Direct Tax

Extension of due date for filing form 56F for AY 2023-24

CBDT Order dated 20 October 2023

Considering the difficulties arising for Taxpayers in timely filing of the report of the accountant (Form 56F) as required to be filed under clause (8) of Section 10AA read with clause (5) of Section 10A of the Income Tax Act, 1961 (the ‘Act’), the CBDT, in exercise of its powers under Section 119(2)(b) of the Act has extended the due date of filing of the same for AY 2023-24 from the specified date under Section 44AB to 31st of December, 2023.

CBDT notifies final changes to Rule 11UA in respect of angel taxes

Notification G.S.R. 685(e) [no. 81/2023/f. No. 370142/9/2023- TPL and press release dated 26 September 2023

Following the earlier press release dated 19 May 2023 inviting suggestions from stakeholders on Draft Rule 11UA for the valuation of shares, CBDT has now notified the amendments to Rule 11UA. The changes to Rule 11UA have been introduced pursuant to the amendment in Finance Act 2023 extending the applicability of Section 56(2)(viib) of the Act to share issue consideration received by unlisted companies from ‘non-resident’ investors. Some of the key changes to the earlier Rule 11UA are as follows:

  • Five additional methods have been made available to non-resident investors for the valuation of shares, namely, Comparable Company Multiple Method, Probability Weighted Expected Return Method, Option Pricing Method, Milestone Analysis Method, and Replacement Cost Method) in addition to the existing Discounted Cash Flow (DCF) and Net Asset Value (NAV) methods.
  • Where any consideration is received by a company for the issue of shares from any entity notified by the Central Government, the price of the equity shares corresponding to such consideration may be taken as the FMV of the equity shares issued to other resident and non-resident investors subject to the following:
    • the consideration from such FMV does not exceed the aggregate consideration that is received from the notified entity, and
    • the company has received consideration from the notified entity within a period of 90 days of the date of issue of shares, which are the subject matter of valuation.

On similar lines, price matching for resident and non-resident investors would be available with reference to investment by Venture Capital Funds or Specified Funds.

  • A safe harbor of 10% variation in value is provided to account for forex fluctuations and other economic indicators.
  • A separate valuation mechanism has also been prescribed for Compulsorily Convertible Preference Shares (CCPS) issued to both residents and non-residents. Barring the NAV method, the mechanism for determining the FMV of CCPS is aligned with the mechanisms as made applicable to equity shares.
  • The valuation report provided by a Merchant Banker would be acceptable if it is of a date not more than 90 days prior to the date of issue of shares.

Indirect Tax

Customs

CBIC notifies revised AIRs of Duty Drawback

Notification No. 77/2023-Cus (N.T.) dated 20 October 2023 r/w Circular No. 26/2023-Cus dated 26 October 2023

The Central Board of Indirect Taxes and Customs (CBIC) has notified the revised All Industry Rates (AIRs) w.e.f. 30 October 2023. Some salient features are listed below:

  • AIRs have been increased for certain items pertaining to chemicals, finished and lining leather, leather articles and footwear, textiles and articles thereof made of silk/wool/ cotton/MMF other than of nylon, carpets, glass and glassware and gold jewelry and silver jewelry/article.
  • AIRs have been rationalized for various items, including textiles and articles thereof made of nylon.
  • New tariff items have been introduced in the Schedule pertaining to sectors, viz. sugar confectionary, chemicals, pharma, plastic, leather articles and footwear, cotton and manmade fibers/fabrics, apparel, footwear, articles of stone, arms and ammunition and furniture.
  • Appropriate caps of duty drawback amount have been provided wherever necessary to prescribe an upper limit of duty drawback.
  • AIRs have been specified for items covered under Chapters 61 and 62 viz., articles of apparel and clothing accessories) exported under the Special Advance Authorization Scheme.

No IGST on Foreign Going Vessels converted for a coastal run

Notification No. 60/2023-Cus dated 19 October 2023

Pursuant to recommendations of GST Council during its 52nd meeting, the CBIC has notified the exemption from 5% IGST for Foreign Going Vessels converted for coastal run, subject to the condition that such vessel re-converts to Foreign Going Vessel within six months from the date of such conversion. Accordingly, Notification No. 50/2017-Cus stands amended w.e.f. 20 October 2023.

Foreign Trade Policy

DGFT exempts import licensing requirements for specified IT Hardware

Notification No. 38/2023 dated 19 October 2023 r/w Policy Circular No. 06/2023-24 dated 19 October 2023

Following the restrictions imposed on the import of Laptops, Tablets, All-in-one Personal Computers, Ultra Small Form Factor Computers, and Servers falling under HSN 8471 w.e.f. 1 November 2023, the Directorate General of Foreign Trade (DGFT) has extended exemption from Import Authorization in cases where:

  • IT hardware manufactured in Special Economic Zones (SEZs) and imported into Domestic Tariff Area (DTA) on payment of applicable duties.
  • Private entities importing IT hardware for supply to government agencies and undertakings owned and controlled by the government for defense or security purposes, subject to valid end-user certification.
  • Imports for repair, return or replacement of IT Hardware sold earlier as well as re-import of such items repaired abroad on a selfcertification basis.

Two-week ‘Export Obligation Discharge Certificate (EODC) Camp’ for Advance and EPCG Authorization holders

Trade Notice No. 29/2023-24 dated 13 October 2023

The DGFT has announced a two-week camp to expedite the disposal of pending EODC applications for Advance and EPCG authorizations, to be organized from 13 - 24 November 2023. Accordingly, exporters whose EODC applications are pending and whose license status is not reflected ‘closed’ on the DGFT website have been advised to participate in the drive to resolve unredeemed license issues.

Tax Street October 2023