RBI on Cryptocurrencies
Pursuant to the Reserve Bank of India’s (“RBI”) April 05, 2018 “Statement of Development and Regulatory Policies” (“Statement”), the RBI has released a circular dated April 06, 2018 wherein it has stated that entities regulated by the RBI shall not deal with virtual currencies or provide services for facilitating any person or entity in dealing with or settling virtual currencies. The prohibited services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of virtual currencies. Furthermore, the circular has sent an ultimatum to entities already involved in the provision of or receipt of the above named services, to exit these transactions and relationships within 3 months from the date of this circular.
RBI on Storage of Payment System Data
In pursuance of the aforementioned Statement, the RBI has released another circular dated April 06, 2018 wherein it has mandated that all system providers store their payment data in India. In order to provide ‘unfettered access’ to the supervisory authorities, the system providers must localize all data storage to servers in India within a period of 6 months from the date of this circular, inform the RBI of its compliance of this requirement and conduct a system audit report, to be submitted to the RBI by December 15, 2018.
MCA Levies Additional Late Fees for Filing Annual Returns & Annual Financial Statement
The Ministry of Corporate Affairs (“MCA”) has notified on its website that the Companies (Registration Offices and Fees) Rules 2014 shall be amended to reflect an additional fee for filings under Section 92 (Annual Return) or 137 (Annual Financial Statement) of the Companies Act, 2013. Once notified, an additional fee of INR 100 per day (beyond the normal date of filing) shall become payable in respect of e-forms 23AC,23ACA,23AC XBRL,23ACA XBRL, MGT-7, AoC-4,AoC-4 XBRL and AOC-4 CFS.
Retailers Urge Government to Take Action Against E-Commerce Giants
Vide a letter from the Retailers Association of India to the Union Minister of Commerce and Industry, Mr. Suresh Prabhu, action is being sought against e-commerce companies that have been flouting Foreign Direct Investment (“FDI”) norms. A consortium of brick-and-mortar retailers including major retailers such as Future Group and Reliance Retail have alleged that major e-commerce companies Flipkart and Amazon India have taken unfair advantage of the 100% FDI deregulation. The allegation is that under the revised FDI norms, 100% FDI is allowed under the automatic route for B2B (business to business) companies and not B2C (business to consumer) companies. E-commerce companies have conventionally B2C operations and therefore, FDI under the automatic route must not be allowed for such companies. Further, the e-commerce companies have been known to provide unsustainable discounts and subsidies and thereby affect artificial market price reductions. Under the inventory based model that most e-commerce companies operate out of, such price determination is not allowed under the FDI norms since the e-commerce companies only provide the marketplace for vendors and consumers to align and not themselves determine vendor prices. It is noteworthy that Flipkart recently lost an appeal in the Income Tax Tribunal bench in Bengaluru for flouting taxation laws by classifying the above mentioned discounts and subsidies as a cost instead of capital expenditure, in order to evade substantial tax liabilities.