President’s Message | March 2022

Dear Professional friends,

I am happy to connect with you all through this month’s President’s message. Let me wish you all a very Happy Ugadi. Ugadi or Yugadi is a term that is derived from the Sanskrit words yuga meaning age and ?di meaning the beginning. So, it means “the beginning of a new age”. I pray that this year brings health, happiness and prosperity of learning to you and your loved ones.

Geopolitical tension has put our government into action to reflect on its policy of not escalating and falling trap to any side but to play for the better option for nation. It also put government on thinking of medical education and loss of brain drain to other countries. The State budget which is presented is encouraging to see, less populist and more development oriented. It has laid prominence of social cause of its citizens more efficiently and is forward looking. The fiscal discipline is the first of many challenges which government would be posted with, when there is uncertainty of collection and higher spending by government for larger good. While it may be very lucrative for governments to increase tax to raise revenue, the government has held its gun for good. Global Governments  are now moving to digitalization to ease the administration efficiency and improve the quality of governance, and the current budget also emphasizes the digitalization.

News Roundup

Direct Tax

Judicial developments :

  • ITAT Kolkata : Fees for default in furnishing TDS/TCS statement couldn’t be levied for period prior to 01-06-2015
  • ITAT Hyderabad : Receipt of security deposit under JDA doesn’t trigger tax liability unless possession of property is transferred
  • SC : Gifting freebies to doctors is prohibited by law; Pharma Cos not eligible for deduction in terms of Explanation 1 to section 37(1) on such freebies
  • ITAT Bangalore : Claim of FTC can’t be disallowed just because Form No. 67 wasn’t filed by due date of filing original return.
  • Rule 128(9) of Rules does not provide for disallowance of Foreign Tax Credit in case of delay in filing Form No. 67, and filing of Form No. 67 is not mandatory but a directory requirement

Executive developments :

CBDT : Last date to link PAN-Aadhaar is 31-03-2022

Indirect Tax

The gross GST revenue collected in the month of February 2022 is Rs. 1,33,026 crore, showing decent GST collections after the initial dip.

The GST Council in its next meeting may look at raising the tax slab to 8 per cent, from 5 per cent, and prune the exemption list in the Goods and Services Tax regime as it looks to increase revenues and do away with states’ dependence on Centre for compensation. This could straightaway have an upward price impact on various goods, which are mostly necessities.

KSCAA has submitted post budget memorandum on GST budget proposals, which included the possible adverse impact and suggestions on Sec 38, which casts more responsibility on the person claiming Input Tax Credit. We need to wait and see how the said provision and related nitty-gritties are addressed.

The State GST authorities in Karnataka have initiated GST Audits in many cases u/65 and the notices have been sent through mails. Caution is required not to miss these emails as it would be a valid service.

Corporate and Allied Laws

Companies Act – Communication received without SRN to be treated as unauthorized

The Registrar of Companies and the Regional Directors at all locations are required to enter all cases of complaints against the Companies and the LLPs, Inspections, Inquiries, Investigations and Prosecution in the MCA Electronic registry i.e., MCA21 before issuing any letter, notice, order etc. Thereafter, a Service Request Number (SRN) is generated. They have also been directed to mention such SRN mandatorily in all such communications to Companies, LLPs, their officers, auditors, etc., on all communications.

LLP – MCA notifies amendments to LLP Rules and Act wherein the provisions are effective from 1st April 2022.

In exercise of the powers conferred by sub-section (1) of section 67 of the Limited Liability.

Partnership Act, 2008 (6 of 2009), the Central Government hereby directs that the provisions of sections 90, 164, 165, 167, sub-section (5) of section 206, sub-section (3) of section 207, 252 and section 439 of the Companies Act,2013 (18 of 2013), shall apply to limited liability partnership, except where the context otherwise requires, with the modifications specified.

The Ministry of Corporate Affairs also vide Notification dated 11th February 2022 has notified the Limited Liability Partnership (Amendment) Rules, 2022, which shall come into force from 1st April 2022. The amendments are made in rule 5, 18, 19 and 37 with respect to :

  • Rule 5 – in the third proviso, for the words Provided also” the word     “Provided” shall be substituted.
  • Rule 18 -(xi) the proposed name is identical with or too nearly resembles the name of any other limited liability partnership or a company.
  • Rule 19A – Allotment of new name to existing LLP under sub-section (3) of section 17.
  • Rule 37A – Adjudication of penalties.
  • Rule 37B – Appeal against order of adjudicating officer.
  • Rule 37C – Registration of appeal.
  • Rule 37D – Disposal of appeal by Regional Director.

Further, two new forms are notified i.e., Form 16A – Certificate of Incorporation pursuant to change of name due to Order of Regional Director not being complied and Form 33 – Memorandum of Appeal. The Central Government has also revised the fee norms for LLP by substituting the existing Annexure A.

Concluding Remarks

Our annual conference which is generally held in the month of March every year is postponed to the month of May 2022 due to prevailing pandemic, which could have impaired our preparation. In case you have any plan or suggestion related to annual conference which you presume could be of interest to larger audience, you can also send your suggestion to me personally at [email protected]

Famous economist John Maynard Keynes said this famous sentence which is relevant to the times when country and profession need to work on design thinking, he said “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”

Happy Reading !

Yours faithfully,

CA. Chandan Kumar Hegde A

President