In a significant move, the government has amended the Prevention of Money Laundering Act (PMLA) to broaden its scope, now encompassing individuals serving as formation agents for companies and Limited Liability Partnerships (LLPs). The finance ministry, in a recent notification, has identified five key activities falling under the purview of the amended PMLA.
Covered Activities:
Formation Agents: Individuals engaged in the formation of companies or LLPs now fall within the anti-money laundering framework.
Directorship Arrangements: Acting as a director or secretary of a company or arranging for someone else to take on such roles is now subject to PMLA provisions.
Registered Office Services: Providing services like a registered office, business address, or accommodation for entities triggers anti-money laundering scrutiny.
Trustee Role: Individuals acting as trustees for express trusts or as nominee shareholders come under the ambit of the amended law.
Exemptions and Focus Areas:
While the amendment casts a wide net, it wisely excludes certain professionals from its purview. Advocates, chartered accountants, cost accountants, and company secretaries are exempted, provided their involvement in company formation is limited to filing a declaration.
Global Compliance Focus:
This move aligns with recent efforts by the government to strengthen anti-money laundering measures, especially in anticipation of an assessment by the Financial Action Task Force (FATF) on India’s adherence to global standards on counter-terror financing and money laundering. The FATF is slated to evaluate India’s implementation of these standards later this year, prompting proactive measures to bolster the country’s regulatory framework.
Introduction to the Franchise Agreement: A Binding Commitment
As you wrap up Discovery Day, captivated by the franchise opportunity, the franchisor presents the crucial document sealing the deal—the franchise agreement. This legally binding pact delineates the expectations and operational guidelines for both the franchisor and you, the franchisee. Recognize that there’s no one-size-fits-all template for franchise agreements, as terms vary based on the nature of the business.
Crucial Provisions Within the Franchise Agreement
Location/Territory: Designates your operational territory, potentially outlining exclusivity rights.
Operations: Details the operational standards expected from franchisees.
Training and Ongoing Support: Outlines training programs and continuous support mechanisms provided by the franchisor.
Duration: Specifies the length of the franchise agreement.
Franchise Fee/Investment: Clearly outlines the initial franchise fee granting you rights to the franchisor’s trademark and operating system.
Royalties/Ongoing Fees: Describes the structure of ongoing royalties, often a percentage of total sales.
Trademark/Patent/Signage: Explains how franchisees can use the franchisor’s intellectual property.
Advertising/Marketing: Reveals the franchisor’s advertising commitments and fees required from franchisees.
Renewal Rights/Termination/Cancellation Policies: Details the process for renewal or termination, sometimes incorporating arbitration clauses.
Exit Strategies: Explores resale policies, potential buyback clauses, or right of first refusal options.
Navigating the Franchisee/Franchisor Relationship
Delve into the intricacies of the franchisee/franchisor relationship within the agreement. Pay special attention to proprietary statements, site maintenance, and upgrade requirements. Before committing, thoroughly read and have the agreement reviewed by legal counsel with franchise expertise. Just like a lasting marriage, aim for a fruitful and enduring franchise relationship.
Zomato and Swiggy, leading food delivery platforms, have reportedly been slapped with a hefty Rs 500 crore GST each amid an ongoing dispute with tax officers over the classification of the delivery fee. The dispute revolves around nearly Rs 1000 crore related to the delivery fee, according to reliable sources.
Silent Responses
When approached for comments, both Zomato and Swiggy remained tight-lipped. Zomato refused to provide a statement, and Swiggy chose not to comment on the matter.
Defining ‘Delivery Charge’
Zomato and Swiggy contend that the ‘delivery charge’ is merely a pass-through of the costs incurred by delivery partners who transport food from door to door. They argue that these costs are collected from customers and transferred to the delivery partners. However, tax officials reportedly disagree with this interpretation.
Fee Adjustments and Platform Charges
Last month, Swiggy made headlines by increasing its platform fee from Rs 2 to Rs 3 for food orders. A Swiggy spokesperson emphasized that this adjustment is in line with common industry practices. In April, Swiggy had introduced a platform fee of Rs 2 per order, irrespective of the cart value. Zomato followed suit in August, raising its platform fee to Rs 3 per order from the initial Rs 2. Interestingly, Zomato began applying the platform fee to Zomato Gold users, who were previously exempted.
The developments highlight an ongoing tussle between food delivery giants and tax authorities, with significant financial implications for the industry players.
The Telecom Regulatory Authority of India (TRAI) has extended the deadline for submitting comments on the Consultation Paper titled ‘Encouraging R&D in Telecom, Broadcasting, and IT (ICT) Sectors.’ Initially released on September 22, 2023, the consultation aimed to gather insights from stakeholders on fostering research and development in these critical sectors.
Extended Submission Dates: Originally, the last date for stakeholders to submit comments was set for October 23, 2023, with counter comments due by November 6, 2023. However, responding to stakeholder requests, TRAI extended the deadline for comments to November 23, 2023, and counter comments to December 7, 2023. Further responding to additional requests, TRAI has decided to extend the submission deadline to December 23, 2023, for comments and January 6, 2024, for counter comments.
Electronic Submission Preferred: TRAI encourages stakeholders to submit their comments electronically, via email to advisorit@trai.gov.in, with a copy to ja-qos1@trai.gov.in. Shri Anand Kumar Singh, Advisor (CA, IT & TD), is designated for any clarification or information related to the consultation.
Ensuring Comprehensive Stakeholder Participation: The extension reflects TRAI’s commitment to ensuring comprehensive stakeholder participation and obtaining valuable insights to inform policies that encourage research and development in the telecom, broadcasting, and ICT sectors.
In a recent development, Non-Resident Indians (NRIs) aiming to mitigate tax deductions on their Indian income now face a revised procedure for obtaining Tax Deduction at Source (TDS) certificates. This adjustment, outlined in a circular by the Central Board of Direct Taxes (CBDT) on September 27, 2023, replaces the conventional use of Form 15G/H for NRIs, necessitating an application to the assessing officer for a reduced or zero TDS certificate.
Digital Verification Mandate for NRI Applications
A notable change in the NRI lower/nil TDS application process involves the elimination of various verification methods. Previously available options such as Aadhar OTP and mobile OTP have been supplanted by the sole method of Digital Signature Certificate (DSC) verification on the TRACES NRI website. NRIs seeking a NIL or reduced TDS certificate must now submit an online application using Form 13 and verify it through DSC, streamlining the application process.
Unchanged Substantive Procedures for NRIs
Apart from the verification alteration, other substantive procedures for NRIs in this context remain largely unaffected. Following the submission of an online Form 13 application for a lower or nil TDS rate, the TDS assessing officer (AO) evaluates the reasons and justifications provided. The AO then assesses the TDS rate suggested by the income tax department’s software, determining whether it should be lower, nil, or unchanged. If a consensus between the system and AO is reached on the current TDS rate, the Form 13 application is rejected.
Conclusion: Enhancing Efficiency in NRIs TDS Certificate Processing
The revised procedures aim to enhance the efficiency of TDS certificate processing for NRIs by introducing a streamlined digital verification process. NRIs can now navigate the application process with greater ease, ensuring a more straightforward approach to securing reduced or nil TDS certificates for their Indian income.
The Food Safety and Standards Authority of India (FSSAI) has issued a stern advisory, urging both food vendors and consumers to discontinue the use of newspapers for packing, serving, and storing food items. This cautionary measure comes in response to the significant health risks associated with such practices.
Ink Risks Highlighted by FSSAI
Emphasizing the potential dangers, the FSSAI pointed out the health hazards linked to the ink used in newspapers. The regulatory body has taken a proactive stance to safeguard public health by discouraging the use of newspapers in any capacity related to food.
Collaborative Regulatory Efforts
The FSSAI is actively collaborating with state food authorities to oversee and enforce regulations pertaining to this matter. The goal is to ensure a unified approach in curbing the usage of newspapers for food-related activities.
CEO Urges Immediate Compliance
G Kamala Vardhana Rao, the Chief Executive Officer (CEO) of FSSAI, has strongly urged consumers and food vendors across the country to promptly cease using newspapers for wrapping or packaging food. Expressing concern over the prevalent practice, the CEO emphasizes the urgency of adopting alternative, safer packaging materials.
Conclusion: Prioritizing Food Safety Through Swift Action
The FSSAI’s proactive warning underscores its commitment to prioritizing food safety. By swiftly addressing the risks associated with newspaper usage in food packaging, the regulatory body aims to protect the well-being of both consumers and those involved in the food industry. It is a collective call for immediate compliance to ensure a healthier and safer food handling environment.
In a remarkable display of timely compliance, the Income Tax Department’s e-filing portal witnessed the submission of more than 30 lakh audit reports (TAR) by the September 30 deadline. The tax authority of India expressed gratitude to both taxpayers and tax experts for their prompt cooperation in meeting this crucial requirement.
Robust Outreach Initiatives for Awareness
The Income Tax Department undertook substantial outreach programs, utilizing mediums such as e-mails, SMSs, and social media, to engage with taxpayers. Over 55.4 lakh outreach activities were conducted to create awareness and stress the importance of filing Tax Audit Reports and other audit forms within the stipulated time frame.
User-Friendly E-Filing System Ensures Seamless Experience
The e-filing system, a cornerstone in this massive filing endeavor, admirably handled the substantial traffic. It provided taxpayers and tax professionals with a seamless experience, facilitating the submission of audit reports in a timely manner.
Proactive Helpdesk Support
During the critical month of September 2023, the e-filing helpdesk team played a pivotal role in assisting taxpayers and tax professionals. Handling approximately 2.36 lakh queries, the team demonstrated proactive support, addressing concerns and ensuring a smooth filing experience.
Conclusion: Collaborative Success in Meeting Deadlines
The collaborative efforts between taxpayers, tax professionals, and the Income Tax Department have resulted in a record-breaking number of audit reports being filed. This success highlights the effectiveness of outreach initiatives, the user-friendly e-filing system, and the dedicated support provided by the helpdesk. The adherence to deadlines reflects a commitment to regulatory compliance and financial transparency.
The Director General of Foreign Trade (DGFT), Santosh Sarangi, has announced the Indian government’s plan to sign Memorandums of Understanding (MoUs) with key e-commerce players, including Amazon, Walmart, and Flipkart. The objective is to enhance e-commerce exports from approximately 100 districts across the country. These partnerships are expected to provide a significant boost to India’s export capabilities in the digital marketplace.
Promoting Big Companies’ Collaboration with MSMEs: DGFT Santosh Sarangi emphasized the importance of fostering collaborations between major Indian companies and Micro, Small, and Medium Enterprises (MSMEs) to stimulate the growth of the latter. Drawing inspiration from successful models in Japan and Korea, where large corporations engage in systematic vendor development programs with MSMEs, Sarangi sees this approach as a promising way forward.
Exemplary Rise in Electronic Product Exports: Highlighting the success of this collaborative approach, Sarangi pointed out the notable increase in exports of electronic products, specifically Samsung and Apple phones, from India. This success story is part of an overall surge in electronic exports from the country, showcasing the potential for similar achievements in other sectors through strategic alliances.
Balancing Geographic Export Contributions: Sarangi drew attention to the regional concentration of exports, noting that currently, only four states—Gujarat, Maharashtra, Karnataka, and Tamil Nadu—contribute to 68% of all exports from India. Emphasizing the need for a more balanced geographic distribution, the government aims to encourage exports from various regions, thereby diversifying and strengthening the country’s overall export landscape.
What is the Employees Provident Fund Organisation (EPFO)
Vendor digitisation startup Bizongo has acquired FactoryPlus, a factory digitisation app catering to MSMEs, in a strategic move to bolster its AI offerings to enterprises. As part of the acquisition, Bizongo will integrate FactoryPlus’ mobile-first Software as a Service (SaaS) capabilities, encompassing features like factory inventory management, real-time raw material prices, news feeds, and digital catalogues, into its solution. The acquisition also marks the exit of FactoryPlus’ investors Better Capital and Titan Capital.
AI-Powered Raw Material Procurement: Through this acquisition, Bizongo aims to provide MSMEs with an AI-powered solution for raw material procurement, allowing them to source materials from vendors at optimal costs. Additionally, Bizongo plans to facilitate embedded financing to assist manufacturers in overcoming delays in raw material procurement and addressing supply chain challenges linked to blocked working capital.
Empowering MSMEs Through Digital Transformation: Sachin Agrawal, Co-founder and CEO of Bizongo, emphasized the importance of technology in driving the MSME sector forward, addressing the challenges faced by these businesses in embracing digital transformation. The integration of digital processes and automated technologies is seen as a pivotal step to empower vendors in a competitive landscape.
Joining Forces with FactoryPlus: Vatsal Rustagi, Sparsh Koyarala, and Bikash Dash, along with their team from FactoryPlus, will join Bizongo through the acquisition. While the transaction details were not disclosed, the move is expected to elevate technology-led efficiency within factories and foster data-driven industrial supply chains.
FactoryPlus Growth and Vision: Founded in 2021, FactoryPlus has witnessed impressive month-on-month growth of 40% and has established a presence with over 4,000 factories on its platform. Vatsal Rustagi, Co-founder and CEO of FactoryPlus, expressed optimism about integrating their product with Bizongo, foreseeing an enhanced ability to drive efficiency and advance technology adoption in factories.
Industry Trends and Challenges: A PwC India survey highlighted the growing trend of Indian companies adopting analytics and AI, with a current implementation rate of 54%. However, challenges persist, including investment hurdles and the need for better alignment of digital transformation with organizational objectives, posing barriers for companies investing in technology solutions.
What is the Employees Provident Fund Organisation (EPFO)
Indian taxpayers inheriting foreign assets are required to disclose these details in Schedule FA (Foreign Asset) of ITR-2 or ITR-3, depending on applicability. Failure to do so may result in a penalty of Rs. 10 lakh under the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015. Although the receipt of money through inheritance is tax-exempt under section 56(2)(x), residents must still report foreign assets in Schedule FA.
Exempt Income Declaration: While the inheritance itself is exempt, it is advisable for Indian recipients to also declare it in the Schedule of Exempt Income (Schedule EI) in the Income Tax Return. Inheritance tax or Estate Tax has been abolished in India since 1985, making the recipient of inherited assets or money free from taxation under specific heads.
No Double Taxation Concerns: Section 47(iii) of the IT Act excludes the transfer of capital assets under a will from being considered a “transfer.” Additionally, section 56(2)(x) specifically exempts transfers under wills or inheritance from gift tax. This ensures that there is no double taxation, allowing residents to claim credit for taxes paid abroad.
Transfer to NRE or NRO Account: While FEMA regulations permit the credit of inherited amounts in both Non-Resident External Account (NRE) and Non-Resident Ordinary Account (NRO), it is advisable to deposit the inheritance in the NRE account. Interest on NRE accounts is tax-exempt under section 10(4)(ii) of the IT Act, making it a more favorable option compared to the taxable interest on NRO accounts. Seeking expert advice on FEMA regulations is crucial to ensure compliance with foreign exchange regulations when depositing the inheritance in the NRE account.
