MM TAX CLUB

Corrigendum to Notification No.3 of 2021

The format, procedure, and guidelines for submission of information relating to capital gains on transfer of listed securities or units of mutual funds by Depository Institutions was notified vide notification no. 3 of 2021 dated 30th April 2021 as per the mandate of Section 28SBA of the Income Tax Act, 1961 and Rule 114E sub-rule SA. The notification lists various files, file formats, data types for different data fields that need to be reported, and various DQ rules that should be validated by Depository Institutions before submission of the data.

2. Subsequently, discussions were held with representatives of Depository Institutions. Accordingly, following changes are made to the said notification.

3. The S. No. 6 of the existing notification mentions the following

"The statement of financial transactions relating to Financial Year 2020-21 shall be furnished on or before the 31st May 2021. Thereafter, the statement of financial transactions relating to the quarter ending 30^th June, 31st September, 31st December and 31st March shall be furnished on or before 25th of July, October, January and April respectively.”

This should be read as following:

"With effect from 1st April 2023 the statement of financial transactions data will be submitted on half yearly basis instead of existing quarterly basis i.e. data relating to 1st half of the Financial Year ending 30^th September and remaining half of the Financial Year ending on 31st March shall be furnished on or before 31 st of October and 30th of April respectively."

4. In annexure A (Guidelines for Preparation of Statement of Financial Transactions (SFT)) of the existing notification, S.No.3 mentions the following:

"The Estimated Sale Consideration for the debit transaction should be determined on the best possible available price of the asset with the depository (e.g. end of day price). The taxpayer will be able to modify the sales consideration before filing the return."

This should be read as following:

"The Estimated Sale Consideration for the debit transaction should be determined on Weighted Average Price i.e., taking into actual value of the transactions executed. The taxpayer will be able to modify the sales consideration before filing the return."

5. In annexure A (Guidelines for Preparation of Statement of Financial Transactions (SFT)) of the existing notification, S. No. 5 mentions the following:

This should be read as following:

6. In annexure A (Guidelines for Preparation of Statement of Financial Transactions (SFT)) of the existing notification, S.No.6 mentions the following:

"For every debit transaction, the corresponding credit trans action should be identified using First in First Out (FIFO) method. The estimated cost of acquisition for the credit should be determined on the best possible available price with the depository. The cost of acquisition can be estimated as per the closing rate on the date (T-2) of transaction for market purchase. The estimated cost of acquisition is to be taken as NIL for OFF Market purchase, [PO or Corporate Action or for any transaction through other than Exchange. The taxpayer will be able to modify the cost of acquisition before filing the return.”

This should be read as following:

For every debit transaction, the corresponding credit transaction should be identified using First in First Out (FIFO) method. The estimated cost of acquisition for the credit should be determined on weighted average price of the asset i.e. taking into actual value of the transactions, if purchase was made after 1^st February 2018 or End of the day price, if purchase was made before 1st February 2018, available with the depository. The estimated cost of acquisition is to be taken as NIL for OFF Market purchase, Corporate Action or for any transaction through other than Exchange. IPO credit will be treated as Market credit and cost of the acquisition of the same will be arrived using the formula i.e. Number of shares allotted x Per unit price at which share is allotted. The taxpayer will be able to modify the cost of acquisition before filing the return."

7. In annexure D (D.3- Depository Transaction Summary (DEP 3RN_Summ.TXT)) of the existing notification, the data fields 16, 17 & 18 is mentioned as following

These should be read as following:

8. In annexure D (D.3- Depository Transaction Summary (DEP _TRN_Summ.TXT)) of the existing notification, a new data field 24 is added for flag indication if the purchase of the security was before 1^st February 2018 or after

1.  Vide Rule 37A of CGST Rules, 2017 the taxpayers have to reverse the Input Tax Credit (ITC) availed on such invoice or debit note, the details of which have been furnished by their supplier in their GSTR-1/IFF but the return in FORM GSTR-3B for the said period has not been furnished by their supplier till the 30th day of September following the end of financial year in which the Input Tax Credit in respect of such invoice or debit note had been availed.

2. The said amount of ITC is required to be reversed by such taxpayers, while furnishing a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year, as part of this legal obligation.

3. To facilitate the taxpayers, such amount of ITC required to be reversed on account of Rule 37A of CGST Rules for the financial year 2022-23 has been computed from system and has been communicated to the concerned recipient. The email communication to this effect has been sent on the registered email id of the taxpayer.

4. The taxpayers are advised to take note of it and to ensure that such ITC, if availed by them, is reversed as per rule 37A of CGST Rules before 30th of November, 2023 in Table 4(B)(2) of GSTR-3B while filing the concerned GSTR-3B.

1. It is informed that GSTN has developed a functionality to generate automated intimation in Form GST DRC-01C which enables the taxpayer to explain the difference in Input tax credit available in GSTR-2B statement & ITC claimed in GSTR-3B return online as directed by the GST Council. This feature is now live on the GST portal.

2. This functionality compares the ITC declared in GSTR-3B/3BQ with the ITC available in GSTR-2B/2BQ for each return period. If the claimed ITC in GSTR 3B exceeds the available ITC in GSTR-2B by a predefined limit or the percentage difference exceeds the configurable threshold, taxpayer will receive an intimation in the form of DRC-01C.

3. Upon receiving an intimation, the taxpayer must file a response using Form DRC-01C Part B. The taxpayer has the option to either provide details of the payment made to settle the difference using Form DRC-03, or provide an explanation for the difference, or even choose a combination of both options.

4. In case, no response is filed by the impacted taxpayers in Form DRC-01C Part B, such taxpayers will not be able to file their subsequent period GSTR-1/IFF.

MCA NOTIFICATION, F. No.17/30/2018-CL-V Dated 9th November, 2023

In exercise of the powers conferred by section 79 of the Limited Liability Partnership Act, 2008 (6 of 2009), the Central Government hereby makes the following rules, namely:-

1. Short title and commencement.- (1) These rules may be called the Limited Liability Partnership (Significant Beneficial Owners) Rules, 2023.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Applicability.- The provisions of these rules shall apply to any Limited Liability Partnership.

3. Definitions.- (1) In these rules, unless the context otherwise requires,-

(a) “Act”  means the Limited Liability Partnership Act, 2008 (6 of 2009);

(b) “Annexure” means the Annexure to these rules;

(c) “control” shall include the right to appoint majority of the designated partners or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their contribution or management rights or limited liability partnership agreements or other agreements or in any other manner;

(d) “fees” means the fees as specified in the Limited Liability Partnership Rules, 2009;

(e) “Form” or “e-form” means a form set forth in the Annexure to these rules;

(f) “majority stake” means;-

(i) holding more than one-half of the equity share capital in the body corporate; or

(ii) holding more than one-half of the contribution in a partnership entity; or

(iii) holding more than one-half of the voting rights in the body corporate; or

(iv) having the right to receive or participate in more than one-half of the distributable dividend or distributable profits or any other distribution by the body corporate including a partnership entity as the case may be;

(g) “notification” means the notification number G.S.R. 110 (E), dated the 11th February, 2022;

(h) “partnership entity" means a partnership firm registered under the Indian Partnership Act,1932 (9 of 1932) or a limited liability partnership registered under the Act;

(i) “reporting limited liability partnership" means a limited liability partnership required to comply with the requirements of section 90 of the Companies Act, 2013 as modified by the notification;

(j) "section" means a section of Act and includes a section of the Companies Act, 2013, as modified by the notification;

(k) "significant beneficial owner" in relation to a reporting limited liability partnership, means an individual who acting alone or together or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting limited liability partnership, namely:-

(i) holds indirectly or together with any direct holdings, not less than ten per cent of the contribution;

(ii) holds indirectly or together with any direct holdings, not less than ten percent of voting rights in respect of the management or policy decisions in such limited liability partnership;

(iii) has right to receive or participate in not less than ten per cent of the total distributable profits, or any other distribution, in a financial year through indirect holdings alone or together with any direct holdings;

(iv) has right to exercise or actually exercises, significant influence or control, in any manner other than through direct-holdings alone:

Explanation I.- For the purpose of this clause, if an individual does not hold any right or entitlement indirectly under sub-clauses (i), (ii), (iii) or (iv), he shall not be considered to be a significant beneficial owner.

Explanation II.- For the purpose of this clause, an individual shall be considered to hold a right or entitlement directly in the reporting limited liability partnership, if he satisfies any of the following criteria, namely:-

(i) the contribution in the reporting limited liability partnership representing such right or entitlement are held in the name of the individual;

(ii) the individual holds or acquires a beneficial interest in the contribution of the reporting limited liability partnership under sub-rule (2) of rule 22B of the Limited Liability Partnership Rules, 2009 and has made a declaration in this regard to the reporting limited liability partnership

Explanation III.- For the purpose of this clause, an individual shall be considered to hold a right or entitlement indirectly in the reporting limited liability partnership, if he satisfies any of the following criteria, in respect of a partner of the reporting limited liability partnership, namely: -.

(i) where the partner of the reporting limited liability partnership is a body corporate (whether incorporated or registered in India or abroad) other than a limited liability partnership, and the individual,-

(a) holds majority stake in that partner; or

(b) holds majority stake in the ultimate holding company (whether incorporated or registered in India or abroad) of that partner;

(ii) where the partner of the reporting limited liability partnership is a Hindu undivided family (through karta), and the individual is the karta of the Hindu undivided family;

(iii) where the partner of the reporting limited liability partnership is a partnership entity (through itself or a partner), and the individual,-

(a) is a partner; or

(b) holds majority stake in the body corporate which is a partner of the partnership entity; or

(c) holds majority stake in the ultimate holding company of the body corporate which is a partner of the partnership entity.

(iv) where the partner of the reporting limited liability partnership is a trust (through trustee), and the individual,-

(a) is a trustee in case of a discretionary trust or a charitable trust;

(b) is a beneficiary in case of a specific trust;

(c) is the author or settlor in case of a revocable trust.

(v) where the partner of the reporting limited liability partnership is,-

(a) a pooled investment vehicle; or

(b) an entity controlled by the pooled investment vehicle,

based in member State of the Financial Action Task Force on Money Laundering and the regulator of the securities market in such member State is a member of the International Organisation of Securities Commissions, and the individual in relation to the pooled investment vehicle,-

(A) is a general partner; or

(B) is an investment manager; or

(C) is a chief executive officer where the investment manager of such pooled vehicle is a body corporate or a partnership entity

Explanation IV - Where the partner of a reporting limited liability partnership is,

(i) a pooled investment vehicle; or

(ii) an entity controlled by the pooled investment vehicle,

based in a jurisdiction which does not fulfil the requirements referred to in clause (v) of Explanation III, the provisions of clause (i) or clause (ii) or clause (iii) or clause (iv) of Explanation III, as the case may be, shall apply.

Explanation V.- For the purpose of this clause, if any individual, or individuals acting through any person or trust, act with a common intent or purpose of exercising any rights or entitlements, or exercising control or significant influence, over a reporting limited liability partnership, pursuant to an agreement or understanding, formal or informal, such individual, or individuals, acting through any person or trust, as the case may be, shall be deemed to be “acting together”

(l) "significant influence" means the power to participate, directly or indirectly, in the financial and operating policy decisions of the reporting limited liability partnership but is not control or joint control of those policies.

(m) “ultimate holding company” is a holding company as defined under clause (46) of section 2 of the Companies Act, 2013, which is not a subsidiary of any other body corporate.

(2). The words and expressions used in these rules but not defined shall have the meaning respectively assigned to them in the Limited Liability Partnership Act, 2008 (6 of 2009).

4. Duty of the reporting limited liability partnership.- (1) Every reporting limited liability partnership shall take necessary steps to find out if there is any individual who is a significant beneficial owner, in relation to that reporting limited liability partnership, and if so, identify him and cause such individual to make a declaration in Form No. LLP BEN-1.

(2) Without prejudice to sub-rule (1), every reporting limited liability partnership shall in all cases where its partner (other than an individual), holds not less than ten per cent. of its-

(a) contribution; or

(b) voting rights; or

(c) right to receive or participate in the distributable profits or any other distribution payable in a financial year,-

give notice to such partner in Form No. LLP BEN-4, seeking information in accordance with sub-section (5) of section 90 of the Companies Act, 2013 as applied to the limited liability partnership as per the notification.

5. Declaration of significant beneficial ownership.- (1) On the commencement of these rules, every individual who is a significant beneficial owner in a reporting limited liability partnership, shall file a declaration in Form No. LLP BEN-1 to the reporting limited liability partnership within ninety days from such commencement.

(2) Every individual, who subsequently becomes a significant beneficial owner, or where his significant beneficial ownership undergoes any change shall file a declaration in Form No. LLP BEN-1 to the reporting limited liability partnership, within thirty days of acquiring such significant beneficial ownership or any change therein.

(3) Where an individual becomes a significant beneficial owner, or where his significant beneficial ownership undergoes any change, within ninety days of the commencement of these rules, it shall be deemed that such individual became the significant beneficial owner or any change therein happened on the date of expiry of ninety days from such commencement, and the period of thirty days for filing will be reckoned accordingly

6. Return of significant beneficial owners in contribution.- Upon receipt of declaration under rule 5, the reporting limited liability partnership shall file a return in Form No. LLP BEN-2 with the Registrar in respect of such declaration, within a period of thirty days from the date of receipt of such declaration by it, along with the fees as prescribed in the Limited Liability Partnership Rules, 2009.

7. Register of significant beneficial owners.- (1) The limited liability partnership shall maintain a register of significant beneficial owners in Form No. LLP BEN-3.

(2) The register shall be open for inspection during business hours, at such reasonable time of not less than two hours, on every working day as may be decided by limited liability partnership agreement, or by partners of the limited liability partnership on payment of such fee as may be specified by the limited liability partnership but not exceeding fifty rupees for each inspection.

8. Notice seeking information about significant beneficial owners.- A limited liability partnership shall give notice in Form No. LLP BEN-4 seeking information in accordance with sub-section (5) of section 90 as applied to the limited liability partnership by the notification.

9. Application to the Tribunal.- The reporting limited liability partnership shall apply to the Tribunal,

(i) where any person fails to give the information required by the notice in Form No. LLP BEN-4, within the time specified therein; or

(ii) where the information given is not satisfactory, under sub-section (7) of section 90 of Companies Act, 2013

for order directing that the contribution in question be subject to such restrictions as Tribunal deems fit, including-

(a) restrictions on the transfer of interest attached to the contribution in question;

(b) suspension of the right to receive profits or any other distribution in relation to the contribution in question;

(c) suspension of voting rights in relation to the contribution in question;

(d) any other restriction on all or any of the rights attached with the contribution in question.

 10. Non-applicability.- These rules shall not apply to the extent the contribution of the reporting limited  iability partnership is held by.-

(a) the Central Government, State Government or any local authority;

(b)        (i) a reporting limited liability partnership, or

(ii) a body corporate, or

(iii) an entity,

controlled by the Central Government or by one or more State Government, or partly by the Central Government and partly by one or more State Government;

(c) an investment vehicles registered with, and regulated by the Securities and Exchange Board of India, such as mutual funds, alternative investment funds (AIF), Real Estate Investment Trusts (REITs), Infrastructure Investment Trust (lnVITs).

(d) an investment vehicles regulated by the Reserve Bank of India, or the Insurance Regulatory and Development Authority of India, or the Pension Fund Regulatory and Development Authority.

Gross Direct Tax collections FY2023-24 upto 9.11.2023 are Rs. 12.37 lakh crore; growth of 17.59% Y-o-Y

Direct Tax collection, net of refunds, stands at Rs. 10.60 lakh crore; growth of 21.82% Y-o-Y

Net growth in Corporate Income Tax collections is 12.48% .and Personal Income Tax collections is 31.77% Y-o-Y respectively

Refunds worth Rs. 1.77 lakh crore issued for FY2023-24 upto 09.11.2023

The provisional figures of Direct Tax collections up to 09th November, 2023 continue to register steady growth. The Gross Direct Tax collections are at Rs. 12.37 lakh crore, which is 17.59% higher than the gross collections for the corresponding period of last year. Direct Tax collection, net of refunds, stands at Rs. 10.60 lakh crore which is 21.82% higher than the net collections for the corresponding period of last year. This collection is 58.15% of the total Budget Estimates of Direct Taxes for F.Y. 2023-24.

So far as the growth rate for Corporate Income Tax (CIT) and Personal Income Tax (PIT) in terms of gross revenue collections is concerned, the growth rate for CIT is 7.13% while that for PIT is 28.29% (PIT only)/ 27.98% [PIT including Securities Transactions Tax (STT)]. After adjustment of refunds, the net growth in CIT collections is 12.48% and that in PIT collections is 31.77% (PIT only)/ 31.26% (PIT including STT).

Refunds amounting to Rs. 1.77 lakh crore have been issued during 1st April, 2023 to 09th November 2023.