CBDT clarifies on Angel Tax issues – States no coercive measure will be taken after IT notices are sent to start-ups regarding recovery of dues from investments made by angel investors
In a meeting attended by officials from Department of Industrial Policy and Promotion (“DIPP”) and the Central Board of Direct Taxes (“CBDT”), it has been decided that no coercive measure will follow after Income-Tax notices to the start-ups regarding recovery of dues from investments made by angel investors.
Additionally, it was also decided that a panel of eminent technical experts from IITs and IIMs will undertake the discussions on a new framework to recognise start-ups including the issue of premiums charged by them on their shares, tax exemptions and other related issues.
Earlier in April, 2018, DIPP in consultation with the Department of Revenue initiated a mechanism to provide exemption from the provisions of Section 56(2)(viib) of the Income Tax, commonly referred as Angel Tax, to genuine investors in recognised start-ups. However, the move did not address the issues faced by start-ups and investors at large.
Quick Views:
- Introduction of Angel Tax is seen as some sort of start-up killer in India, which was in contrast to what the Central Government promised. We believe that this move will give hope to angel investors and the start-ups that the government is still willing to provide a conducive environment for the start-ups.
Indian subsidiaries of US-based technology companies to submit their financial data by December 31, 2018
The Central Government has reportedly directed US based technology companies, having a subsidiary in India to submit their financial details including global revenue, profit and sales by December 31, 2018.
The information will have to be submitted in line with the Convention on Mutual Administrative Assistance in Tax Matters developed by the Organisation for Economic Cooperation and Development (“OECD”) which means that the directive will not be applicable on countries not part of OECD. The companies are directed to submit a Country by Country Report stating the annual financial details of all the jurisdictions where the company operates.
Quick Views:
- We believe this move by the Central Government will stop these companies from evading tax. The Country by Country Report will enable the Indian Tax authorities to track all the funds going out of India to the tax-haven jurisdictions.
Petition questioning authority of BCCI filed in Madras High Court
A petition challenging authority of Board of Control for Cricket in India (“BCCI”) for representing Indian cricket at national and international stage has been filed. The petition points out that BCCI does not fall under the category of “State” under Article 12 and the team created by BCCI is BCCI’s cricket team and not India’s national team. The petition also challenges the monopoly of BCCI in controlling cricketing affairs in India.
The Madras High Court has issued a notice to the Central Government and BCCI returnable by February 7, 2019.
Quick Views:
- While nature and functions of BCCI has been questioned a lot recently, the central government has, implicitly accepted BCCI as the apex body that is responsible to manage all affairs relating to cricket in the country, as also pointed out in the case of Zee Telefilms Ltd. v. Union of India. However, it will be important to see what the Madras High Court decides after the replies from both, the Central Government and the BCCI.
MCA amends Companies (Registration of Charges) Rules, 2014 and Companies (Incorporation) Rules, 2014 amending a slew of timelines for various corporate actions under the Companies Act
The Ministry of Corporate Affairs (“MCA”) issued a notification to amend the Companies (Registration of Charges) Rules, 2014. The amendment revises Form No. CHG-4 used for filing Particulars for Satisfaction of Charge.
MCA issued another notification to amend the Companies (Incorporation) Rules, 2014. This amendment introduces new forms to be filed for incorporation process. Some of the key changes introduced by The Amendment are as follows:
- Insertion of Rule 23A- Declaration at the time of commencement of business. This new rule states that the declaration under Section 10A by a director shall be made in the Form No. INC-20A and it shall be verified by a Company Secretary, or a Chartered Accountant or a Cost Accountant.
- Application for conversion of a public company into a private company shall be filed within 60 days from the passing of resolution in e-Form No. RD-1 along with the fees specified in the Companies (Registration Offices and Fees) Rules, 2014.
- The company shall, at least 21 days before filing an application for conversion of a public company into a private company, advertise in the Form No.INC.25A in a vernacular newspaper in principal vernacular language of that region and in English language in an English newspaper, where the registered office is situated.
- In case of any re-submission, the company shall do the same in Form No. RD-GNL-5. Maximum of two re-submissions are allowed.
Quick Views:
- The amendment to the existing timelines is an additional regulation on businesses. Companies will need to keep in mind the revised timelines whilst conducting their operations.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.