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Sannam S4’s Financial Consulting practice presents a monthly bulletin with key updates and developments from India on tax, regulatory, and financial aspects. The bulletin’s endeavour is to provide updates and information about doing business in India, with emphasis on aspects that affect or improve ease of operations in-country.

The Union Budget 2018-19

The Budget Session of Parliament is set to commence on January 29 and the Union Budget for 2018-19 will be presented on February 1, 2018 (Source: The Economic Times, Livemint).

Against the backdrop of recent and significant reforms such as GST, Insolvency Law and Demonetisation (which have all impacted the Indian economy), this upcoming budget will be crucial to encourage further growth and investment across India.

With continued dynamism in global markets, the budget may contain key initiatives for foreign organisations active in Indian markets. So, watch out for our continuing updates on these key budget proposals.

For assurances and advice on your operation in India, and how to stay complaint in the midst of the ever-changing landscape, please do not hesitate to contact the team.

Foreign Direct Investment (FDI) Announcement

In line with expectations for this year’s annual Budget, the Government announced revisions to the existing FDI policy. Rationalisation measures have been proposed in key sectors to boost foreign investment in India. Details of the policy measures announced can be viewed here.

In sum and substance, key sectors where FDI amendments are proposed are as under:

  • Single Brand Retail Trading (SBRT): Existing regulations in India allowed up to 49 % foreign investment in SBRT under the automatic route (i.e. without prior government clearance). Investments beyond 49 % required prior approval of the Central Government. It has now been decided to do away with such approvals, and foreign investors shall be permitted to invest up to 100 % in SBRT under the automatic route. While association compliance conditions for foreign investment in SBRT remain, few relaxations for sourcing and branding arrangements have also been announced.
  • Civil Aviation: In light of planned disinvestment of India’s national carrier (Air India), the Government has announced that foreign airlines can invest (directly or indirectly) up to 49 % in Air India with prior government approval. However, balance substantial ownership/control shall continue to remain with the Government or an Indian investor.
  • Real Estate: It has been clarified now that real-estate broking service does not amount to a restricted real estate business and is therefore, eligible for 100 % FDI under the automatic route.
  • Other minor amendments and relaxations in definitions for the power sector, investment companies, pharma sector as well as clarifications in definitions for share capital, audit etc. have also been announced.

The Companies (Amendment) Act, 2017

The Companies (Amendment) Act, 2017 has now been enacted after months of negotiation in both houses of India’s Parliament (Source: Livemint). The amended regulation is aimed at introducing approximately 93 amendments in current company law (Companies Act, 2013). The amendments are broadly aimed at addressing compliance difficulties and facilitating ease of doing business, harmonisation of Company Law with other regulations such as accounting standards, securities regulations, banking regulations etc. Few examples of key amendments are given below, which will be relevant to all foreign organisations having company (ies) set up or currently being set up in India:

  • In case of incorporation of a company, a name reserved by the Registrar of Companies (“RoC”) shall be valid for 20 days from the date of the approval instead of 60 days from the date of application, as currently provided.
  • In addition to Directors & Key Managerial Personnel, any designated employee can also authenticate documents for a company.
  • It is proposed that the Annual General Meeting (‘AGM’) of an unlisted company may be held anywhere in India if a consent is given in writing or by electronic mode by all members/shareholders in advance.
  • It is proposed that the Extraordinary General Meeting (‘EGM’) of a wholly owned subsidiary of a foreign company can be held outside India as well.
  • Requirements related to “resident director” have been amended. All companies in India now need to have a director on board, who is physically present in India for a total period of not less than 182 days during the financial year (April – March). Previously, the time limit was calculated in reference to the previous calendar year (January – December).
  • It is proposed that a Director may hold any other identification as may be prescribed by Central Government to comply with requirements under Company Law. Currently, it is mandated that all Directors need to obtain and maintain a Director’s Identification Number (DIN). The Central Government may now recognise other identification numbers as well [such as tax registrations (PAN) and unique identifications (Aadhar)] in place of a DIN.
  • The requirement of ratification for the appointment of auditors by members at every AGM is proposed to be removed, which is currently mandatory.
  • It is proposed that if annual returns or financial statements are not filed with RoC within the prescribed time, higher fees for non-compliance (as per different classes of companies) will apply.
  • It is proposed that capital received under private placement cannot be utilised unless return for allotments are filed with the RoC.
  • It is also proposed that CEO (whether appointed as a Director or not) will be a signatory to financial statements, in case there is no Chairperson of the Company. Currently, CEO is required to sign only if he is also a Board Member.

Further amendments to align the process of insolvency with new bankruptcy regulations have also been introduced. There are many other amendments proposed under this new bill as well. Also, it is pertinent to note that the Government is in the process to revise incorporation forms and procedures as well in January 2018. To understand further details of such amendments, as well as to identify which other amendments in Company law and procedures impact your business in India, please reach out to us.

Goods And Services Tax (GST)

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Government notifies 1 % GST on manufacturers under composition scheme.

E-Way bill system to roll out from February 1.

Government relaxes norms for rectification of returns under GST.

Standard operating procedures proposed for processing complaints on GST profiteering.

Source: NDTV Profit

Source: NDTV

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Centre looks to include petro-products in GST after consensus with states.

Lower House of Parliament approves bill for 25 % GST on luxury cars from 15 %

Corporate Tax

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Capital gains tax on listed equity shares may return to haunt stock markets.

Relief for Income taxpayers: Complete online e-assessment procedures to be implemented in 2018.

Tax department exploring ways to tax cryptocurrencies.

Union Budget 2018-19: Government may cut corporate tax for larger firms.

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Individuals may see increase in basic tax exemption limits in Budget 2018.

Commerce Ministry hopeful of lower MAT (Minimum Alternate Tax) in SEZs.

Regulatory

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Condonation of Delay Scheme for defaulting directors.

Ease of doing business: Govt. targets 90 reforms to climb rank in World Banks report.

ETMarkets Global Summit to focus on fintech revolution in markets.

SEBI eases “scheme of arrangement” rules for listed companies.

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Amendments proposed in negotiable instruments regulations for interim compensation in cases of dishonoured cheques.

New visa rules by US, UK  and Australia may pose challenge for Indian IT industry in 2018.

Foreign exchange reserves surge to new lifetime high of $409.4 Bn.

India to become fifth largest economy in 2018.

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Govt. may allow 100 % FDI in telecom via automatic.

Start-up incubators: DIPP for tweak in CSR norms.

About Sannam S4’s Financial Consulting Practice

Sannam S4’s in-house Financial Consulting team comprises of experienced professionals who provide 24 X 7 support to foreign organisations seeking to enter and expand in dynamic markets like India.

The team’s support for new companies entering India covers a wide range of services including tax advice, planning and compliance, corporate structuring, inbound M&A support and implementing legal setup (and other mandatory registrations). In addition, we also provide ongoing in-house financial management and support services such as accounting, payroll and expense management, financial reporting and corporate secretarial and legal compliance services.

We’re deeply experience in helping new international businesses set up in India in sustainable, efficient and compliant ways. We’re also helping international business already in India interpret and respond to key government-led changes and initiatives.

So, do not hesitate to contact the team for our guidance

Kapil Dua (B&W)

Michael Green 1 (B&W)

Kapil Dua
Co-Founder, Group CFO & Executive Director of Financial Consulting
kapil.dua@sannams4.com

Michael Green
General Manager – India
michael.green@sannams4.com

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