March will march up fast

You all might be marching up to the end of the year, closing the financials, paying advance taxes, preparing for audit, and what not. While closing our year, we are very much awaiting to see what our government provides us for the following year. In Budget 2016, GOI provides nine pillars on which the budget has been prepared such as: governance, ease of doing business, fiscal discipline, tax reforms, agriculture and farmers’ welfare, rural sector with focus on employment, social sector with healthcare, educational skills and job creation, infrastructure and investment and financial sector reforms. In this edition, we will be seeing the Budget 2016 Highlighting the factors affecting the company and business, along with our usual Legal Terms and News Bites that contains notification and updates of MCA, SEBI, RBI and IT Department in the previous month.

Saranya Deivasigamani,
CEO

Budget 2016 Highlights

Growth of Economy accelerated to 7.6% in 2015-16.
India hailed as a ‘bright spot’ amidst a slowing global economy by IMF.
Robust growth achieved despite very unfavourable global conditions and two consecutive years shortfall in monsoon by 13%.
Foreign exchange reserves touched highest ever level of about 350 billion US dollars.
Despite increased devolution to States by 55% as a result of the 14th Finance Commission award, plan expenditure increased at RE stage in 2015-16 – in contrast to earlier years.

Skill Development

Allocation for skill development – . 1804. crore.
1500 Multi Skill Training Institutes to be set-up.
National Board for Skill Development Certification to be setup in partnership with the industry and academia.
Entrepreneurship Education and Training through MOOC.

Job Creation

GoI will pay contribution of 8.33% for of all new employees enrolling in EPFO for the first 3 years of their employment. Budget provision of . 1000 crore for this scheme.
Deduction under Section 80JJAA of the Income Tax Act will be available to all assesses who are subject to statutory audit under the Act
100 Model Career Centres to operational by the end of 2016-17 under National Career Service.
Model Shops and Establishments Bill to be circulated to States.

Corporate Tax rate proposals

New manufacturing companies incorporated on or after 1.3.2016 to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.
Lower the corporate tax rate for the next financial year for relatively small enterprises i.e. companies with turnover not exceeding . 5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess.
100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019. MAT will apply in such cases.
10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident.
Complete pass through of income-tax to securitization trusts including trusts of ARCs. Securitisation trusts required to deduct tax at source.
Period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years.
Non-banking financial companies shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts.
Determination of residency of foreign company on the basis of Place of Effective Management (POEM) is proposed to be deferred by one year.
Commitment to implement General Anti Avoidance Rules (GAAR) from 1.4.2017.
Exemption of service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship.
Exemption of Service tax on general insurance services provided under ‘Niramaya’ Health Insurance Scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability.
Basic custom and excise duty on refrigerated containers reduced to 5% and 6%.

Financial Sector Reforms

A comprehensive Code on Resolution of Financial Firms to be introduced.
Statutory basis for a Monetary Policy framework and a Monetary Policy Committee through the Finance Bill 2016.
A Financial Data Management Centre to be set up.
RBI to facilitate retail participation in Government securities.
New derivative products will be developed by SEBI in the Commodity Derivatives market.
Amendments in the SARFAESI Act 2002 to enable the sponsor of an ARC to hold up to 100% stake in the ARC and permit non institutional investors to invest in Securitization Receipts.
Comprehensive Central Legislation to be bought to deal with the menace of illicit deposit taking schemes.
Increasing members and benches of the Securities Appellate Tribunal.
Allocation of . 25,000 crore towards recapitalisation of Public Sector Banks.
Target of amount sanctioned under Pradhan Mantri Mudra Yojana increased to . 1,80,000 crore.
General Insurance Companies owned by the Government to be listed in the stock exchanges.

Governance and Ease of Doing Business

A Task Force has been constituted for rationalisation of human resources in various Ministries.
Comprehensive review and rationalisation of Autonomous Bodies.
Bill for Targeted Delivery of Financial and Other Subsidies, Benefits and Services by using the Aadhar framework to be introduced.
Introduce DBT on pilot basis for fertilizer.
Automation facilities will be provided in 3 lakh fair price shops by March 2017.
Amendments in Companies Act to improve enabling environment for start-ups.
Price Stabilisation Fund with a corpus of . 900 crore to help maintain stable prices of Pulses.
“Ek Bharat Shreshtha Bharat” programme will be launched to link States and Districts in an annual programme that connects people through exchanges in areas of language, trade, culture, travel and tourism.

Fiscal Discipline

Fiscal deficit in RE 2015-16 and BE 2016-17 retained at 3.9% and 3.5%.
Revenue Deficit target from 2.8% to 2.5% in RE 2015-16; and Total expenditure projected at . 19.78 lakh crore
Plan expenditure pegged at . 5.50 lakh crore under Plan, increase of 15.3% and Non-Plan expenditure kept at . 14.28 lakh crores
Special emphasis to sectors such as agriculture, irrigation, social sector including health, women and child development, welfare of Scheduled Castes and Scheduled Tribes, minorities, infrastructure.
Mobilisation of additional finances to the extent of . 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority by raising Bonds.
Plan / Non-Plan classification to be done away with from 2017-18.
Every new scheme sanctioned will have a sunset date and outcome review.
Rationalised and restructured more than 1500 Central Plan Schemes into about 300 Central Sector and 30 Centrally Sponsored Schemes.
Committee to review the implementation of the FRBM Act.

Legal Term

Pro bono publico

Translated from the Latin as ’for the public good’. In PIL, this refers to a petitioner acting bonafide in the public interest.

MCA Updates

Version of LLP Form 4-4A & Form 11 are changed w.e.f Mar-8th.
A new LLP Front Office Service ‘Enter Form 3 or Form 3 & 4 details for LLP filing’ has been introduced.

SEBI Updates

Introduction of Exchange Traded Cross Currency Derivatives contracts on EUR-USD, GBP-USD and USD-JPY currency pairs and Exchange Traded Option contracts on EUR-INR, GBP-INR and JPY-INR currency pairs.

RBI Updates

Grant of EDF Waiver for Export of Goods Free of Cost

Income Tax Updates

F.No. 279/Misc./M-142/2007-ITJ (Part) : Clarification on applicability of Circular 21 of 2015
Circular No. 06/2016 : Issue of taxability of surplus on sale of shares and securities – Capital Gains or Business Income – Instructions in order to reduce litigation