India Advocacy

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.

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.

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.

Financial analysts at Reliance Securities and Mehta Equities have both issued a ‘Subscribe’ rating to the Indian Renewable Energy Development Agency (IREDA)’s Initial Public Offering (IPO), which opens on November 21. The IPO boasts a total issue size of Rs 2,150 crore, with a price band set at Rs 30-32 per share. Analysts are optimistic about IREDA’s prospects, considering factors like its robust growth track record, improvements in asset quality, and attractive valuations.

Financial Performance Highlights: IREDA has demonstrated substantial growth, with Assets Under Management (AUM) witnessing a remarkable 41% Year-over-Year increase as of September 2023. Fiscal years 2022 and 2023 show robust growth of 22% and 39%, respectively, accompanied by an impressive 83% and 36% growth in net profit. Despite valuation considerations at the upper price band, analysts believe the IPO presents a promising investment opportunity.

Strategic Positioning in Renewable Energy: As the largest pure-play green financing Non-Banking Financial Company (NBFC) in India, IREDA is strategically positioned to capitalize on the government’s ambitious renewable energy targets for 2030. The company’s nodal agency status and diverse financial products enhance its ability to seize opportunities in the growing renewable energy sector.

Solid Financial Metrics: IREDA’s financial performance includes a 58% Compound Annual Growth Rate (CAGR) in net profit from FY21 to FY23. The Capital-to-Risk Weighted Asset Ratio (CRAR) stood at 21.22% as of March 31, 2022, indicating a strong financial position. Total revenue witnessed a notable 21.7% increase, reaching Rs 3,481.9 crore in FY23.

Ownership Structure Changes Post-IPO: Following the IPO, the government’s stake in IREDA is expected to decrease from 100% to 75%, while the public stake is projected to increase to 25%, marking a significant shift in the company’s ownership structure.

Investors are urged to consider the potential for both short-term and long-term gains, aligning with the government’s initiatives to promote the Renewable Energy sector and achieve net zero emission targets by 2030.

In September 2023, the Employees’ Provident Fund Organization (EPFO) witnessed a substantial increase in its membership, with a net addition of 17.21 lakh members, as revealed by the latest payroll data. This marks a month-on-month growth of 21,475 members compared to August 2023 and a significant year-on-year increase of 38,262 members from September 2022.

Youth Dominance in Workforce Entry: Among the 8.92 lakh new members enrolled in September, nearly 59% belong to the age group of 18-25 years, indicating a youth-dominated influx into the organized workforce. This surge underscores the trend of young, first-time job seekers entering the job market.

Steady Decline in Exits: The data also highlights a declining trend in EPFO exits since June 2023. In September 2023, exits decreased by 12.17%, with approximately 3.64 lakh members leaving the EPFO. Interestingly, around 11.93 lakh members exited but later rejoined, choosing to transfer their accumulations instead of opting for final settlement.

Gender Dynamics: Out of the total new members, 2.26 lakh are female, constituting a notable portion of the workforce. The month witnessed a net addition of around 3.30 lakh female members, emphasizing a positive trend in female workforce participation.

Regional and Industry Insights: Maharashtra, Tamil Nadu, Karnataka, Gujarat, and Haryana led in net member addition, accounting for 57.42% of the total growth. Maharashtra, in particular, contributed significantly with a 20.42% increase. Industry-wise, sectors like sugar, courier services, iron and steel, hospitals, and travel agencies experienced noteworthy growth.

Provisional Data and Continuous Updates: The EPFO emphasizes that the payroll data is provisional, given the ongoing nature of data generation and continuous employee record updates. Since April 2018, EPFO has consistently released monthly payroll data covering the period from September 2017 onwards.

This robust growth in EPFO membership reflects a dynamic and evolving landscape in India’s organized workforce, with a notable influx of young talent and a steady rise in female participation.

In pursuit of Prime Minister Narendra Modi’s ambitious goal to elevate India into a $5 trillion economy by 2030, a pivotal factor emerges – achieving $2 trillion in total exports. For this vision to materialize, the often-overlooked yet critical element of seamless cross-border payments, particularly for Micro, Small, and Medium Enterprises (MSMEs), takes center stage.

Democratizing Global Trade for MSMEs

The digital revolution has transformed the landscape of international trade, breaking down barriers that traditionally favored corporate giants. Today, MSMEs can leverage B2B and B2C eCommerce platforms, facilitated by technological advancements and supportive government policies. This shift allows smaller businesses to integrate into global supply chains, contributing significantly to India’s export growth. In the fiscal year 2022-23, MSME products accounted for a substantial 43.6% of the country’s total exports.

Overcoming Financial Maze: Challenges in Cross-Border Payments

Traditionally, navigating cross-border low-value payments has been akin to traversing a financial maze, laden with challenges. The reliance on correspondent banking relationships and SWIFT for secure communications often results in slow and costly international wire transfers. Payment service providers (PSPs) offer alternatives with lower fees and quicker transfers, yet MSMEs face persistent challenges, particularly in emerging markets like India. Issues are exacerbated by intermediary currencies, introducing layers of complexity to transactions.

Charting the Path Forward

To empower India’s exports and aid MSMEs in achieving the formidable $2 trillion export target, addressing these challenges in cross-border payments is imperative. Streamlining processes, reducing costs, and fostering a supportive financial ecosystem are essential steps towards ensuring that small and medium-sized enterprises can seamlessly participate in and contribute to the global trade landscape.