The Ministry of Corporate Affairs has made it mandatory for all directors to fulfil KYC obligations through a specific form called DIR-3 KYC. The form must be filed on or before August 31, 2018, by all those directors who have a Director Identification Number (DIN) allotted on or before March 31, 2018. It must be filed annually. Next year onwards, the due date for filing DIR-3 KYC will be April 30 of the immediately following financial year. The form must be duly certified by a practising professional (CA, CS, CMA). Non-filing of the form within the due date can result in the director’s DIN being marked ‘deactivated’. Late filing will attract a fee of ₹5,000.
Monetary limit revised
The Central Board of Direct Taxes has revised the monetary limits for filing of appeal by the Income Tax Department before various appellate forums. The Tax Department, before going on an appeal on any particular matter, should not only consider the merits of the case, but also make sure the tax effect is as per the monetary limits prescribed. The new limits for taking up a matter for various appellate forums are: Income Tax Appellate Tribunal – ₹20 lakh; High Court – ₹50 lakh; Supreme Court – ₹1 crore. Here, ‘tax effect’ refers to the tax on the items of income that are being disputed by the Income Tax Department.
Amendments in Form 3CD
If the accounting records of a taxpayer are subject to audit, filing Form 3CD is mandatory. Form 3CD is the statement of particulars of various compliances under the income tax law, which must be certified by a CA. With effect from August 20, 2018, additional details have to be disclosed in Form 3CD. Details on the GST registration number of the taxpayer and the parties with whom GST transactions have taken place are needed. In-depth reporting on transactions covered by General Anti-Avoidance Rules and transfer pricing adjustments are also asked for. Any deemed dividend received or investment made in a new plant/machinery in notified areas will also have to be reported.
PAN to ensure FPI compliance
The Securities and Exchange Board of India (SEBI ) has made it mandatory to check the PAN of foreign portfolio investors when they invest in Indian IPOs. The main objective is to ensure that they don’t exceed the upper investment limit as prescribed by SEBI. From July 13, 2018, onwards, all the related parties of a foreign investor would be treated as a single entity and would not be allowed to invest beyond 10 per cent of the total issued capital of a company. To ensure that these foreign portfolio investors stick to the guidelines, depositories and Registrar and Transfer Agents need to verify the PAN of the foreign investor before the share allotment is made.
Move to curb money laundering
Presently, remitting of funds worth more than ₹50,000 through drafts, when payment for the same is made in cash by the purchaser, is not allowed. This is because there are possibilities of the demand draft being misused to promote money laundering, since the purchaser of demand draft was unknown. Remitting funds worth more than ₹50,000 is only possible by giving a debit to your account or against cheques. Now, the RBI has taken this a step further. From September 15, 2018, it is mandatory that the issuing bank should mention the name of the purchaser on the face of the demand draft, pay order or banker’s cheque.