Chamber Voice – October 2018

President's Note

Dear Friends,

While our State’s Economy has taken a bad hit due to the August floods, it is very satisfying to see how we have been able to cope up with the disaster and recover from the devastating effects of this unforeseen calamity. Keralites have shown the world that we are a resilient group of people who can come together, putting aside all differences in times of distress, to help those in need. The Chief Minister’s Distress Relief Fund has been able to generate the much-needed funds for the rehabilitation of the affected people and we hope that this rehabilitation process is well on track and that our brothers and sisters will be able to recoup their losses very soon.

Another fallout of the unprecedented rains are our roads that have been left in a state of total disrepair. It is a matter of great concern that, to date, many of the roads have not been redone despite the serious damage caused. We urge the State Government to act quickly and to ensure that the roads are repaired at the earliest.

Recently a Diesel Electric Multiple Unit (DEMU) Train service commenced operations between Ernakulam South Station and the Harbour Terminus on Willingdon Island. The three coach DEMU Trains started shuttling between these two stations twice a day, both during the peak rush hours. The Cochin Chamber, while cautiously optimistic about this new venture, opted to adopt a wait and watch policy on the utility and efficiency of the project. Sadly, it was found that the service was totally unviable as we apprehended and hence had to be withdrawn. The Chamber had sent a representation to the authorities asking them to seriously relook the viability of the service.

The recent unchecked increase in fuel prices is a matter of serious concern. Higher crude oil prices will adversely impact the twin deficits of current account and fiscal, which will have spill over effects on monetary policy, consumption and investment. An increase of 15-25% in oil prices in one year will certainly impact the Indian economy negatively.

Higher oil prices will push the import bill higher; however, it will be partly offset by higher oil exports and better remittances. In numbers, an increase of $10 per barrel in crude prices will push the merchandise imports bill up by about $20 billion, which will be partly offset by an increase of about $6 billion in oil exports and $3-4 billion in workers’ remittances.

Rising petrol and diesel prices can dent the savings of the common man, by adding to the monthly household budget for not only fuel but also essential commodities and other goods.

With the daily revision in prices, you might not always notice that your monthly fuel outgo is on the rise. But over time, this could dent your budget by not only increasing your outgo for fuel but also essential commodities and other goods, apart from making foreign trips and loans costlier.

A direct impact of rising diesel and petrol prices is increase in what you spend on fuel every month for the same amount of travel.

Record high prices for diesel mean that the cost of transporting goods goes up across the country. In turn, prices of essential commodities like fruit and vegetables as well as other goods increases.

Higher inflation may eventually lead the Reserve Bank of India to consider increasing interest rates. Therefore, those intend to avail loans will get affected. On the positive side, savers will benefit from higher rates.

October has been an eventful month for the Chamber. We conducted two major programmes which were highly successful – the CEO Breakfast Meeting and the 4th Annual Dr.A.P.J.Abdul Kalam Memorial Lecture. I would like to take this opportunity to thank you all and the members of the Executive Committee of the Chamber for the support and co-peration received.

The 11th CEO Forum Breakfast Meeting was held on the 5th of October. The Speaker, Mr.Nandu Govindankutty, Director – Barclays UK & Co-founder of MADTA spoke on the subject, “Cyber Security – Psychological Resilience & Cyber Security – Rapidly Changing Threat Landscape.” All those who attended appreciated the program as very interesting and enlightening talk.

As you are all aware, the Chamber conducted the 4th Annual Dr.A.P.J.Abdul Kalam Memorial Lecture on the 12th of October 2018. Dr.Namperumalsamy, Chairman – Emeritus of Aravind Eye Care Systems was the Guest Speaker on the occasion. It was an honour for the Chamber to have hosted such an eminent personality. We couldn’t have asked for a better person to deliver the Lecture this year. The event went off very well and we had almost 170 participants including students and other industry representatives attending the program.

A detailed report on these events along with pictures is carried in this issue of the Newsletter for your information.

Later this month, the Chamber will be conducting a Management Development Programme on “Corporate Excellence – The Kaizen Way.” The programme will be held on the 26th of October at the Abad Plaza Hotel Ernakulam. I look forward to having our members attend this programme in earnest.

The next CEO Breakfast Meeting is planned for the 2nd of November. Ms.Deepa Bhatia Chirayath, Leader – Entity Governance & Compliance, Tax & Regulatory, PwC India, will be the Speaker on the occasion. She will speak on the topic, “Key Compliance Updates under the Companies Act, 2013 and Foreign Exchange Management Act, 1999.” I invite you all to participate in these programmes.

I am also pleased to inform you all that consequent to the visit of Mr.Ade Sukendar, Consul General of the Republic of Indonesia, and Mr.Yadi Suriahadi, Consul (Economics), to the Chamber in August this year, the Chamber has decided to lead a delegation from the Chamber to the Annual Indonesian Trade Event “Trade Expo Indonesia 2018” that is being held in Jakarta, Indonesia between October 24th and 28th, 2018. The delegation comprising ten members, led by our Executive Committee Member Mr.Bibu Punnooran, will be visiting the Trade Expo later this month representing the Chamber. This is the first time that a delegation such as this is going from the Cochin Chamber. We wish them every success.

Wishing you all the very best!

 

Venugopal

President

 

Remembering a Legend

The Cochin Chamber conducted the 4thAnnual Dr. A.P.J Abdul Kalam Memorial Lecture on Friday the 12th of October at Hotel Abad Plaza, Ernakulam.

This Lecture is an annual event held by the Chamber wherein Guest Speakers who have had some degree of interaction with the late President are invited to share their experiences with Dr. Kalam and the impact that Dr. Kalam’s principles have had in their lives. Following the demise of Dr. Kalam, in the year 2015, the Chamber initiated this Annual Lecture Series to celebrate his life – one of India’s greatest sons. Through this event the Chamber hopes to inspire the business community to be part of the transformation process of making India into a principled and inclusive developed nation.

The Inaugural Lecture was delivered by Mr. Srijan Pal Singh, a close associate of Dr. Kalam. In the year 2016, Mr. P.M. Nair I.A.S (Retd.) who was Secretary to the late President between 2002 and 2007 delivered the Lecture. Last year, the Speaker was Mr. Hormis Tharakan, Former Chief of the Research and Analysis Wing (RAW).

This year, the Guest Speaker was Dr. Namperumalsamy, Chairman –Emeritus, Aravind Eyecare System, Madurai a Padmashree  recipient. The event was attended by the CEOs and representatives of various organizations based in and around Cochin. Students from various colleges in Cochin also attended the programme.

The evening commenced with a Welcome Speech by Mr. V Venugopal, President of the Cochin Chamber of Commerce and Industry. In his address, he recalled the honour accorded to the Chamber at the time of its 150th anniversary celebrations where the late President Dr. A.P.J Abdul Kalam was the Chief Guest.

In the traditional manner, as a sign of welcome and respect, Mr. A.K Nair, Past President of the Chamber honored the Guest Speaker Dr. Namperumalsamy with a ”ponnada.”

Commencing his address, Dr. Namperumalsamy thanked the Chamber for the opportunity afforded to him in delivering the 4th Dr. A.P.J. Abdul Kalam Memorial Lecture this year. He said that he had been closely associated with Dr. Kalam in his lifetime and that Dr. Kalam had visited the Aravind Eye Hospital in Madurai over 19 times. Dr. Namperumalsamy  recalled a time when Dr. Kalam had visited his hospital like any other patient many years ago and said that he had appreciated the hospital for offering unbiased treatment and state-of –the art facilities for both the rich and the poor alike. Dr. Namperumalsamy fondly shared pictures of the many events in which Dr. Kalam had taken part  including those of the Silver Jubilee Celebrations of the hospital, laying of the foundation stone of their Research Institute etc. He recalled one particular incident wherein Dr. Kalam personally went and met the maid in Dr. Namperumalsamy’s home to thank her for the dinner that she had made for him. Dr. Kalam’s simplicity, humility and humaneness were beyond compare, he said.

Dr. Namperumalsamy, said that “Social Entrepreneurship” and “Social Innovation” are two important lessons that he learnt from Dr. A.P.J Abdul Kalam. He touched upon the fact that Dr. Kalam, when he was working with the DRDO, had invented light weight calipers for handicapped children to help them manage the weight of the prosthesis. Dr. Namperumalsamy said that Dr. Kalam was a dedicated and innovative social entrepreneur who was constantly striving to do better and achieve greater things.

Dr. Namperumalsamy also explained the ”Aravind Business Model” which he said was based on 4 dimensions namely the ‘service model’, the ‘business model’, the ‘spiritual model’ and the  ‘innovative model.’ He also said that a social innovative mindset would go a long way in building up a successful nation. Dr. Kalam, he said, would never aske about the tasks that had been completed. He was always talking about what more could be done.

In the latter half of the session, Dr. Namperumalsamy spoke about how his hospital was now manufacturing eye lenses for $3 apiece as against the earlier cost of $120 for imported lenses. He said that this innovation had made treatment more affordable for the masses. He also mentioned that the lenses manufactured by Aravind Hospital were done by local women who, without much education, had been trained to do this work. Today, these lenses which have been internationally certified, are being and exported to over 127 nations, he said.

Dr. Namperumalsamy also outlined his institution’s initiatives in providing training and skill development to people from the weaker sections of society which in turn helped them earn a decent living. He specifically mentioned the hospital’s Paramedical training initiative in which school girls are trained and skilled to do jobs like administering eye drops and painting eye lenses which in reality do not require any expert’s attention. He also reflected on how the advanced in Information Technology have influenced the healthcare sector in a big way. With the help of Tele-Ophthalmology he said, his hospital had set up many Vision Centers where the patients, living in remote villages, could consult with the doctor who would be examining the patient virtually.

Dr. Namperumalsamy said that it was at Dr. Kalam’s request that a branch of the Aravind Eye Hospital was built at Rameshwaram since Dr. Kalam was very keen on having an eye care facility in his hometown. He even shared some enlightening moments with the audience as he read out excerpts from the “Thirukkural”, a renowned spiritual text in Tamil.

Dr. Namperumalsamy also mentioned the fact that the Aravind Business Model had been adopted as a Case Study in many reputed business schools in the world including Harvard Business School in Boston.

The interactive session that followed saw Dr. Namperumalsamy answering questions from the audience including one about the prestigious Conrad N Hilton Humanitarian Prize which the Aravind Eye Hospital had won in the year 2010.

Mr. C.S. Kartha, Past President of the Chamber presented Dr. Namperumalsamy a charcoal portrait of Dr. Kalam as a memento. A book on the Chamber’s 150 year history, “A Journey through Time” was also presented to Dr. Namperumalsamy. This book was released by Dr. A P J Abdul Kalam on the occasion of the Chamber’s 150th year celebrations in 2007.

Concluding the programme Mr. K. Harikumar, Vice President of the Chamber proposed a Vote of Thanks.

4th Dr. A.P.J. Abdul Kalam Memorial Lecture |12.10.2018

Inspiring Quotes

CEO Forum - Breakfast Meeting

Psychological Resilience & Cyber Security - Rapidly Changing Threat Landscape | 05.10.2018

The Cochin Chamber of Commerce and Industry conducted its 11th CEO Forum Breakfast Meeting on 5th October 2018 at the Taj Gateway Hotel, Ernakulam.

The subject under discussion was “Psychological Resilience and Cyber Security – Rapidly Changing Threat Landscape.”

Mr. V Venugopal, President of the Chamber delivered the Welcome Address and introduced the Speaker for the meeting. Mr. Nandu Govindankutty, Director – Barclays UK & Co-founder of MADTA spoke on the importance of Psychological Resilience and Cyber Security, a rapidly changing threat landscape.

In his address, he said that using the internet has become an integral part of life in the modern world. From communicating via instant messages to banking and shopping, every aspect of our lives revolves around the cyber world. But with every leap in technology there comes its own set of side effects. These negative side effects are a challenge that every developer should be prepared to tackle to ensure optimum results and maximum protection.

Mr. Nandu Govindankutty touched upon the importance of cyber security in the modern world given the fact that today everyone is prone to cyber attacks. We now have a situation where almost everyone ranging from a business organization to an individual can be victimized through a cyber attack. This could even be by E-Mail or SMS which is termed as phishing. Phishing is a type of attack often used to steal user data, including login credentials and credit card numbers by disguising the attacker as a trustworthy entity. Here, the user is tricked into clicking a malicious link, which can lead to the installation of malware in the system which in turn reveals sensitive information to the hacker.

Another important aspect which contributes to cyber attacks is the use of public Wi-Fi without a VPN protection. The same features that make free Wi-Fi desirable for consumers also makes them desirable for a hacker especially since it doesn’t require authentication to establish a connection. This gives the hacker uninterrupted access to one’s information. However, if you have a VPN, even if a hacker manages to get into the system, all sensitive data is protected since it’s encrypted.

Another way in which cyber attacks are carried out and which mostly go unnoticed is by giving permissions to applications on smart phones. For example if an app has permission to the microphone of the phone it can record all conversations anytime with out the knowledge of the user.  These problems are applicable to smart TV too.

While social media helps in sharing thoughts, images, reports on activities etc it also acts as a window to look into somebody else’s lives anonymously. These sites pose a serious threat to the privacy and personal security of the individual. Details that one puts on LinkedIn can be accessed by anybody around the world. All of this,  collectively, form a huge database which can be used as a threat, not only business organizations but also to the common man.

Mr. Nandu Govindankutty also cited examples of cyber attacks that happened around the world like the Bangladesh Bank attack, the Cosmos Bank attack, the involvement of Zattara etc. He also went on to say that in many of these cases the involvement of insiders was instrumental in carrying out these cyber attacks.

Mr. A.K. Nair, the Past President of the Cochin Chamber presented a Memento to Mr. Nandu Govindankutty.

Mr. C.S.Kartha, Past President of the Chamber delivered the Vote of Thanks.

The interactive session came to an end with a networking breakfast.

Fine Points

Tax and Regulatory Updates from PricewaterhouseCoopers

Direct Tax

Supreme Court holds that 100% deduction under section 80-IC cannot be claimed after initial five years, even if substantial expansion takes place within ten year block

In a recent decision, the Supreme Court (SC) held that 100% deduction under section 80-IC of the Income-tax Act, 1961 (Act) cannot be claimed beyond five years, even if a substantial expansion is undertaken after initial period of five years. The deduction shall be restricted at the rate of 25%/30% (as the case may be) for the next five years. It held that taxpayers who had availed deductions at the rate of 100% for the first five AYs on the ground that they had set up a manufacturing unit as prescribed under sub-section (2) of 80-IC of the Act, could not start claiming deductions at the rate of 100% again for next five AYs even if they were undertaking “substantial expansions.”

PwC comments: The controversy on the claim of deduction under section 80-IC at the rate of 100% after the initial five AYs on undertaking substantial expansion is now settled. After availing deduction for a period of five AYs at 100% of such profits and gains from the eligible “units,” the taxpayer would be entitled to deduction for the remaining five AYs at 25% only (30% for companies), and not at 100%, irrespective of any substantial expansion.

CBDT mandates conduct of all assessments through e-proceeding facility, carves-out certain exceptions

The Central Board of Direct Taxes (CBDT) partially modifying its earlier instruction, has now issued an instruction directing that all the assessments required to be framed under section 143(3) of the Income-tax Act, 1961 (the Act) in financial year (FY) 2018-19 shall be conducted electronically through the e-proceeding facility.

The instruction carves out seven exceptions where “e-proceeding” shall not be mandatory. Further, it lists four situations where personal hearing may take place, despite conducting assessment through e-proceeding facility.

PwC comments: CBDT’s step to mandate e-proceedings is a welcome move. CBDT has expressed its view that manual proceedings should be conducted only in certain situations, while all other tax proceeding in connection with assessment under section 143(3) to be carried out electronically. In some cases, an approval is to be obtained from higher officials for conducting the manual proceedings. This is a step to ensure that recourse to manual mode is taken only in genuine cases.

A pragmatic approach has been followed to list out situations where a personal hearing is necessitated. One has to also take note that when a show cause notice contemplating any adverse view is issued to the taxpayer, a request for personal hearing can be made through the e-filing account only.

Financial, legal and risk management services not covered within the meaning of FIS under the India-USA tax treaty

In a recent decision, the Kerala High Court (HC) has held that management services such as (i) management decision making, (ii) financial decision making, (iii) legal matters and public relation activities, (iv) treasury services and (v) risk management services provided by a non-resident would not be covered within the meaning of “fees for included services” (FIS), as defined under Article 12 of the Double Taxation Avoidance Agreement (tax treaty) entered into between India and USA. The HC has held that the mere fact that the provision of a service may require technical input by the service provider does not per se mean that the technical knowledge, skills, etc., are made available to the person availing such services.

PwC comments: The decision reaffirms the position that the mere provision of general support and routine advisory services related to finance, management and legal matters by a non-resident will not be considered as “making available” technical knowledge or skill to the taxpayer. This decision also reaffirms that technology would be considered “made available” only when the person acquiring the service is enabled to apply the same to its business.

Tribunal holds that provisions of section 56(2)(viib) not applicable where the company had only closely related shareholders and there was no possibility of unaccounted money being involved

The Chennai bench of the Income-tax Appellate Tribunal (Tribunal) lifted the corporate veil in case of a company having shareholders who were relatives to hold that the provisions of section 56(2)(viib) of the Income-tax Act, 1961 (Act) are not attracted on subscription to shares by existing shareholders at a substantial premium, provided the genuineness of the source of investment is not in dispute.

PwC comments: This ruling will ease implementation of group restructuring/ restructuring of capital of companies having shareholders who are relatives, unless there is a question about the genuineness of source of investment.

Indirect Tax

CBIC amends CGST rules, notifies formats of annual return and issues various clarifications 

Major amendments to the CGST Rules

  • Proceedings for cancellation of registration due to non-filing of returns can now be dropped if all pending returns are filed and tax dues paid along with interest and late fees.
  • Input tax credit (ITC) can be claimed if the invoice/debit note contains the details of at least the amount of tax charged, description of goods or services, total value of supply, GSTIN of the supplier and recipient, and place of supply in case of inter-State supply.
  • Definition of adjusted total turnover to compute the amount of eligible refund of accumulated ITC for zero-rated supplies has been amended to bring it in line with the definition of zero-rated turnover of services, and remove an internal inconsistency between accrual and cash based details.
  • Refund of IGST paid on export of goods is restricted if exporter has imported goods without payment of IGST by availing benefits under customs duty, i.e. advance authorization, EPCG, EOU/STPI etc. The restriction is with retrospective effect from 23rd Oct’17. Previously, such restrictions were applicable only if supplier to exporter had availed aforementioned benefits on the supplies made to the exporter.
  • In case of imported goods, person in-charge of a conveyance will now need to carry a copy of the bill of entry filed by the importer & indicate number & date of bill of entry in Part A of Form GST EWB-01.
  • The format of annual return notified in Form GSTR-9 and Form GSTR-9A for normal and composition taxpayers respectively. This is a much awaited development.

Supply of services by principal to agent and vice versa without consideration is outside the ambit of scope of entry I of Schedule I, and therefore in the absence of any consideration, it cannot be treated as supply

Further, the key ingredient for determining an agency relationship under GST would be whether the invoice for the further supply of goods on behalf of the principal is being issued by the agent (in his own name) or not, and vice versa in case of procurements on behalf of principal. In other words, the important criteria is whether or not the agent has the authority to transfer or receive the title of the goods on behalf of the principal, thus contractually binding the principal.

Recovery of Arrears of Legacy Central Tax Laws

It was earlier clarified that the recovery of arrears arising from legacy central laws (e.g. excise, service tax, etc.) shall be made as central tax liability, and can be paid by utilizing the balance available in credit or cash ledger. Since the GSTN portal did not allow such liability under the legacy laws to be recorded, the taxpayers can alternatively reverse the erroneously availed CENVAT credit or inadmissible transition credit through Table 4(B)(2) of Form GSTR 3B. The applicable interest and penalty should be paid through entry in column 9 of Table 6.1 of Form GSTR 3B.

Clarifications relating to refunds

  • For claiming refund on exports, instead of submission of input invoices, copy of Form GSTR 2A of the claimant for period for which refund is claimed has to be submitted. The authorities may call for invoice, only where assessee has claimed credit but the same is not reflected in Form GSTR 2A due to various reasons. The assessee is also required to submit the details of the invoices on the basis of which ITC had been availed during the period for which the refund is being claimed in prescribed format (Annexure A)
  • For claiming refund of ITC, amount equal to the refund claim has to be debited in the credit ledger. The order, in which the amount need to be debited from respective tax credit ledger is prescribed for all the refund claims filed after this circular. For previous claims, no adverse view to be taken by the authorities if this order was not followed.
  • For rejection of refund claim due to ineligibility of credit, amount would be re-credited in the credit ledger & notice to disallow such credit would be issued. For rejection of refund claim due to any other reason, amount of ITC would be re-credited in the credit ledger after receipt of undertaking from assessee that no appeal would be filed, or if an appeal is filed, the re-credit will not occur until it is finally decided against the assessee.
    • It has been clarified that restriction under rule 96(10) of the CGST Rules on claiming refund of IGST paid on import of goods applies only to those purchasers/importers who are directly purchasing/importing supplies on which the benefit of specified notifications is availed. Once refund claim is sanctioned, any error in such order should be appealed against by the sanctioning authority. The disbursement should not, however, be withheld.
    • In case of any deficiency in the refund claim filed, a deficiency memo is to be issued and the amount of credit already debited would be re-credited. Further, the refund would have to be filed afresh. Show cause notices are not required to be issued where the deficiency memo is issued.

GST Audit format notified

GST rules are amended to notify the GST audit report format and reconciliation statement in Form GSTR 9C.

TDS/ TCS provisions notified effective 1st Oct’18

  • Provisions of section 51 of the CGST Act, 2017 relating to TDS, are made effective from 1 October, 2018 for the following class of persons:
    – A department or establishment of the Central Government/State Government;
    – Local authority;
    – Governmental agencies;
    – An authority/ board or any other body –

    • set up by an Act of Parliament or a State Legislature; or
    • established by any Government, with 51% or more participation by way of equity or control, to carry out any function.- Society established by the Central Government/ the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
      – Public sector undertakings.
    • Provisions of section 52 of the CGST Act, 2017 relating to TCS by e-commerce operators, are made effective from 1 Oct’18

PwC Comments: The extension of compliance due dates is a welcome step, allowing the businesses an opportunity to fulfil their pending filing obligations without any penal consequences. The release of GST Audit report format was much awaited and would now enable businesses to commence the audit process. The information sought for and the audit report has to be provided GSTIN-wise, and multi-location entities have to quickly collate the various information sought for GSTIN-wise considering the timeline for submission of the report by 31 December (this date is not extended as of now). The industry was hoping for introduction of TDS and TCS from the beginning of the next financial year, so as to avoid overlap, reduce mid-year transitions and also complete other pending compliance obligations

Regulatory

Dematerialization of securities – unlisted public companies

The Ministry of Corporate Affairs in its drive to enhance transparency, investor protection and corporate governance, has notified Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018. In accordance with the said rules, unlisted public companies need to dematerialize its existing securities and ensure that further issue of securities and transfers are only in dematerialized form. The major benefits that will be available to unlisted companies on dematerialization are as follows:

  • Elimination of risk of duplication, theft, fraud and loss with respect to physical share certificates.
  • Enhancement of transparency in ownership, preventing mal-practices, such as benami shareholding, back dated issuance of shares/ transfers.
  • Exemption from payment of stamp duty on transfer.
  • Ease in transfer and pledge of securities.

Dematerialization of existing securities

Unlisted public companies can facilitate the dematerialization of their existing securities by:

  • Applying to a depository as per the provisions of the Depositories Act, 1996;
  • Securing International Security Identification Number (ISIN) for each type of security; and
  • Informing all its existing security holders about such facility.

Impact on further issue of securities by the company

Every unlisted public company needs to ensure that all its securities are dematerialized in accordance with the Depositories Act, 1996 prior to making any of the following offers:

  • Issue of securities;
  • Buy-back of securities;
  • Issue of bonus shares; and
  • Rights issue.

Clarifications relating to e-way bill for storing goods in transporter’s godown state that

  • Goods in movement, including when they are stored in the transporter’s godown prior to delivery, would always be accompanied by a valid e-way bill.
  • Transporter’s godown should be declared as additional place of business by the consignee, if its goods are stored there. Accordingly, transportation under e-waybill would be treated to be concluded once the goods have reached the transporter’s godown.
  • The movement from transporter’s godown to any other premises of recipient would also attract relevant provisions of e-way bill rules.
  • The transporter would be required to maintain accounts and records as a warehouse keeper. The recipient taxpayer would also be responsible for maintaining relevant accounts and records, including for goods stored at the transporter’s godown.

PwC Comments: The clarifications issued would help the industry resolve certain ambiguities and computational anomalies (e.g. for refund claims). The industry would have expected that the retrospective amendment pertaining to denial of refund of IGST paid on export of goods should have been made on a prospective basis. The release of annual return formats is an important development and would enable the industry to commence preparations for identifying various data points needed for the annual return. However, the additional compliances for transporter’s warehouses will increase compliances, especially for the e-commerce sector.

CBIC extends compliance due dates in some cases, notifies format of GST audit report and notifies effective date of TDS/ TCS provisions under GST Act

 

Impact on security holder intending to transfer/ subscribe to securities

A security holder of an unlisted public company, who intends to transfer its securities on or after 02 October, 2018 needs to dematerialize such securities before transfer.

Also, security holders who intend to subscribe to the securities of an unlisted public company on or after such date shall ensure that all his existing securities in the respective company are dematerialized before such subscription (by way of private placement, bonus shares, rights offer).

Compliance requirements

Every unlisted public company who have dematerialized their securities must comply with the following compliance requirements:

  • Make timely payment of fees (admission as well as annual) and maintain a security deposit of at least two years’ fees, as per agreement executed with the following:
    – Depository;
    – Registrar to an issue; and
    – Share transfer agent.
  • Comply with regulations, guidelines /circulars, issued by SEBI or Depository from time to time.
  • Audit Report provided under regulation 55A of the SEBI (Depositories and Participants) Regulations, 1996 to be submitted on a half-yearly basis to the registrar, under whose jurisdiction the registered office of the company is situated.
  • Unlisted public companies that have defaulted in compliance requirements shall not offer any securities or buyback, or issue any bonus or right shares until the payment to depositories or registrar to an issue or share transfer agent are made

Single Master Form – Reporting of foreign investment in India – User manual

In line with the procedure laid down by the Reserve Bank of India (RBI) in its circular dated 07 June, 2018 for the introduction of the Entity Master Form (EMF) (effective from 28 June, 2018) and Single Master Form (SMF) for reporting foreign investment, the RBI has implemented the second module, namely SMF for reporting of foreign investment in India. (Please refer to our news alerts dated 08 June 2018 and 29 June 2018 for the previous RBI circulars.)

The SMF has been now made effective from 01 September, 2018 for filing of the following five forms:

  • Form FC-GPR – For issue of capital instruments by an Indian company to a person residing outside India (PROI) (including reporting of receipt of share application money that was reported in erstwhile Form ARF).
  • Form FC-TRS – For transfer of capital instruments between a person resident in India and a PROI.
  • Form LLP-I – For foreign direct investment in limited liability partnership (LLP) through capital contribution and profit share.
  • Form LLP-II – For disinvestment/ transfer of capital contribution and profit share in LLP.
  • Form CN – For issue or transfer of convertible notes.

With effect from 01 September, 2018 all new filings for the above five forms have to be made in SMF only. The other four forms mentioned in the RBI circular dated 07 June, 2018 namely, ESOP, DI, InVi and DRR, will be made available subsequently.

RBI has issued a user manual containing step-by-step instructions for data entry in the SMF.

Further, RBI has also enabled registration for those companies who missed the deadline for registration for EMF. Those companies that could not register within the stipulated time period may register for the entity master with effect from 01 September, 2018. However, they shall be required to provide the reasons for not registering within the time period along with the prescribed authority letter.

Apart from the above, the user manual also provides detailed guidance to Authorized Dealer Banks (AD Banks) to process the forms. AD Banks would have five working days for approving or rejecting the form or sending it to RBI. {Please click here to access the link to the user manual}.

Press Releases

Blog!

CHEKUTTY MAGIC

Ever since the devastating floods that hit Kerala in August, we have been waking up to the news of post flood relief operations and campaigns all over Kerala. It has been raining campaigns on and off the social media ranging from ’Justice for Pranay’, Kudumbashree’s dress collection campaign, the ones launched on twitter like the  #DoForKerala by ‘Anbodu Kochi’ –a group of friends that came together for a noble cause, #KeralaFloods, #KeralaFlood Relief etc. The campaigning spirit is still far from over. Amongst this entire buzz, Kochi has had its fair share of campaigns but there is one amongst them that we personally feel is unique and noteworthy and that is “Chekutty”.

The ‘Chekutty Doll’ is an initiative by social entrepreneurs Lakshmi Menon and Gopinath Parayil,” Chekutty is a doll that is upcycled from the Chendamangalam handloom sarees that were damaged during the Kerala floods. According to the Chendamangalam Weavers Association, 80% of the revenue generated by the weavers usually comes from the annual Onam sales. After the deluge, the Chendamangalam weavers were left with a huge heap of soiled garments that couldn’t be salvaged in any way.

It is at this juncture that Lakshmi Menon who is also the founder of Pure Living, an organization that recycles waste materials, came up with the idea of making dolls from these soiled clothes. Thus the ‘Chekutty Doll’ was born. In making these dolls, each piece of textile is chlorinated and boiled in water to disinfect it and make it safe for use. UNder normal circumstances the average cost of a Chendamangalam handloom saree is  around Rs. 1,300/-. Lakshmi Menon found that around 350 of these dolls could be made from one sari and priced each of them at Rs. 25. This initiative has caught everyone’s imagination and the proceeds of the sales will go to Chendamangalam Handloom Weavers’ Cooperative Society. Gopinath Parayil who is the founder of Blue Beyond and cofounder of ‘Chekutty’ said that even before the sales had begun, they were flooded with bulk orders from all over the world.

One of our colleagues had ordered the Chekutty Dolls online recently. It was delightful to see a box filled with 20 Chekuttys. They were tiny, cute and endearing, awash with subtle colors and bearing a few scars here and there – a reminder of the trauma that the weavers of Chendamangalam underwent during the floods. Honestly the next time one feels like gifting someone with something, a box Chekkutty Dolls would be ideal. Her creator Lakshmi Menon has called her “the mascot of an emerging Kerala.”

Today Keralites all over the world are proud of Lakshmi who is an ecopreneur, and the promoter of ideas that helped in making value-added products from waste materials.

The Cochin Chamber of Commerce and Industry is proud to announce that Ms. Lakshmi Menon has agreed to be the Guest Speaker at the 13th CEO Forum  Breakfast Meeting to be held in December this year.

The “Chekutty” is here to stay and will symbolise the rebuilding of lives in Kerala after the recent floods.

Upcoming Events

Workshop on Corporate Excellence - The Kaizen Way | 26.10.2018

The Chamber is organizing a One-Day Workshop on “Corporate Excellence – The Kaizen Way.”  The Workshop will be held at the Vantage Point, Hotel Abad Plaza, Ernakulam on Friday, the 26th of October, 2018.

The registration starts at 09.00 hrs and the session will commence at 09.30 hrs.  The details about the programme are laid out on the brochure attached herewith.

TrainerMr. Mark Antony Sequeira, Master Trainer & CEO of Maestro Human Resources Pvt. Ltd.  A full profile of the Trainer is also attached with this mail for your perusal.

 Programme Outline:

Kaizen (pronounced ‘kyzan’ or ‘kyzen’ in the western world) is a Japanese word, commonly translated to mean ‘continuous improvement’. Kaizen is a core principle of quality management generally, and specifically within the methods of Total Quality Management.

Kaizen works best when it is ‘owned’ by people, who see the concept as both empowering of individuals and teams, and a truly practical way to improve quality and performance, and thereby job satisfaction and reward.

Kaizen is a way of thinking, working and behaving, embedded in the philosophy and values of the organization. Kaizen should be ‘lived’ at all levels for survival and growth of organizations.

The aims of organizations following the Kaizen way are:

✓ To be profitable, stable, sustainable and innovative.

✓ To eliminate waste of time, money, materials, resources and improve effort to increase productivity.

✓ To make incremental improvements to systems, processes and activities before problems arise rather than correcting them after the event.

✓ To create a harmonious and dynamic organization where every employee participates passionately and is valued.

 *Students who are interested to participate should submit a valid College ID proof to avail special rate. 

The Chamber will issue Participation certificates at the end of the Workshop.

To register, please contact: events@cochinchamber.org

Tel: +91 484 2668349/ 2668650 / +919744629992 / +919895676827

CEO FORUM - Key Compliance Updates under the Companies Act, 2013 and Foreign Exchange Management Act, 1999 | 02.11.2018

The Twelvth Breakfast Meeting of the CEO FORUM 2017-18 will be held on Friday, the 2nd of November 2018 at the Taj Gateway, Ernakulam.

Speaker:  Ms. Deepa Bhatia Chirayath, Leader – Entity Governance & Compliance, Tax & Regulatory – PwC India

Topic: Key Compliance Updates under the Companies Act, 2013 and Foreign Exchange Management Act, 1999

Date: Friday, 02nd October 2018

Time: 8.00 a.m. to 10.00 a.m.

Venue: Marina Hall, Taj Gateway, Marine Drive, Ernakulam.

For registrations, please contact:

ceoforum@cochinchamber.org

Tel: +91 484 2668349/ 2668650 / +919895676827 / +919744629992

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THE DEMU TRAIN SERVICE TO WILLINGDON ISLAND -

NEEDS A SERIOUS RETHINK

Today marks a week since the Diesel Electric Multiple Unit (DEMU) Train service commenced operations between Ernakulam South Station and the Harbor Terminus on Willingdon Island. The three coach DEMU Train has been shuttling between these two stations twice a day, both during the peak rush hours. The Cochin Chamber while cautiously optimistic about this new venture, opted to wait for a week to understand and see if the ridership on this service would increase and if it would be really useful to the common man. Sadly this does not seem to be the case.

The Harbor Terminus at the Willingdon Island was renovated about a year ago with the idea to revamp passenger Train and Cargo Train movements between the Island and the City. The idea in theory seemed promising but in practice it has turned out to be an unviable initiative. Although the Chamber understands the efforts made by the Government in this regard, we would like to point out that the DEMU Service, which has been operating for the past week now, has failed to attract sufficient passengers and is plying with a minimum number of people on board.

This service is being carried out at the expense of thousands of other motorists who travel via the Vathuruthy railway crossing every day. The huge traffic blocks caused by the closing of the railway gates at Vathuruthy during peak rush hours in the morning and evening has become a serious issue for commuters using that road. Additionally it is observed that several additional police personnel, whose services could be better utilised elsewhere, are being deployed at the junction to control the traffic disruption there.

Despite the concerns raised by several sections of society, the service continues without any benefit from it.  Certainly the office goers on the Wellington Island are not benifitted. Continuation of the DEMU Service will make economic and practical sense only if there are sufficient commuters using it on a daily basis. We understand that in the last week the average number of people using this service was around 10. Furthermore, the time taken to travel between these two stations is around 40 minutes. This is definitely not an ideal situation nor is it feasible in the long run.

The Cochin Chamber had, sometime back made a representation to the powers that be to consider the construction of an Over Bridge at Vathuruthy to ease the movement of traffic to and from West Kochi. Nothing seems to have happened in this regard. If the bridge, as proposed, was in place, the traffic problems being faced now would not have surfaced at all and the DEMU Service could have carried on without causing difficulties to the road users though the ridership issue would still remain.

People travelling between the City, Willingdon Island and West Kochi are being put to great hardship, morning and evening, on a daily basis. Office goers to the City and the Wellington Island are being inordinately delayed due to this new development in addition to the usual chaos on our roads. The authorities need to take this into consideration at the earliest. The Cochin Chamber of Commerce & Industry urges the authorities to discuss various options with the stakeholders to come up with the better solutions to remedy the situation.

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