6-digit HSN code mandatory in invoices for biz with over Rs 5crore turnover

Source: Financial Express. Apr 01, 2021

Businesses with turnover of more than Rs 5 crore will have to furnish six-digit HSN or tariff code on the invoices issued for supplies of taxable goods and services from April 1

Businesses with turnover of more than Rs 5 crore will have to furnish six-digit HSN or tariff code on the invoices issued for supplies of taxable goods and services from April 1, the Finance Ministry said on Wednesday. Those with turnover of up to Rs 5 crore in the preceding financial year would be required to mandatorily furnish four-digit HSN code on B2B invoices. Earlier, the requirement was four-digits and two-digits respectively. “With effect from the 1st April, 2021, GST taxpayers will have to furnish HSN (Harmonised System of Nomenclature Code), or Service Accounting Code (SAC) in their invoices, as per the revised requirement, the Ministry said in a statement.

In trade parlance, every product is categorised under an HSN code (Harmonised System of Nomenclature). It helps in systematic classification of goods across the globe. HSN codes for goods at 6 digits are universally common. Therefore, common HSN codes apply to Customs and GST. Accordingly, codes prescribed in the Customs tariff are used for the GST purposes too. The Ministry said manufacturers and importers/exporters have been commonly using HSN Codes. Manufacturers were furnishing these codes even in the pre-GST regime. Importers and exporters have been furnishing these codes in import/export documents. Traders would mostly be using HSN codes furnished in the invoices issued to them by the manufacturer or importer suppliers.

“A large number of GST taxpayers are already furnishing HS codes/SAC at 6/8 digits on voluntary basis on the invoices, e -way bills and GSTR 1 returns,” it added. AMRG & Associates Senior Partner Rajat Mohan said traders, manufacturers and services providers would be required to give more precise HSN code while issuing an invoice to the supplies with effect from April 1. “This will help tax officers with deeper data analytics for every item supplied and help them in arresting tax evasion emanating from fake invoices and irregular tax credit claims,” Mohan added.

CBIC notifies ICEGATE as common portal for registration, bills of entry

Source: The Economic Times, Mar 30, 2021

The Central Board of Indirect Taxes and Customs (CBIC) notified ICEGATE or Indian Customs and Central Excise Electronic Commerce/Electronic Data Interchange (EC/EDI) Gateway as the common customs electronic portal for all customs related documentation and duty payments.

In a notification issued Monday, the Board has specified the portal as the one for facilitating registration, filing of bills of entry, shipping bills, other documents and forms prescribed under the Customs Act or any other law, besides duty payments and data exchange with other systems within or outside India.

CBIC has also amended the bill of entry forms for goods arriving via land, sea or air prescribing the use of the common portal for submitting bills of entry. The Board has also specified that bills of entry must be filed before the end of the preceding day on which the goods arrive at the customs port, other than inland container depot and air freight station.

If goods are arriving from Bangladesh, Maldives, Myanmar, Pakistan, and Sri Lanka, the authorised person will have to file the bill of entry before the end of the day of arrival of the vessel.

In case of goods arriving at customs airport, the authorised person will have to file the bill of entry before the end of the day of arrival of the aircraft.

In case of an inland container depot, air freight station, land customs station, at which goods are to be cleared for home consumption or warehousing, the authorised person has been directed to file the bill of entry before the end of the day before the vehicle, including train, arrives.
The changes form part of the move to making the customs processing of bills of entry and declarations more electronic, paperless and seamless, so as to facilitate trade.

CBDT notifies new rules, forms for trusts and non-profit organisations

Source: The Hindu Business Line, Mar 28, 2021

New Delhi: The Income Tax Department has notified a new set of rules and forms for trusts and non-profit organisations. Registration under these rules will help these organisations to get tax exemption for their own income. Also, the new rules will help in attracting funds where contributors will get exemption.

The Central Board of Direct Taxes (CDBT) has come out with a specific format of application to grant the approval of a fund, trust, institution, university, any hospital or other medical institution under various provisions of section 10.

As per the provision, mentioned in this section, there are incomes from certain funds, universities, educational institutions, hospitals, etc, that are not included in the total income for the taxation purpose.

The notification has also stated the rules are related to the approval of the institution for the fund under various provisions of Section 80G. Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. All donations, however, are not eligible for deductions under section 80G. Only donations made to the prescribed funds qualify as a deduction. These funds and institutions have been defined in the notification.

Sanjoli Maheshwarri, Director at Nangia Andersen India said the CBDT has finally issued a notification about amendments in the IT Rules and Forms for granting the approval to various non-profit organisations , under section 80G(5). Notably, the amendments were enacted through Finance Act 2020 wherein compliance and registration procedure for such entities were entirely revamped.

However, the required rules and forms to be prescribed got delayed given the nationwide pandemic crises. The rules and forms prescribed in the said notification indicates the procedure and details to be complied in the applicable forms for seeking registration of charitable & religious entities, hospitals, schools, scientific and industrial research organisation by DSIR, etc.

The newly notified forms are comprehensive and detailed as compared to the earlier forms requiring certain key details to be filled in the applications. “As per Section 12A, the requirement for registration has been mandated for all the existing registered entities under12AA as well as for the new entities seeking provisional registration. Further, the timeline to file the application for provisional registration was at least one month prior to the commencement of the previous year from which the said registration is sought,” Maheshwari said. However, considering the said notification has been issued on the verge of year end and the timeline for filing the application for seeking provisional registration has already lapsed, it has been provided that for applications filed during previous year on or after April 1 2021, the provisional registration sought shall be effective from AY 2022-23. “With this clarification, the Government has helped in removing various concerns and anxiousness of the concerned entities who were in dilemma and perplexed as to how to proceed and strategize in the absence of forms notified,” she said.

Parliament passes bill to boost private investment in mining, Opposition protests

Source: Financial Express, Mar 22, 2021

Parliament Monday passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2021 which seeks to bring more reforms in mining sector for boosting private investment and creating more jobs.

However, opposition parties demanded a select committee scrutiny of the bill, saying the government may face same backlash against this Bill as they are in the case of farm laws.

Assuring members in Rajya Sabha, Mines Minister Pralhad Joshi said the “progressive” bill will not curb the powers of states while creating more jobs.

The Bill was passed by a voice vote in Rajya Sabha Monday. It was passed in Lok Sabha on March 19, 2021.

The Bill seeks to create employment opportunities and also allow private players in mining activities that would bring in modern technology.

Allaying concerns of the members about the Bill curtailing states’ powers, the minister told the Upper House, “I assure you that not a single iota of power of state will be snatched or taken away by this bill.”

On the demand of the Parliamentary standing committee scrutiny, he said, “Wide consultations on bill were held. The bill was circulated to states and 10,500 comments were received. As many as 10 association and six NGOs had recorded their comments.”

“A 143 mines have been given to states. Since 2015, these mines are with them. Neither those were allotted nor auctioned. Who suffered the loss? We are importing coal despite having the 4th largest resource of coal.”

The minister submitted before the House that the funds allocated for exploring mines remained largely under-utilised as they don’t have the capacity to explore.

Earlier while moving the bill for consideration, Joshi said its major objective is to generate employment in the sector and enhance the contribution of the mining sector in the total GDP of the country.

“Currently, the contribution of the mining sector, putting all together, is around 1.75 per cent and we want to take it to 2.5 per cent which is our commitment,” he added.

According to him, the mining sector contributes around 7 to 7.5 per cent of the GDP in countries like South Africa and Australia which are just as mineral-rich as India.

“Major reason why we are lacking in the mining sector is we do not have explored mines. Only 10 per cent of the Obvious Geological Potential (OGP) area we have explored so far and out of that, in only 5 per cent of OGP we are mining,” he said, adding that in countries such as Australia and South Africa 70 to 80 per cent of OGP is mined.

The reason is that only government agencies are involved in the process, he said.

“We want to bring private players into this because we have rich minerals like coal, gold, silver, but we are not being able to bring it out. That’s why we are bringing these changes and trying to redefine exploration,” he added.

The government is proposing to make National Mineral Exploration Trust (NMET) an autonomous and professional body, which would provide fund for exploration, Joshi added.

The minister informed the House that the bill was even supported by many non-BJP-ruled states as it is in national interest.

A total of “334 working merchant mines have expired in 2020 and out of that, 46 mines were working and were dispatching. Out of that 46, only 28 have been auctioned despite all clearance given by us and in between that there was a shortage of iron ore,” he said.

It would create a level-playing field and end the system of captive and non-captive mines, which was followed in India only and “created a lot of problems”. The government is also fixing the mechanism to calculate extra royalty into the schedule of the bill.

“Without any charges, we have allowed the transfer of mines. We want to bring a transparent system,” he said, adding it is a progressive bill and will bring a lot of change.

The bill to amend the Mines and Minerals (Development and Regulation) Act, 1957, would bring in mega reforms in the sector with resolution in legacy issues, thereby making a large number of mines available for auctions, he said.

Congress leaders Digvijaya Singh and Jairam Ramesh among other opposition members pressed the government to send the bill to a select committee for scrutiny.

Participating in the discussion on the bill, Ramesh said, “Eleven parties in House, have requested that the bill be referred to a select committee…consensus today is that the bill should go to select committee but government is unlikely to agree and respect this consensus…by passing this bill, today we are going against the general consensus.”

Singh also echoed similar views said, “Don’t treat this bill as you had done with the farm laws.”

M Thambidurai (AIADMK) said the minister should ensure that states’ rights are not taken away. He referred to the spectrum case where joint Parliamentary committee was constituted.

K Keshava Rao (TRS) said, “If you want to take people along then send this bill to a select committee. Don’t make the same mistake you have done with farm laws.”

V. Vijayasai Reddy (YSRCP), “This bill should not be passed in its present form…It is pro-private sector and anti-public sector.”

Ram Gopal Yadav (SP) said, “This bill will take towards privatisation of the entire mineral sector…Heaven would not fall if this bill would be passed in next session after the select committee scrutiny.”

Bill to increase FDI limit in insurance sector gets Parliament’s nod

Source: Business Standard, Mar 22, 2021

New Delhi: A bill to increase foreign direct investment (FDI) in the insurance sector from 49 per cent to 74 per cent was approved by Parliament with the Lok Sabha giving green signal to the legislation by a voice vote on Monday.

Piloting the Bill, Finance Minister Nirmala Sitharaman said that hiking the FDI limit in the insurance sector will help insurers to raise additional funds and tide over financial problems.

The Insurance (Amendment) Bill, 2021 was earlier passed by the Rajya Sabha last week.

The minister said that the government will provide funds to the public sector insurance companies but the private players will have to raise capital on their own.

Observing that insurance companies are facing solvency related issues, she said, “if growth capital is hard to come by, there will be a stress situation. In order that the stress situation is not left unattended, we need to raise the FDI limit.”

The COVID-19 pandemic, Sitharaman said, has further added to the woes of the insurance companies.

The minister further said that the FDI limit was being raised on the recommendations of the regulator IRDAI which had extensive consultations with stakeholders.

The FDI inflow in the insurance sector, the minister said, had increased significantly after the government decided to raise the cap from 26 per cent to 49 per cent in 2015. As much as Rs 26,000 crore has come as FDI in the insurance sector since 2015, she said, adding the asset under management (AUM) in this sector has grown by 76 per cent during the last five years.

DPIIT changes norms on NRI downstream investments

Source: The Hindu Business Line, Mar 19, 2021

New Delhi: The Department for Promotion of Industry and Internal Trade (DPIIT) has said the downstream investments made by Non-Resident Indians (NRIs) on a non-repatriation basis shall be treated at par with domestic investments and not considered for calculation of indirect foreign investment.


“Investments by NRI(s) on a non-repatriation basis as stipulated under Schedule IV of Foreign Exchange Management (non-debt instruments) Rules 2019 are deemed to be domestic investments at par with the investments made by residents. Accordingly an investment made by an Indian entity which is owned and controlled by NRI(s) on a non-repatriation basis shall not be considered for calculation of indirect foreign investment,” as per Press Note 1 (2021 series) issued by the DPIIT on Friday. The change in the FDI policy in relation to investments made by an Indian company owned and controlled by NRIs on a non repatriation basis and in order to provide clarity on downstream investments, made through appropriate additions in the consolidated FDI Policy Circular of 2020 (FDI Policy), is effective from October 15, 2020, the release said.

Cabinet approves decision to shut down Handicrafts and Handlooms Export Corporation

Source: The Hindu Business Line, Mar 16, 2021

New Delhi: The Union Cabinet on Tuesday approved the closure of Handicrafts and Handlooms Export Corporation of India Ltd (HHEC). The corporation, which is a Government of India undertaking, is under the administrative control of the Ministry of Textiles.

An official statement said the decision will help in reducing recurring expenditure on wages of sick CPSE which is not in operation and earning no income.

“There are 59 permanent employees and 6 management trainees serving in the Corporation. All the permanent employees and management trainees will be given an opportunity to avail the benefits of a Voluntary Retirement Scheme (VRS) as per norms laid down by the Department of Public Enterprises,” an official statement added.

Stating that the Corporation was incurring losses since 2015-16 and not earning sufficient income to meet running expenses, the government said there is little scope for its revival and necessitated closure. Meanwhile, the Cabinet was also informed about the MoU signed between India and Maldives for co-operation in sports and youth affairs, which was signed in November.

Lok Sabha passes Appropriation Bill, completing two-thirds of budget exercise

Source: The Economic Times, Mar 17, 2021

The Lok Sabha on Wednesday passed the Appropriation Bill 2021-22, authorising the government to draw funds from the Consolidated Fund of India for its working as well as implementation of its programmes and schemes. This completes two-thirds of the exercise for approval of the Budget for 2021-22.

The Appropriation Bill authorising payment and appropriation of specified sums from the Consolidated Fund of India for 2021-22 was introduced by finance minister Nirmala Sitharaman. The bill was later approved by voice vote.

The Lok Sabha earlier discussed demands for grants of different ministries, including railways, education and health. Speaker Om Birla later applied the guillotine, after which all the outstanding demands for grants, whether discussed or not, were put to vote at once and passed.

After that, the Appropriation Bill was taken into consideration and passed by the lower house of Parliament. The Lok Sabha will now discuss the Finance Bill, which essentially contains the government’s tax proposals. Once the Finance Bill is passed, the budget exercise is complete.

Both appropriation and finance bills are classified as money bills which do not require the explicit consent of the Rajya Sabha. The upper house only discusses them and returns the bills. After passing the Finance Bill, it enters the statute as the Finance Act. Thus, the final Budget gets approved.

While guillotine literally is a large, weighted blade used for executing a condemned person, in legislative parlance, to ”guillotine” means to bunch together and fast-track the passage of financial business. It is a fairly common procedural exercise in Lok Sabha during the Budget Session.
After the Budget is presented, Parliament goes into recess for about three weeks, during which the House Standing Committees examine demands for grants for various ministries, and prepare reports. After Parliament reassembles, time is allotted for discussions on the demands for grants of some ministries.

Ease of doing business boost: 6,000 compliances to be eased

Source: The Economic Times, Mar 10, 2021

India has identified 6,000 burdensome compliances, both at the central and states levels, that would be eased as part of the government’s plan to make it easier to do business.

“A systematic exercise across the Centre and states is being undertaken to eliminate or reduce compliances which have an adverse impact on time and cost of businesses,” Guruprasad Mohapatra, secretary at the Department for Promotion of Industry and Internal Trade, said.

Mohapatra said most compliance burdens were seen in five ministries – commerce and industry, finance, health, corporate affairs and mines.

Out of the 6,000 compliances, 1,500-2,000 are at central level and the remaining at state.

The exercise would be carried out in two phases. In Phase-I, work is underway for reducing regulatory burden across six areas including renewal of licences, assigning inspections randomly, standardisation of returns/filings and digitisation and simplification of all manual records or procedures, he said.

In Phase-II, he said, the focus would be on four areas including de-criminalisation of regulations, identification and repealing of archaic laws and rules, and intensive use of new-age digital technologies.

Mohapatra said to promote investments, the government is working on the creation of a single-window system for approvals and clearances. It expects to launch the system with 14 states by April 15. The single-window system portal will integrate the existing clearance systems of various central and state departments.
FDI approvals
On whether the government is clearing pending foreign direct investment proposals from countries sharing a land border with India, Mohapatra said the government had not banned or prohibited investments from those nations.

“There are some proposals getting approved,” he said adding that the approval route was left to the concerned ministries to give clearances.

How new IT rules will change the internet in India

Source: LiveMint.com, Mar 01, 2021

The Indian government has taken its first big step towards regulating big tech platforms. The government’s new Intermediary Guidelines for the Information Technology Act (IT Act) place certain restrictions on platforms and how they function in India. Mint explains.

What are these new intermediary rules?

The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, are formed to regulate tech platforms operating in India. These will supersede the policies of platforms, which will have to comply with the new rules. These rules, along with the upcoming Personal Data Protection (PDP) Bill and an expected law on cybersecurity, will determine how the internet and internet-based companies function in the country in future.

They also indirectly regulate what you can or cannot do, see or access through internet. In essence, they will determine the future of the internet in India.

How do they affect users and platforms?

Platforms will have to review their own policies and ensure they comply with these rules, and more that may follow with the PDP Bill. In some cases, they will have to review their algorithms to ensure compliance, which could lead to higher research and development (R&D) costs. Platforms that don’t draw significant revenue from India could also choose to leave the country, instead of complying. For users, it would mean regulations over what they say or do on the internet. Their activities will be under greater surveillance, and there have been concerns about misuse by both platforms and the government.

Social media platforms continue to face criticism for invading users’ privacy

What are the rules written under these guidelines?

Social media platforms must put grievance redressal officers and trace content to first originator within India. A Code of Ethics and Procedure and Safeguards in Relation To Digital/Online Media has been put in place. Digital media will have to follow the Journalistic Conduct of the Press Council of India and the Programme Code under Cable TV Networks Regulation Act.

What specific rules are being criticized?

One of the primary concerns is that encrypted messaging apps will need to collect more user data to trace messages back to the first originator. This also conflicts with extraterritorial jurisdiction norms made in the IT Act. The new rules could get people into trouble even if they share a tweet/message that originated outside India, thereby shooting the messenger instead of the actual creator. Experts have said the IT Act should not apply to news media and putting them under the same norms could lead to unfair censorship of news.

Will messaging apps get access to chats? Not necessarily. While it does mean apps will have to collect more data, experts said there are ways to ‘fingerprint’ each text, by which you can reach the first originator of a text without reading its content. Think of it this way, the police lawfully confiscates a phone, reads a text and then asks an app to find the first originator of the text. The app uses the fingerprint of that message to see where it started. This is technically possible and apps can do so without needing to read the text.