[ TAXMANN | THIS WEEK ]

Taxmann’s ‘This Week’ is a newsletter service that analytically summarizes the
significant developments of the previous week (11-16 May 2020) reported at
www.taxmann.com. In this newsletter, you will know about the latest happenings,
namely:
a) Special Rs. 20 lakh crore package announced for making the country a self-reliant or
‘Atmanirbhar’ nation.
b) Highlights of the package announced by the Finance Minister in press conference
c) Announcements related to Income-tax, Vivad se Vishwas Scheme and GST
d) Stock-brokers to pay 50% of fees for the period 01-06-2020 to 31-03-2021
e) SEBI relaxes procedural matters relating to Takeovers and Buy-back of securities
f) Construction services without legal binding agreement and non-serving of invoices does
not amount to operational debt
g) CIRP plea dismissed as no default occurred when operational creditor failed to supply
pump sets as per purchase order
h) Delhi HC orders extension of all interim orders till 15-6-2020
i) Guidance issued by the Auditing and Assurance Standards Board to assess the Going
Concern Basis of an entity during COVID-19
1. PM’s message and Rs. 20 lakh crore special economic
package
Prime Minister, Sh.Narendra Modi, in an important address to the nation announced a
special economic package of Rs. 20 lakh crore to combat the economic impact of
coronavirus and at the same time underlined the need for making the country a self-
reliant or ‘Atmanirbhar’ nation.
Self-reliant India, he said, will stand on five pillars - Economy, which brings in quantum
jump and not incremental change; Infrastructure, which should become the identity of

India; System, based on 21stcentury technology-driven arrangements; Vibrant
Demography, which is the source of energy for a self-reliant India; and Demand,
whereby the nation’s strength of demand and supply chain could be utilized to full
capacity.
Atmanirbhar Bharat Abhiyaan
The Prime Minister said that the special economic package, taken together with earlier
announcements by the government during COVID crisis and decisions taken by RBI,
amounts to Rs. 20 lakh crore, which is equivalent to almost 10% of India’s GDP.
The package will provide the much-needed boost towards achieving the goal of
‘Atmanirbhar Bharat’, he said, adding the focus will be on land, labour, liquidity and laws.
It will promote various sectors including cottage industry, MSMEs, industries, etc.
Referring to the positive impact of reforms like JAM (Jandhan Aadhaar Mobile) trinity
introduced during the last six years, Prime Minister stressed that more bold reforms were
needed to make the country self-reliant.
The reforms, suggested by the Prime Minister, include supply chain management for
agriculture, rational tax system, simple and clear laws, capable human resource and
strong financial system. These reforms are essential to promote business, attract
investment and further strengthen the Make in India initiative, he added.
Read the Press Release
To Subscribe to the Newsletter Click Here:
2. The Package
Finance Minister, Smt. Nirmala Sitharaman, in her series of press conferences
announced the broad contours of the Rs. 20 lakh crore special package to revive the
economy hit by the Coronavirus outbreak.
Some of the key measures announced by the Finance Minister are as follows:
Collateral-free loans for MSMEs
To alleviate the hardship being faced by the MSME sector, the government has
proposed Rs. 3 lakh crore collateral-free automatic loan for small businesses.
This emergency credit line will be available to businesses/MSMEs from banks and
NBFCs up to 20 per cent of their entire outstanding credit as on February 29, 2020.

Borrowers having outstanding up to Rs. 25 crores and turnover of Rs. 100 crores will be
eligible to take benefit of the scheme. The tenure of the loan will be 4 years with a
moratorium of 12 months on principal repayment. The scheme will operate till October
31, 2020.
Subordinate debt for stressed MSMEs
Intending to assist MSMEs that have become NPAs or are stressed, the government
has proposed a subordinate debt scheme of Rs. 20,000 crores. The scheme will benefit
around two lakh MSMEs.
Under the scheme, promoters of the MSME units will be given debt by banks to be
infused as equity in the unit by them.
Fund of Funds
In addition, the government has proposed to set up a Fund of Funds (FoF) with a corpus
of Rs. 10,000 crore. The corpus would provide equity funding for MSMEs with growth
potential and viability. The FoF will operate though Mother Fund and few Daughter
Funds.
The fund structure will help leverage Rs. 50,000 crore for the MSME sector.
This initiative is aimed at helping MSMEs expand their size as well as capacity. It will
also encourage MSMEs to get listed on stock exchanges.
Definition of MSME
The government has announced a revised definition of MSMEs whereby the investment
limit will be increased and additional turnover criteria will be added. The new definition
eliminates the distinction between the manufacturing MSME and services MSME.
As per revised definition, a company can be classified as ‘Micro’ if the investment is up
to Rs. 1 crore and turnover up to Rs 5 crore; ‘Small’ if the investment is up to Rs 10 crore
and turnover up to Rs 50 crore. A company will be classified as ‘Medium’ if the
investment is up to Rs 20 crore and turnover up to Rs 100 crore.
These amendments will encourage companies to grow without the constant fear of
losing special incentives.
Global tenders
To protect the MSMEs from unfair competition from foreign companies, the government
has decided to do away with global tenders for public procurement up to Rs 200 crores.
The initiative is expected to give a major boost to medium enterprises in India which face
tough competition from foreign players.

Reduction in EPF contribution for the next 3 months
The statutory PF contribution for both employee and employer has been reduced from
12 per cent to 10 per cent for all establishments covered by the EPFO.
However, for the government undertaking the contribution shall remain at 12 per cent.
Special Liquidity Scheme for NBFCs, HFCs and MFIs
The government has come up with a special Rs 30,000 crore scheme for non-banking
financial companies (NBFCs), housing finance companies (HFCs) and micro-finance
institutions (MFIs).
Under the scheme, investments will be made in both primary and secondary market
transactions in investment-grade debt paper of these institutions.
In addition, the Government has announced Rs 45,000 crore partial credit guarantee
scheme for NBFCs under which 20 per cent of losses would be borne by the guarantor,
the government of India in this case.
Real estate projects
With a view to give relief to the struggling real estate sector, the government has decided
to extend the registration protocol and completion date of the project which are covered
under RERA by 6 months for all registered projects expiring on or after 25-03-2020,
without individual applications.
This measure will de-stress real estate developers and ensure completion of projects so
that home buyers can get delivery of their booked house with new timelines.
DISCOMS
In order to deal with the contingences and unprecedented cash flow problem being faced
by the DISCOMS, the government has decided to infuse liquidity of Rs. 90,000 crore
into them against receivables.
The loans to be given against state guarantees will have to be utilized exclusivelyfor
discharging liabilities of Discoms to Gencos.
Housing subsidy scheme
In order to provide benefit to the middle-class families, the government has decided to
extend the credit-linked subsidy scheme up to 31-03-2021.
The scheme will benefit more than 2.5 lakh middle income families during 2020-21,
besides generating employment opportunities in the real estate sector.
Job creation through CAMPA funds

In order to create the job opportunities in urban, semi-urban and rural areas, the
government has decided to use Rs 6,000 crore of CAMPA (Compensatory Afforestation
Fund Act) funds.
The fund will be used by the State Government towards afforestation and plantation
work, forest management and so on.
Credit facility for street Vendors
The government has decided to launch a Rs 5,000 crore scheme to provide credit facility
to street vendors.
Under the scheme, a street vendor will be entitled to get a credit of Rs 10,000 to restart
his business.
3. Taxation related initiatives
The Finance Minister has announced several measures with regard to taxes and
subsequently the Central Board of Direct Taxes (CBDT) came out with a press release
on reduced TDS/TCS rates which shall remain in force from 14-05-2020 to 31-03-2021.
Rates of TDS/TCS
With a view to give relief to people, the government has decided to reduce the rates of
TDS/TCS in respect of specified payments/receipts by 25 per cent till the end of the
current financial year.
This relief, however, will not be available to salaried persons and non-resident taxpayers.
The decision will benefit self-employed, professionals and senior citizens earning
interest income or rental income.
However, it may be noted that the relaxation in the rate of TDS/TCS will not have any
impact on the ultimate tax liability of a taxpayer.
Refunds
The Minister announced that all pending refunds to a charitable trust and non-corporate
businesses and professions would be released soon.
Returns

The government has decided to extend the due date of all income-tax returns for the
Financial Year 2019-20 from 31-07-2020 and 31-10-2020 to 30-11-2020.
Similarly, the due date for tax audit under section 44AB has been extended from 30-09-
2020 to 31-10-2020
Vivad Se Vishwas Scheme
The Finance Ministry has also extended the last date for opting for Vivad se Vishwas
Scheme without paying additional 10 per cent of the disputed tax till 31-12-2020.
The due date of 30-09-2020 for completion of assessments has been extended to 31-
03-2020. Where assessments are getting barred on 31-03-2021, they shall be extended
to 30-09-2021.
Sabka Vishwas Scheme
The Central Board of Indirect Taxes and Customs (CBIC) has extended the timeline for
payment of dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme to 30-
06-2020.
As per the existing provisions of Rule 7 of the Sabka Vishwas (Legacy Dispute
Resolution) Scheme Rules, 2019 dealing with form and manner of making the payment,
“every declarant shall pay electronically the amount, as indicated in Form SVLDRS-3
issued by the designated committee, within a period of thirty days from the date of its
issue”.
The government has amended the Rule 7, replacing words “within a period of thirty days
from the date of its issue”, by the expression “on or before the 30th day of June, 2020.”
Thus the taxpayer will have time up to 30-06-2020 to clear the dues under the Scheme.
Read the CBDT press release
Read the Article
Read the CBIC Notification
4. SEBI reduces fee for public/rights issues

In view of the Coronavirus pandemic, the market regulator Securities and Exchange
Board of India (SEBI) has halved the fee charged from brokers and also from companies
coming out with public issues and rights issues during 01-06-2020 to 31-12-2020.
The SEBI (Payment of Fees) Amendment Regulations, 2020, to give effect to the
reduced fee structure, was notified by the government on 08-05-2020.
Brokers
As per the amendments to the SEBI (Stock Brokers) Regulations, 1992, the stock-
brokers in cash segment, equity derivatives segment, currency derivatives segment,
interest rate derivatives segment and commodity derivatives segment (other than Agri
commodity derivative) will be required to pay only 50 per cent of the prescribed fee to
the regulator.
The fee for stock-brokers in different categories is prescribed in Schedule V of the SEBI
(Stock Brokers) Regulations.
Public issue and rights issue
The market regulator has reduced the fee charged by it from companies for public issue
and rights issue by 50 per cent from 01-06-2020 to 31-12-2020.
An amendment to this effect was made in the SEBI (Issue of Capital and Disclosure
Requirements) Regulations, 2018. The new fee structure prescribed in Schedule III will
remain valid until the end of 2020.
In case of both public issue and rights issue, the fee depends upon the size of the issue
and the intended retention of oversubscription.
In case of both public issue and rights issue, the fee depends upon the size of the issue
and the intended retention of oversubscription.
For issues of over Rs 5,000 crore, the fee will be halved to Rs 2.50 crore plus 0.0125
per cent of the portion exceeding Rs 5,000 crore.
Similar reduction in fee has been made in the case of Rights Issue.
As regards the rights issue, there will be a flat fee of Rs 25,000 if the issue size is less
than Rs 10 crore (Rs 25 crore after 21-04-2020). In case the size of the rights issue is
more than Rs 10 crore (Rs 25 crore after 21-04-2020), the fee would be 0.025 per cent,
down from 0.05 per cent.
Buy-back of shares

The regulator has also halved the fee for buy-back of shares under the SEBI (Buy-back
of Securities) Regulations, 2018. It will be Rs 2.5 lakhs if the offer size is less than Rs
10 crore and 0.25 per cent if it is more than Rs 10 crore but less than Rs 1,000 crore.
If the size of the buy-back offer is more than Rs 1,000 crore, the fee will be Rs 2.50 crore
plus 0.0625 per cent of the portion of the offer size in excess of Rs 1,000 crore.
Conclusion
The reduced fee structure introduced by the market regulator SEBI will remain valid from
01-06-2020 to 31-12-2020. It will definitely provide relief to the market participants who
are facing the heat of coronavirus.
Read the Notification
5. SEBI relaxes procedural matters relating to Takeovers and
Buy-back of securities
The SEBI has relaxed the procedure for buy-back of shares by companies in view of the
COVID-19 pandemic and the lockdown measures undertaken by the central and state
governments.
This one-time relaxations from strict enforcement of certain regulations of SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and SEBI (Buy-
back of securities) Regulations, 2018 will be available to open offers and buy-back
tender offers opening up to 31-07-2020.
Under the modified norms, the acquirer company will be required to make greater use
of electronic mode for transmission of information like SMS, audio-visual advertisement
on television or digital advertisement.
They will be expected to publish the letter of offer and tender form on the websites of
the company, registrar, stock exchanges and the managers to offer.
The acquirer/ company will have the flexibility to publish the dispatch advertisement in
additional newspapers, over and above those required under the respective regulations.
They may make use of advertisements on television channels, radio, internet, etc. to
disseminate information relating to the tendering process. Such advertisements can be
in the form of crawlers/ tickers as well.

The acquirer/ company and the manager will also be required to provide a procedure for
inspection of material documents electronically.
Read the Circular
6. NCLT rejects claim of operational creditor in absence of
proper agreement
The Mumbai bench of the National Company Law Tribunal (NCLT) rejected the
application of an operational creditor for initiating corporate insolvency resolution
process under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) as there
was no legally binding agreement or contract between the concerned parties.
Background
In the RS Infra Project v. Supreme Infrastructure India Limited case, the petitioner
claimed to have provided services related to the construction of a road to the corporate
debtor on the basis of a letter of intent (LOI) and raised invoices. Here it may be
mentioned that there was no legally binding agreement or contract between the parties.
On failure to receive payments, the petitioner initiated corporate insolvency resolution
process as an operational creditor under section 9 of IBC against corporate debtor
Supreme Infrastructure India Limited.
NCLT’s ruling
The NCLT dismissed the petition on the ground that no agreement was signed between
the parties after acceptance of the LOI.
“Since no acceptance was made by the Petitioner, no Agreement was signed between
the parties. Therefore, the contention of the Petitioner that the work of filling up of earth
was carried out as per an ‘Agreement’ is not correct,” said the NCLT.
The tribunal also rejected the claims of the petitioner on various technical grounds like
the absence of tax invoice paid by way of royalty to the land authorities. Also, there were
no records to show compliance to procedures laid down by the NHAI.
“Therefore, this Bench has no hesitation in arriving at a conclusion, based on the facts
submitted before it, that it is not a fit case of Operational Debt which can be considered
under section 9 of the IBC,” said the order of the tribunal.
Read the Ruling

7. No insolvency proceedings in the absence of supply of
goods
The Mumbai bench of the National Company Law Tribunal held that corporate
insolvency resolution process under the Insolvency and Bankruptcy Code (IBC) cannot
be initiated against the corporate debtor in absence of supply of goods by operational
creditor.
Brief background
In the Pooja Engineering Company v. Overseas Infrastructure Alliance (India) Private
Limited case, the petitioner, which is an operational creditor, received an order for the
supply of goods by the corporate debtor. These goods were to be ultimately supplied to
the overseas client of the corporate debtor.
However, before the goods could be supplied by the operational creditor to the corporate
debtor, the overseas buyer cancelled the contract. The corporate debtor informed the
petitioner about the cancellation of the contract by the overseas client.
In the meantime, the petitioner company had invested resources in getting the goods
ready for supply to the corporate debtor.
On failure to obtain payments for expenses incurred, the petitioner company initiated the
Corporate Insolvency Resolution Process (CIRP) under section 9 of the IBC against
respondent alleging a default in payments.
NCLT’s ruling
The Tribunal dismissed the petition on the ground that the petitioner was informed about
the cancellation of the contract by the overseas client and also that the goods were not
delivered to the corporate debtor.
“Hence, there is no debt and default committed by the Corporate Debtor,” the Tribunal
said.
Read the Ruling
8. Delhi High Court extends the validity of interim orders

In view of the lockdown, the Delhi High Court has extended the validity of all interim
orders, which were subsisting on 15-05-2020, till 15-06-2020.
The High Court judgment excludes those orders where a contrary view was taken by the
Supreme Court.
“…we hereby order that in all matters pending before this Court and Courts subordinate
to this Court, wherein the interim orders issued, as mentioned in our order dated 25th
March, 2020, were subsisting as on 15-05-2020 and expired or will expire thereafter, the
same shall stand automatically extended till 15-06-2020 or until further orders, except
where any orders to the contrary have been passed by the Hon’ble Supreme Court of
India in any particular matter, during the intervening period,” said the order passed by a
bench headed by the Chief Justice of the Delhi High Court.
The order further said that in the case where the extension of interim order was causing
hardship of extreme nature, the litigant could seek appropriate remedy under the law.
Read the Ruling
9. Guidance on assessing Going Concern basis of an entity
during COVID-19
As all the companies need to consider the potential impacts of the outbreak on the going
concern assessment, guidance has been recently issued including FAQs to assist the
accounting professionals to deal with the unique challenges emanating from the impact
of coronavirus on the audited entities.
One of such key challenge is to consider the potential implications of COVID–19 on the
going concern assessment while preparing annual accounts. As the situation is
changing very rapidly, it is of vital importance to determine whether the entity will be able
to continue its operations and meets its obligations over the time.
The guidance deals with matters like management and auditor’s respective
responsibilities in relation to the going concern; period of going concern assessment;
additional audit procedures required to be performed by the auditor; and implications for
the auditor’s report.
The guidance issued does not amend or override the current Standards on Auditing
(SAs). It only aims at helping accounting professionals and auditors to deal with various
situations in the current environment.

Read the Story

[ TAXMANN | THIS WEEK ]

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to [ TAXMANN | THIS WEEK ]

Similar to [ TAXMANN | THIS WEEK ] (20)

More from Taxmann

More from Taxmann (20)

Recently uploaded

Recently uploaded (20)

[ TAXMANN | THIS WEEK ]