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16th- 31st October 2016
Please find below the highlights of our newsletter with latest updates and information.
We hope you find this useful. You may send your comments to updates@neerajbhagat.in

New FDI Norms may Open Vaults for Fintech Cos

The Reserve Bank of India's move to allow up to 100% foreign direct investment (FDI) in regulated financial services companies other than banks or insurance companies through the automatic route is likely to benefit several fintech startups as it is expected to ease equity funding norms, increase investor interest, and also help them expand into more financial services.
So far, activities of NBFCs such as underwriting, investment advisory and stock broking were among 18 categories under the 100% FDI automatic route regime. Startups that didn't fall in these categories had to take the approval route. Now, all regulated financial services companies can take the automatic route.
In its notification last week, the RBI said other financial services will include activities which are regulated by any financial sector regulators including RBI, Securities and Exchange Board of India, and the Insurance Regulatory and Development Authority . It said such foreign investment will be subject to conditionalities, including minimum capitalisation norms, as specified by the concerned regulator, which means that it will not come under the blanket rule of the Foreign Investment Promotion Board (FIPB).
The move is likely to further expand the huge scope for funding in NBFCs and other financial services. The fintech sector has over 1,200 companies, of which, 172 have been funded since 2011, according to Tracxn. While over $1 billion was invested in mobile payments in 2015, $200 million was invested in digital NBFCs.
GSTN ready to migrate existing 80 lakh assessees from Nov. 8, 2016
Goods and Service Tax Network (GSTN) is ready to enroll 80 lakh existing assessees of Excise, VAT, and Service Tax on its platform.
We will enable the GSTN platform for migration of existing assessee with effect from November 8, 2016, said Prakash Kumar, Chief Executive Officer, GSTN. This move will help assessees to do their business without any hassle from April 1 next year on implementation of GST.
He further pointed that the assessee’s details would come onto the GSTN Platform, but they would not be able to use other features from November 8, itself.

 
Monthly returns to be mandatory under GST
Moving at a fast pace, the tax department came up with two more draft rules and their formats on GST returns and refunds requiring assessees to file monthly returns and specifying procedure for claiming refunds of taxes, interest and fees.The Central Board of Excise and Customs (CBEC) unveiled three draft rules and their formats relating to registration, invoice and payments for public comments.
The government aims to implement the new indirect tax regime GST from April 1, 2017.
As per the rules for refund, every registered taxable person will be required to furnish a monthly return in specified form (GSTR-3).
There is also a provision for electronic furnishing of annual return by every registered taxable person and composition supplier.
The rules further said that every taxable person whose aggregate turnover during a financial year exceed Rs 1 crore will be required to submit annually a duly certified audited statement.

RBI updates master direction on import of Goods and Services

Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account Transaction) Rules, 2000. These Regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications. 2. Within the contours of the Regulations, Reserve Bank of India also issues directions to Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA), 1999. These directions lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/constituents with a view to implementing the regulations framed.
Instructions issued on import of goods and services into India have been compiled in this Master Direction. The list of underlying circulars/ notifications which form the basis of this Master Direction is furnished in the Appendix. Reporting instructions can be found in Master Direction on reporting (Master Direction No. 18 dated January 01, 2016).

Five new Countries ink agreement for automatic sharing of CbC information
As part of continuing efforts to boost transparency by MNEs, Brazil Guernsey, Jersey, the Isle of Man and Latvia signed the Multilateral Competent Authority Agreement (MCAA) for automatic exchange of Country-by-Country reports.
The MCAA will enable consistent and swift implementation of new transfer pricing reporting standards developed under Action 13 of the BEPS Action Plan.
RBI updates master direction on opening and maintenance of Foreign Currency Vostro Accounts of NR Exchange houses
Rupee Drawing Arrangement (RDA) is a channel to receive cross-border remittances from overseas jurisdictions. Under this arrangement, the Authorised Category I banks enter into tie-ups with the non-resident Exchange Houses to open and maintain their Vostro Account. 2. Reserve Bank issues directions to Authorised Persons, including Authorised Category I banks, under Section 11 of the Foreign Exchange Management Act, 1999, in regard to conduct foreign exchange business in compliance with the provisions of the Act and any rules, regulations, notifications, directions or orders made there under. 3. The directions relating to Opening and Maintenance of Rupee/ Foreign Currency Vostro Accounts of Non-resident Exchange Houses in India are being issued in a consolidated form through the Master Direction enclosed herewith. Reporting instructions can be found in Master Direction on Reporting. It may be noted that whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the rules, regulations, notifications, directions or orders or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/constituents. The Master Direction issued herewith shall be amended suitably simultaneously.
Neeraj Bhagat & Company is a team of distinguished chartered accountant, corporate financial advisors and tax consultants in India. Our firm of chartered accountants represents a coalition of specialized skills that is geared to offer sound financial solutions and advices. The organization is a congregation of professionally qualified and experienced persons who are committed to add value and optimize the benefits accruing to clients.


Neeraj Bhagat & Co.
New Delhi, Gurgaon, Mumbai
www.neerajbhagat.in 

Neeraj Bhagat & Co., S-13, St. Soldier Tower, Vikas Puri, New Delhi, 110018 India
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