deposits shall not be available where loans against such deposits are availed of.

vi) The term “loan” shall include all types of fund based/ non-fund based facilities.

vii) Income from interest on the balances in the account is exempt from income tax and balances are exempt from wealth tax.

viii) Current income like rent, dividend, pension, interest, etc. of NRIs and PIOs will be construed as a permissible credit to their NRE account provided the Authorised Dealer is satisfied that the credit represents current income of the NRI/ PIO account holder and income tax thereon has been deducted/ paid/ provided for, as the case may be.

ix) AD Category – I banks and authorized banks may credit proceeds of demand drafts / bankers’ cheques/ account payee cheques issued against encashment of foreign currency to the NRE account where the instruments issued to the NRE account holder are supported by encashment certificate issued by an AD Category I/ Category – II.

x) An NRE account can be opened jointly:

(a) in the names of two or more eligible NRIs and/or PIOs;

(b) with resident relative(s) on “former or survivor” basis.

B) Foreign Currency (Non-Resident) Account (Banks) (FCNR(B)) Scheme

i) NRIs and PIOs are permitted to open these accounts in any permissible foreign currency with Authorized Dealers subject to the conditions specified in Schedule 2 of the Deposit Regulations.

ii) These accounts can only be maintained in the form of term deposit.

iii) Other terms and conditions applicable to NRE accounts (cf. Schedule 1 of the Deposit Regulations) in respect of joint accounts, repatriation of funds, loans/ overdrafts applies mutatis mutandis to FCNR(B) accounts.

iv) Form A2 is not required to be filled while remitting funds at the time of closure of FCNR (B) accounts.

C) Non-Resident (Ordinary) Rupee (NRO) Account

i) Any person resident outside India may open NRO account in Indian Rupee with Authorized Dealers and authorized banks for the purpose of putting through bona fide transactions in rupees subject to the conditions specified in Schedule 3 to the Deposit Regulations.

ii) The account can be maintained in any form e.g savings, current, recurring or fixed deposit.

iii) Balances in the NRO account cannot be repatriated abroad except for current income of the account holder and up to USD 1 million per financial year by NRIs and PIOs, subject to conditions specified in Foreign Exchange Management (Remittance of Assets) Regulations, 2016. Funds can be transferred to the NRE account within the USD 1 million facility.

iv) Loans may be granted in India to the account holder or third party subject to usual norms and margin requirement.

v) Transfers from other NRO accounts is a permissible credit for the account. Similarly, transfers to other NRO accounts is a permissible debit.

vi) An NRO account can be opened jointly with residents on ‘former or survivor’ basis. NRIs and/or PIOs may hold NRO accounts jointly with other NRIs and/or PIOs.

vii) Rupee gift/ loan made by a resident to a NRI/ PIO relative within the limits prescribed under the Liberalized Remittance Scheme may be credited to the latter’s NRO account.

viii) NRO accounts may be designated as resident accounts on the return of the account holder to India for any purpose indicating his intention to stay in India for an uncertain period.

ix) Authorized Dealer Banks may furnish on a monthly basis, a statement on the number of applicants and total amount remitted, as per proforma at annex.

x) Opening of accounts by individuals of Pakistan nationality and entities of Pakistan/ Bangladesh nationality/ ownership will require prior approval of the Reserve Bank of India.

xi) Individuals of Bangladesh nationality can open an NRO account provided they hold a valid visa and valid residential permit issued by Foreigner Registration Office (FRO)/ Foreigner Regional Registration Office (FRRO) concerned.

D) Special Non-Resident Rupee (SNRR) Account

i) Any person resident outside India, having a business interest in India, may open an SNRR account in Indian Rupee with Authorized Dealers for the purpose of putting through bona fide transactions in rupees, subject to the conditions specified in Schedule 4 of the Deposit Regulations.

ii) The SNRR account shall carry the nomenclature of the specific business for which it is opened and shall not earn any interest.

iii) The debits/ credits and the balances in the account shall be incidental and commensurate with the business operations of the account holder.

iv) The tenure of the account should be concurrent to the tenure of the contract/ period of operation/ the business of the account holder and shall in no case exceed seven years.

v) The balances in the SNRR account shall be eligible for repatriation.

vi) Opening of account by individual/ entities of Pakistan/ Bangladesh nationality/ ownership will require prior approval of the Reserve Bank of India.

E) Escrow Account

i) Resident/ non-resident acquirers and non-resident corporates may open Escrow account in INR with an Authorized Dealer in India as an escrow agent subject to the terms and conditions specified in Schedule 5 of the Deposit Regulations.

ii) Transactions shall be in accordance with the Foreign Exchange Management (Transfer or Issue of Security by a person resident Outside India) Regulations, 2000 and regulations of the Securities and Exchange Board of India (SEBI), as applicable.

iii) The accounts shall be non-interest bearing.

iv) No fund/ non-fund based facility would be permitted against the balances in the account.

F) Acceptance of deposit by a company in India from NRIs and PIOs on repatriation basis

A company incorporated in India including a Non-Banking Financial Company (NBFC) registered with the Reserve Bank shall not accept deposits from NRIs/PIOs on repatriation basis. It may, however, renew the deposits it had accepted in accordance with Schedule 6 of the Deposit Regulations.

G) Acceptance of deposits by Indian proprietorship concern/ firm or a company from NRIs and PIOs on non-repatriation basis

General permission has been granted to Indian proprietorship concern/firm or a company (including Non-Banking Finance Company registered with Reserve Bank) to accept deposits from NRIs and PIOs on non-repatriation basis subject to the terms and conditions specified in Schedule 7 of these Regulations.

6. Other deposits (subject to Regulations 6 and 7 of the Deposit Regulations)

i) General permission has been granted to Indian companies to accept deposits from NRIs and PIOs by issue of Commercial Papers subject to conditions.

ii) A deposit made by an Authorised Dealer with its branch, head office or correspondent outside India, and a deposit made by a branch or correspondent outside India of an Authorised Dealer, and held in its books in India, will be governed by the directions issued by the Reserve Bank in this regard.

iii) A shipping or airline company incorporated outside India, can open, hold and maintain a foreign currency account with an Authorized Dealer for meeting the local expenses in India of such airline or shipping company, provided the credits to such accounts are only by way of freight or passage fare collections in India or by inward remittances through banking channels from its office outside India.

iv) An Authorised Dealer may allow unincorporated joint ventures (UJV) of foreign companies/ entities, with Indian entities, executing a contract in India, to open and maintain non-interest bearing foreign currency account and an SNRR account as specified in Schedule 4 of the Deposit Regulations for the purpose of undertaking transactions in the ordinary course of its business. The debits and credits in these accounts should be incidental to the business requirement of the UJV. The tenure of the account should be concurrent to the tenure of the contract/ period of operation of the UJV and all operations in the account shall be in accordance with the provisions of the Act or the rules or regulations made or the directions issued thereunder. Opening of such accounts by companies/ entities of Pakistan/ Bangladesh ownership/ nationality would require the prior approval of the Reserve Bank.

v) Opening of a foreign currency Escrow account with an Authorised Dealer in India for the purpose of routing counter-trade transactions would require approval of Reserve Bank.

7. To facilitate the foreign nationals to collect their pending dues in India, ADs may permit such foreign nationals to re-designate their resident account maintained in India as NRO account on leaving the country after their employment to enable them to receive their pending bonafide dues, subject to the bank satisfying itself that the credit of amounts are bonafide dues of the account holder when she/ he was a resident in India. The funds credited to the NRO account should be repatriated abroad immediately, subject to payment of the applicable Income tax and other taxes in India. The amount repatriated abroad should not exceed USD one million per financial year. The debit to the account should be only for the purpose of repatriation to the account holder’s account maintained abroad. The account should be closed immediately after all the dues have been received and repatriated as per the declaration made by the account holder when the account was designated as an NRO account.

8. Maturity proceeds of term deposits, if any, under the erstwhile Non-Resident (Special) rupee Account Scheme (NRSR Account) which was discontinued with effect from April 1, 2002, may be credited to the NRO account of the account holder.

9. Balances in the Exchange Earner’s Foreign Currency (EEFC) Account and Resident Foreign Currency (Domestic) [RFC(D)] Account may be credited to NRE/ FCNR(B) Accounts, at the option/ request of the account holders, consequent upon change of their residential status from resident to non-resident.

10. Authorised Dealers may issue International Credit Cards (ICCs) to NRIs and PIOs, the debits of which are subject to the conditions for use of the ICCs by residents. Charges on the use of ICCs should be settled by the NRI/PIO out of inward remittances or balances held in NRE/ FCNR(B)/ NRO accounts. Settlement of charges out of balances held in NRO accounts are subject to the limits for repatriation of balances held in NRO accounts specified in regulation 4(2) of Foreign Exchange Management (Remittance of Assets) Regulations, 2016.

11. Authorised Dealers can allow the following operations on non-resident accounts in terms of Power of Attorney granted in favour of a resident by the non-resident account holder:

(a) The operations in NRE/ FCNR(B) Accounts are restricted to:

(i) Withdrawal for local payments; and

(ii) Remittance of funds through banking channels to the non-resident account holder.

(b) The operations in NRO Accounts are restricted to:

(i) All local payments in rupees including payments for eligible investments subject to compliance with relevant regulations made by the Reserve Bank; and

(ii) Remittance outside India of current income in India of the non-resident individual account holder, net of applicable taxes.

The resident Power of Attorney holder is not permitted to repatriate outside India funds held in the account other than to the non-resident individual account holder nor making payment by way of gift to a resident on behalf of the non-resident account holder or transfer funds from the account to another NRO account.

12. Regional Rural Banks (RRBs) are permitted to open and maintain NRO/ NRE accounts in Rupees and accept FCNR(B) deposits as per the eligibility criteria prescribed by the Reserve Bank vide Circular No. RPCD.CO.RRB.No.BC.106 /03.05.33(C)/2006-07 dated June 28, 2007. RRBs may approach the respective Regional Office of the Foreign Exchange Department, for authorization for opening of accounts/ acceptance of deposits.

13. Any deposit between a person resident in India and a person resident outside India which is not covered by the provisions of the Act or these Regulations would require approval of Reserve Bank.

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Remittance of Assets Regltns

RBI has vide its notification dated 28th April, 2016 revamped the Foreign Exchange Management (Remittance of Assets) Regulations. The salient features of these regulations are:

a) Remittance of capital assets in India held by a person whether resident in or outside India would require the approval of the Reserve Bank except to the extent provided in the Act or Rules or Regulations made under the Act.

b) In terms of regulation 4(1) of the Remittance of Assets regulations, ADs may allow remittance of assets, up to USD one million per financial year, by a foreign national (not being a PIO or a citizen of Nepal or Bhutan), on submission of documentary evidence, in case:

  1. the person has retired from employment in India;
  2. the person has inherited the assets from a person referred to in section 6(5) of the Act;
  3. the person is a non-resident widow/ widower and has inherited assets from the person’s deceased spouse who was an Indian citizen resident in India.

In case the remittance is made in more than one instalment, the remittance of all instalments should be made through the same AD.

c) In terms of regulation 4(1), ibid, ADs may allow remittance of balance amount, held by a foreign student in a bank account in India, after completion of his/her studies/training in India.

d) In terms of regulation 4(2), ibid, ADs may allow NRIs and PIOs, on submission of documentary evidence, to remit up to USD one million, per financial year:

  1. out of balances held in their Non-Resident (Ordinary) Accounts (NRO accounts)/ sale proceeds of assets/ assets acquired in India by way of inheritance/ legacy;
  2. out of assets acquired under a deed of settlement made by either of his parents or a relative as defined in Companies Act, 2013. The settlement should take effect on the death of the settler.

In case the remittance is made in more than one instalment, the remittance of all instalments should be made through the same AD. Further, where the remittance is to be made from the balances held in the NRO account, the Authorised Dealer should obtain an undertaking from the account holder stating that “the said remittance is sought to be made out of the remitter’s balances held in the account arising from his/ her legitimate receivables in India and not by borrowing from any other person or a transfer from any other NRO account and if such is found to be the case, the account holder will render himself/ herself liable for penal action under FEMA.”

e) In terms of regulation 4(3), ibid, ADs may allow remittances by Indian companies under liquidation on directions issued by a Court in India.

f) In terms of regulation 5, ibid, ADs may also allow Indian entities to remit their contribution towards the provident fund/ superannuation/ pension fund in respect of their expatriate staff resident in India but “not permanently resident” in India.

g) In terms of regulation 6, ibid, ADs may permit remittance of assets on closure or remittance of winding up proceeds of branch office/ liaison office (other than project office) as per Reserve Bank’s directions from time to time.

h) In terms of regulation 7, ibid, remittance of assets on hardship ground and remittances by NRIs and PIOs in excess of USD one million/financial year would require the prior approval of the Reserve Bank.

i) Any transaction involving remittance of assets under these regulations are subject to the applicable tax laws in India.


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Import of Goods – IDPMS

Gist of RBI notification dated 28th April, 2016

Attention of Authorised Dealers is invited to Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Government of India Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account Transaction) Rules, 2000 on import of goods read with A.P. (DIR Series) Circular No. 9 dated August 24, 2000 which provides the procedure, mode/manner of payment for imports and submission of related returns.

2. Reserve Bank of India had constituted a Working Group (Chairman: Shri A. K. Pandey, CGM, FED) comprising of representatives from Customs, Directorate General of Foreign Trade (DGFT), Special Economic Zone (SEZ), Foreign Exchange Dealers Association of India (FEDAI) and select Authorised Dealer banks (AD banks), to suggest putting in place a comprehensive IT- based system to facilitate efficient processing of all import transactions and effective monitoring thereof. The Working Group had recommended development of a robust and effective IT- based system “Import Data Processing and Monitoring System “(IDPMS) on the lines of “Export Data Processing and Monitoring System” (EDPMS) in consultation with the Customs authorities and other stakeholders.

3. To track the import transactions through banking system, Customs will modify the Bill of Entry format to display the AD Code of bank concerned, as reported by the importers. Primary data on import transactions from Customs and SEZ will first flow to the RBI secured server and thereupon depending on the AD code shall be shared with the respective banks for taking the transactions forward. The AD bank shall enter every subsequent activity, viz. document submission, outward remittance data, etc. in IDPMS so as to update the RBI database on real time basis. It is therefore, necessary that AD banks upload and download data on daily basis.

4. For non EDI (manual) Customs ports, till they are upgraded to EDI (computerised) ports, nodal branch of AD Category – I banks will upload Bills of Entry (BoE) data based on original BoE with stamp/signature of the Customs as submitted by importer. Under no circumstances, AD category – I banks will process the transactions till the concerned BoE is reflected in the IDPMS. Customs will share a copy of manual BoE with respective Regional Office of RBI for information as they presently do for shipping bills in the case of exports.

5. The date of operationalization of IDPMS will be notified shortly. All import remittances outstanding as on the notified date shall have to be uploaded in IDPMS. Further, to facilitate smooth processing of import transactions and closure of BoE and advance remittances in IDPMS, the following guidelines will be followed by the AD category – I banks:

6. Write off of import bills

i) AD Category I banks can consider closure of bills in IDPMS that involve write off to the extent of 5% of invoice value in cases where the amount declared in BoE varies from the actual remittance marginally due to discounts, fluctuation in exchange rates, change in the amount of freight, insurance, etc. Cases, where write off is on account of quality issues; short shipment or destruction of goods by the port / Customs / health authorities, may be closed with remarks subject to submission of satisfactory documentation for the same, irrespective of the amount involved.

ii) While allowing write off, AD Category – I banks must ensure that:

    1. The case is not the subject matter of any pending civil or criminal suit;
    2. The importer has not come to the adverse notice of the Enforcement Directorate or the Central Bureau of Investigation or any such other law enforcement agency; and
    3. There is a system in place under which internal inspectors or auditors of the AD category – I banks (including external auditors appointed by authorised dealers) should carry out random sample check / percentage check of write-off of import bills; and

iii) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.

iv) The above guidelines are only meant to facilitate closure of bills in IDPMS and do not in any way absolve the importer from remitting / receiving the amount in case circumstances change.

7. Extension of Time

i) AD Category – I banks can consider granting extension of time for settlement of import dues up to a period of six months at a time (maximum up to the period of three years) irrespective of the invoice value for delays on account of disputes about quantity or quality or non-fulfilment of terms of contract; financial difficulties and cases where importer has filed suit against the seller. In cases where sector specific guidelines have been issued by Reserve Bank of India for extension of time (i.e. rough, cut and polished diamonds), the same will be applicable.

ii) While granting extension of time, AD Category –I banks must ensure that:

  1. The import transactions covered by the invoices are not under investigation by Directorate of Enforcement / Central Bureau of Investigation or other investigating agencies;
  2. While considering extension beyond one year from the date of remittance, the total outstanding of the importer does not exceed USD one million or 10 per cent of the average import remittances during the preceding two financial years, whichever is lower; and
  3. Where extension of time has been granted by the AD Category – I banks, the date up to which extension has been granted may be indicated in the ‘Remarks’ column.

iii) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.

8. Follow-up for Evidence of Import

i) As per extant guidelines, AD Category – I banks have to submit a statement on half-yearly basis as at the end of June & December of every year, in form BEF furnishing details of import transactions, exceeding USD 100,000 in respect of which importers have defaulted in submission of appropriate document evidencing import within six months from the date of remittance using the online eXtensible Business Reporting Language (XBRL) system on bank-wide basis to the respective Regional Offices of the RBI.

ii) On operationalization of IDPMS, all outstanding import remittances, irrespective of the amount involved, will be uploaded into the system and submission of a separate BEF statement would be discontinued from a date to be notified separately.

iii) AD Category – I banks are required to follow up submission of evidence of import and remittance within stipulated time irrespective of the amount involved.

9. AD Category – I banks shall put in place a system to ensure that all import transactions and related remittances are processed only through IDPMS from the date to be notified shortly. The AD category – I banks should, therefore be in readiness mode for switching to the proposed IT based system. The requisite message formats and technical specifications have been shared with AD category –I banks via e-mail. These have also been placed on website (

10. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned.

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

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Real Estate Act comes into force

PIB press release dated 30th April, 2016.

The much awaited and widely acclaimed Real Estate (Regulation and Development) Act, 2016 comes into force tomorrow i.e May 1, 2016 setting in motion the process of making necessary operational rules and creation of institutional infrastructure for protecting the interests of consumers and promoting the growth of real estate sector in an environment of trust, confidence, credible transactions and efficient and time bound execution of projects.   

Ministry of Housing & Urban  Poverty Alleviation has notified 69 of the total 92 sections of the Act on Wednesday this week bringing the Act into force from May 1,2016 culminating the eight year long efforts in this regard. A proposal for a law for Real Estate was first mooted at the National Conference of Housing Ministers of States and Union Territories in January, 2009.

As per the notification announcing the commencement of the Act on May 1,2016, Rules under the Act have to be formulated by the Central and State Governments within a maximum period of six months i.e by October 31,2016 under Section 84 of the Act. Ministry of HUPA would make Rules for  Union Territories without legislatures while the Ministry of Urban Development would do so for Delhi.

Section 84 of the Act stipulates that “The appropriate Government shall, within a period of six months of the commencement of this Act, by notification, make rules for carrying out the provisions of this Act.”

Early setting up of Real Estate Regulatory Authorities with whom all real estate projects have to be registered and Appellate Tribunals for adjudication of disputes is the key for providing early relief and protection to the large number of buyers of properties.

Section 20 of the Act says “The appropriate Government shall, within a period of one year from the date of coming into force of this Act, by notification establish an authority to be known as the Real Estate Regulatory Authority to exercise the powers conferred on it and to perform the functions assigned to it under this Act”. These Authorities decide on the complaints of buyers and developers in 60 days time.

Section 20 of this Act also empowers appropriate Governments to designate any officer preferably Secretary of the Department dealing with Housing, as the interim Regulatory Authority until the establishment of Regulatory Authority under the provisions of the Act.

Regulatory Authorities, upon their constitution get three months time to formulate regulations concerning their day to  day functioning under Section 85 of the Act.

Likewise, under Section 43 of the Act, Real Estate Appellate Tribunals shall be formed within a maximum period of one year i.e by April 30,2017. These fast track Tribunals shall decide on the disputes over the orders of Regulatory Authorities in 60 days time.

Under the directions of the Minister of Housing & Urban Poverty Alleviation Shri M.Venkaiah Naidu, a Committee chaired by Secretary (HUPA) has already commenced work on formulation of Model Rules under the Act for the benefit of States and UTs so that they could come out with Rules in quick time besides ensuring uniformity across the country. The Ministry will also will come out with Model Regulations for Regulatory Authorities to save on time.

The time limits of six months for formulation of Rules and one year for setting up Regulatory Authorities and Appellate Tribunals are the outer limit and the States willing to act quickly could do so and the Ministry of Housing & Urban Poverty Alleviation would notify the remaining Sections of the Act to enable relief to the buyers under the Act as quickly as possible, as desired by Shri M.Venkaiah Naidu.

The remaining 22 Sections to be notified relate to functions and duties of promoters, rights and duties of allottees, prior registration of real estate projects with Real Estate Regulatory Authorities, recovery of interest on penalties, enforcement of orders, offences, penalties and adjudication, taking cognizance of offences etc.


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