PROVISION FOR AADHAR AUTHENTICATION IN GST REGISTRATION

PROVISION FOR AADHAR AUTHENTICATION IN GST REGISTRATION

1.     Aadhaar Authenticatiobn process has been introduced, for the persons applying for GST registration as Normal Taxpayer/ Composition/ Casual Taxable Person/ Input Service Distributor (ISD)/ SEZ Developer/ SEZ Unit etc, in Form GST REG 01 (refer Notification No 62/2020-CT dt 20.08.2020 ).

2.     Under this, Individuals, Authorised signatory of all types of businesses, Managing and Authorised partners of a partnership firm and Karta of an Hindu undivided family, applying for new registration, can opt to undergo e-KYC authentication of their Aadhaar number.

3.     Applicants, who, either do not provide Aadhaar, while applying for new registration or whose Aadhar authentication fails in validation, would be subjected to site verification by the tax department. However, Tax authority based on the documents produced can grant registration.

4.     Timelines for grant of registration are:

v  In case of successful authentication of Aadhaar, registration will be deemed approved within 03 working days

v  If Aadhar authentication is not opted for or if authentication fails in validation and no SCN is issued within 21 days by tax official, registration will be deemed approved

v  Tax Officer can issue SCN within the period specified for grant of registration, like in cases of successful Aadhar authentication i.e. 03 working days, or in cases when taxpayer do not opt to provide Aadhaar or when Aadhar authentication fails i.e. 21 working days. Applicants can submit their reply within 07 working days from issue of SCN

5.     Important points while opting for Adhaar authentication is as follows:

v  Once registration application is submitted, an authentication link will be shared on GST registered mobile numbers and email ids mentioned in the GST application

v  On clicking the verification link, a window for Aadhaar Authentication will open where they have enter Aadhaar Number and the OTP received by them on the mobile number linked with Aadhaar

v  Taxpayer need to complete Aadhaar authentication of all Promoters/ Partners/ Authorized Signatories/ Karta etc. as mentioned in the application to avail this option

v  Applicant can access the link again for authentication by navigating to My Saved Applications > Aadhaar Authentication Status > RESEND VERIFICATION LINK

v  Persons already registered on GST portal are not required to undergo Aadhar authentication at this stage

v  Persons who are not resident /citizen of India are exempted from the Aadhaar authentication process

- Source : https://www.gst.gov.in/newsandupdates/read/394

CONDITIONS FOR AVAILING THE CONCESSIONAL RATE UNDER MERCHANT EXPORTS (GST)

CONDITIONS FOR AVAILING THE CONCESSIONAL RATE UNDER MERCHANT EXPORTS

The government has provided special relief to the merchant exporters by way of reducing the GST rate to 0.1% for purchasing goods from domestic suppliers. But the below conditions needs to fulfill or availing such concessional rate relief:

Ø  The tax invoice for the procured goods should clearly state the GST rate at 0.1%.

Ø  Such goods should be exported within 90 days of the issue of a tax invoice.

Ø  The GSTIN and the tax invoice number of the supplier should be mentioned on the shipping bill.

Ø  Such Merchant Exporters should be registered with an Export Promotion Council/Commodity Board.

Ø  A copy of the order placed at the concessional rate shall be provided to the jurisdictional tax officer of the registered supplier.

Ø Such goods shall be directly moved to the place from where it shall be transferred to the port/ICD/Airport/LCS. This condition prevails even if the goods are purchased from multiple registered suppliers.

Ø  On export of goods, a copy of the shipping bill / bill of export along with the proof of EGM and export report shall be filed with the registered supplier as well as its jurisdictional tax officer.

Ø  The merchant exporter should export goods under LUT/bond but not with the payment of tax (IGST).

Further, if the merchant exporter fails to export the goods within 90 days from the date of issue of tax invoice, then the registered supplier cannot avail the benefit of the concessional tax rate.

QUALIFIED INSTITUTIONAL PLACEMENT (QIP)

QUALIFIED INSTITUTIONAL PLACEMENT (QIP)

WHAT IS A QUALIFIED INSTITUTIONAL PLACEMENT (QIP)

A qualified institutional placement (QIP) is, at its core, a way for listed companies to raise capital without having to submit legal paperwork to market regulators. It is common in India and other Southeast Asian countries. The Securities and Exchange Board of India (SEBI) created the rule to avoid the dependence of companies on foreign capital resources.

HOW A QUALIFIED INSTITUTIONAL PLACEMENT (QIP) WORKS

A qualified institutional placement (QIP) was initially a designation of a securities issue given by the Securities and Exchange Board of India (SEBI). The QIP allows an Indian-listed company to raise capital from domestic markets without the need to submit any pre-issue filings to market regulators. The SEBI limits companies to only raising money through issuing securities.

The SEBI put forth the guidelines for this unique avenue of Indian financing on May 8, 2006. The primary reason for developing QIPs was to keep India from depending too much on foreign capital to fund its economic growth.

Before the QIP, there was a growing concern from Indian regulators that its domestic companies were accessing international funding too readily via American depository receipts (ADRs), foreign currency convertible bonds (FCCBs) and global depository receipts (GDR), rather than Indian-based capital sources. Authorities proposed the QIP guidelines to encourage Indian companies to raise funds domestically instead of tapping into overseas markets.

QIPs are helpful for a few reasons. Their use saves time as the issuance of QIPs and the access to capital is far quicker than through a follow-on public offer (FPO). The speed is because QIPs have far fewer legal rules and regulations to follow, making them much more cost-efficient. Further, there are fewer legal fees and there is no cost of listing overseas.

In India, 47 firms together raised Rs 551 billion ($8 billion) through QIPs in the fiscal year 2018. This figure is the highest ever in a financial year. However, as of early 2019, 30 of those 47 QIPs were trading below their original issue prices.

REGULATIONS FOR A QUALIFIED INSTITUTIONAL PLACEMENT (QIP)

To be allowed to raise capital through a QIP, a firm must be listed on a stock exchange along with the minimum shareholding requirements as specified in their listing agreement. Also, the company must issue at least 10% of its issued securities to mutual funds or allottees.

Regulations also exist for the number of allottees on a QIP, depending on the specific factors within an issue. Additionally, no single allottee is allowed to own more than 50% of the total debt issue. Furthermore, allottees must not be related in any way to promoters of the issue. Several more regulations dictate who may or may not receive QIP securities issues.

QUALIFIED INSTITUTIONAL PLACEMENTS (QIPS) AND QUALIFIED INSTITUTIONAL BUYERS (QIBS)

The only parties eligible to purchase QIPs are qualified institutional buyers (QIBs), which are accredited investors, as defined by whatever securities and exchange governing body preside over it. This limitation is due to the perception that QIBs are institutions with expertise and financial power that allows them to evaluate and participate in capital markets, at that level, without the legal assurances of a follow-on public offer (FPO).

KEY TAKEAWAYS

Ø  Qualified institutional placements (QIPS) are a way to issue shares to the public without going through standard regulatory compliance.

Ø  QIPs instead follow a looser set of regulations but where allottees are more highly regulated.

Ø  The practice is mostly used in India and other Southeast Asian countries.

Ø  QIPs were created to avoid dependency on foreign resources for raising capital.

Ø  Qualified institutional buyers (QIBs) are the only entities allowed to purchase QIPs.

RESOLUTIONS TO BE FILED IN FORM MGT 14

RESOLUTIONS TO BE FILED IN FORM MGT 14

To be filed with the ROC within 30 days from the date of passing of resolution or formulating the agreement

Categories of Filing Resolutions

The resolutions have to be filed in the E-form for the following categories:

Ø  Board Resolutions

Ø  Special resolutions

Ø  Ordinary Resolutions

Board resolutions must be duly filed in Annexure A, special resolutions in Annexure B and ordinary resolutions in Annexure C. Let us now examine them separately.

Annexure A – Board Resolution

This annexure need not be filed by Private Limited Companies, though private limited companies which are subsidiaries of public limited entities are not exempt from this provision.

The following board resolutions must be filed in Form MGT-14:

Ø  To issue securities, inclusive of debentures, either inside or outside the confines of India. It may be noted that in case of shares, issue of security denotes issue of Letter of Offer.

Ø  To borrow money from any sources, including a director.

Ø  To invest the funds of the company. (Also follow provisions of Section 186)

Ø  To issue loans or provide guarantee or security in respect of loans. (Also follow provisions of Section 186)

Ø  To endorse the financial statement and Board’s report.

Ø  To appoint internal auditors.

Ø  To appoint Secretarial Auditor.

Ø  To appoint or remove Key Managerial Personnel.

Ø  To make political contributions.

Ø  To take decisions on those shareholders relating to the money unpaid on their shares.

Ø  To sanction buy-back of securities under Section 68.

Ø  To expand the business of the company.

Ø  To endorse Amalgamation, Merger or Reconstruction.

Ø  Take over a company or acquire a controlling or considerable stake in another company.

Annexure B – Special Resolution

The following special resolutions must be files in Annexure B of the form:

Ø  For companies registered under Section 8 for converting itself into a company of another kind or alteration of its MOA or AOA.

Ø  Change of location of registered office in the same State, but outside the local limits of the city, town or village where it is currently situated.

Ø  Change of registered office from the jurisdiction of one registrar to another in the same sate.

Ø  Amendment of Articles of a private limited company for entrenchment of any provisions. This must be consented by all the members of a private company.

Ø  Amendment of Articles of a public company for entrenchment of any Provisions.

Ø  Modification in name of the company to be sanctioned by a special resolution.

Ø  If a company has raised funds from the public through issue of a prospectus, and the money so raised remains unutilized, the company is not entitled to change the object for which the money was raised, except by passing a special resolution.

Ø  A company is not authorized to modify the terms of a contract referred to in the prospectus or objects for which the prospectus was issued, except on the approval of the concerned authority.

Ø  A company is entitled to pass a special resolution in its general meeting, issue depository receipts in any foreign country in the specified manner, in compliance with the pertinent conditions.

Ø  If a shared capital of the company is classified into various classes of shares, the rights attached to the shares of any class may be modified with the written consent of the authorized shareholders; or through a special resolution passed at a meeting of the shareholders of the issued shares of that class.

Ø  Private offer of companies needs the consent of the company by a special resolution.

Ø  Issue of ‘Sweat Equity Shares”.

Ø  Reduction of share capital.

Ø  Special resolution for endorsing scheme for the purchase of fully-paid shares for the welfare of the employees.

Ø  Buy back of shares.

Ø  A company is authorized to issue debentures with an option of converting these debentures into shares, either wholly or partly during the stage of redemption; on the condition that the operation is sanctioned by a special resolution passed at the general meeting.

Ø  Maintain registers at any other Indian locality.

Ø  Re-appointment of Independent Director.

Ø  The members of a company are empowered to specify any lesser number of companies in which the directors of the company may act as directors. The specification can only be done after the process of approval through a special resolution.

Ø  To sell, lease or dispose the whole or the majority of the undertakings of the company.

Ø  To invest the compensations received by the company due to any merger or amalgamation in trust securities.

Ø  To borrow money, where the prospective borrowable amount, as well as the money previously borrowed by the company exceeds the aggregate of its paid-up share capital and free reserves, barring the temporary loans obtained from the company’s bankers in the normal course of business.

Ø  To remit, or grant time for the repayment of any debt owed by the director.

Ø  To approve scheme for providing loans to MD or WTD.

Ø  Loan and investment by company which is above 60% of paid up share capital or 100% of free reserve,

Ø  Recruitment of a person as Managerial Personnel, given that his/her age is above 70 years.

Ø  Remuneration to managerial personnel on the event of insufficient profits.

Ø  Special resolution for closure of the company by Tribunal

Ø  Special resolution for closure of the company.

Ø  Conversion of a private limited company into a One Person Company.

Annexure C – Ordinary Resolutions

This annexure should be inclusive of the following ordinary resolutions:

Ø  Change of name as per the discretion of the Registrar if the application for reservation of name was applied by using incorrect information.

Ø  Change of name as per the discretion of the Central Government.

Ø  Issue of equity shares with differential rights needs to be endorsed by an ordinary resolution passed at a general meeting held by the shareholders.

Ø  A company is entitled to increase or consolidate its capital, or on the other hand increase or consolidate its capital, or sub-divide or cancel shares which haven’t been taken, provided that such an action is endorsed by its Articles.

Ø  A private company is not vested with the rights to offer shares to employees under a scheme of employee’s stock option, except on the consent of the shareholders through a special resolution.

Ø  To transact the consideration of financial statements and the reports of the Board of Directors and Auditors, declaration of dividends, appointment of new directors in place of the retiring ones and determining the remuneration of the auditors in the Annual General Meeting under a special resolution.

Ø  Approval of general meeting for the issue of bonus shares.

Ø  Approval of general meeting for encouraging deposits from members.

Ø  Appointment of auditors.

Ø  Appointment of branch auditors.

Ø  Appointment of independent director.

Ø  Appointment of a director by small shareholders.

Ø  Appointment of directors at the initial general meeting or on the proposal of a person with a deposit of Rs 1,00,000.

Ø  Remuneration of cost auditor will be set by an ordinary resolution at the general meeting.

Ø  Ordinary resolution for entering a specified contract or arrangement with the concerned party, for Companies with prescribed paid-up capital or for transactions which exceed the prescribed amount.

Ø  To mention any non-monetary transactions wherein the directors of the company or holding, subsidiary or associate company are involved.