President's Desk 

President’s Message | June 2020

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Dear Professional friends,

Often these days, the world outside and mind inside is completely filled with Covid and the fear which set in initially, seems to loosen. The government is also under pressure by many industries to liberalise the restrictions. Albeit, some view ‘liberalising the initial restriction’ as a dangerous precedent to a disastrous fate which we all would untastefully bite. Looking back at past 70 days, we have realised that the world would probably live with this new reality or what people call it as ‘new normal’. India is also slowly marching on world top list of Covid infected, the current increase in rate of infection is inspite of the fact that lockdown was stringent in many parts of country for more than two months.  ICMR even as on this day reiterates, India is still not in community transmission and so India has largely postponed the transmission to a large extent. WHO’s chief scientist, noting India has a population of 1.3 billion, said that the 200,000 reported cases, “look big but for a country of this size it’s still modest”. On the economy front, India is pushed to some hard realities of falling GDP, poor productivity, rising unemployment etc. Some of the world’s top agencies have already cut down the GDP numbers of India for the current year. However, some good news is that the GDP growth stories would continue to move positive in the fiscal 2020-21 and have been seen to outperform the peers in the same rating scale.

Even at KSCAA’s activity level, every year the month of June was generally used for dispatch of financials and AGM would have been called for. This year with restriction in public assembly, we feel it apt to postpone the AGM event to a convenient subsequent date. We will let you know the same in the days to come.

News Roundup

Goods and Service Tax

CBIC has issued a Circular dated 10th June 2020 clarifying the levy of GST on Director’s remuneration which had become a burning issue post the divergent rulings given by the Rajasthan and Karnataka Authority for Advance Ruling on the subject. Some of the jurisdictions had already started groundwork of gathering information about remuneration and other payments made to the directors from companies. This had created jitters among the corporates. Summary of the circular:

  • Managing Director / Whole Time Director: Salary in Books and TDS u/s 192, hence out of ambit of GST.
  • Independent Director: Professional / Sitting Fees in Books and TDS u/s 194J, covered by entry No.6 of Not. No.13/2017 – CT(Rate) and hence, liable for GST under RCM on the recipient company.

Government in its on-going efforts to neutralize the situation as impacted by Covid pandemic has released following additional reliefs measures to ensure there is ease in compliance of GST Law:

  • Relief for small taxpayers whose aggregate turnover is up to Rs 5 crore will be provided a waiver of late fees and interest if they file the form GSTR-3B for the supplies affected in months of May, June and July 2020, by September 2020, no late fee or interest.
  • Relief for small taxpayers whose aggregate turnover is up to Rs 5 crore, the rate of interest for late furnishing of GST returns for Feb-2020, Mar-2020 and April 2020, beyond July 6, 2020, the rate of interest is being reduced from 18% to 9% per annum and that is only till September 30.
  • As measure to clean up pendency for people who have no tax liability the late fees will be NIL and people with tax liability, maximum late fee for non-filing of GSTR-3B returns for period July 2017 – January 2020 has been capped to Rs 500. This will apply to all returns submitted during July 1, 2020 – September 30, 2020.
  • To facilitate tax payers who could not get their cancelled GST registrations restored in time, an opportunity is being provided for filing of application for revocation of cancellation of registration up to September 30, in all cases where registrations have been cancelled till June 12.

Corporate and Business Law

On account of Coronavirus pandemic, lot of companies had requested for leniency on the AGM rules owing to the social distancing norms and the nationwide lockdown. After considering the present situation, MCA has liberalised AGM rules clarifying that Companies can hold AGM through video conferencing (VC) or other audio-visual means (OAVM) during the calendar year 2020. Earlier the Finance Minister had relaxed the need to hold a Board meeting for once in 60 days for two quarters and had said that it would not be considered a violation of corporate governance norms if the Independent Directors do not hold any meetings.

Further, in order to ensure that the CSR funds are put to the right use, ICAI has advised that where a company undertakes the CSR activity through a third party, it should obtain an Independent Practitioner’s Report on Utilisation of such CSR Funds from the auditor / CA in practice of the third party / NGO, to whom the funds are given by the Company for implementing CSR activity.

Direct Tax

  • CBDT notifies new form for 26AS which shall also include information relating to assessee’s specified financial transaction payment of taxes, demand/ refund and pending / completed proceedings.
  • CBDT amended Guidelines for application of section 9A. It contains provisions related to certain activities not to constitute business connection in India.
  • CBDT notified the year of applicability of the ‘Safe Harbour Rules for International Transactions’ for AY 2020-21, as the existing rules were applicable only up to AY 2019-20.
  • Section 269SU (using online mode for payments) is not applicable for specified person having only B2B transactions.
  • CBDT issues a circular for exclusion of period of 22nd March 2020 to 31st March 2020 for computation of residential status for the financial year 2019-20.
  • Instant PAN facility basis Aadhar based e-KYC launched. Now PAN can be obtained near to real time basis.
  • Reduction of Tax deduction at Source and Tax collected at Source by 25% for remaining period of FY 2020-21.

Conclusion

As Mark Twain once said “If it’s your job to eat a frog, it’s best to do it first thing in the morning. And if it’s your job to eat two frogs, it’s best to eat the biggest one first.”

The frog here means the job which you need to accomplish for the day, probably one of the dirtiest things which can happen to anyone is to eat a frog. The frog is one thing you have on your to-do list that you have absolutely no motivation to do and that you’re most likely to procrastinate on. Eating the frog means to just do it, otherwise the frog will eat you meaning that you’ll end up procrastinating it the whole day. Once that one task is done, the rest of the day will be an easier ride and you will get both momentum and a sense of accomplishment at the beginning of your day. If you have more than one important thing to achieve for the day, simply tackle the ugliest frog first. Remove the stress of choosing your frog early in the morning. Leave your resources to tackle it instead.

My Wishes to you all for a great learning and enriching experience.

Yours Sincerely,

Chandrashekara Shetty,

President