Legal & Regulatory
Multi-Tier Goods and Services Tax (GST) Structure Finalised for Goods Categories
India is one step closer to implementing its most ambitious tax reform, the Goods and Services Tax (GST), which seeks to replace the existing multi-layered indirect tax structure, and in turn establish a single national market for goods and services in the country. On November 3, the GST Council reached a broad consensus over a four tier GST structure with the following slabs of 5 percent (mass consumption items like spices, tea, mustard oil), standard rates of 12 (processed foods) and 18 percent (soaps, oil, toothpaste, smartphones, refrigerators), and the higher slab of 28 percent (for white goods and cars). The segment of luxury cars and demerit goods such as tobacco and aerated drinks will be subject to the 28 percent tax slab in addition to a cess.
By Pritesh Samuel
In June, the Ministry of Corporate Affairs (MCA) amended the Companies Act of 2013, introducing the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), and replacing the Company Law Board (CLB) after 14 years of deliberations.
The NCLT will be a single judicial forum to judge all disputes concerning the affairs of Indian companies. Both the NCLT and NCLAT were made effective from June 1; they should enable faster implementation of the bankruptcy code and also reduce the burden of hundreds of cases pending in the courts.
Central Bank Directive to Tighten Cyber Security after Debit Card Data Breach
India’s central bank, the Reserve Bank of India (RBI), has called on banks to ensure tightened cyber security norms after the country’s largest data breach involving debit cards went undetected for three months. All lenders (banks and payment network service providers) will now need to report on their cyber security issues to the RBI on a real-time basis. Another proposal in the offing is a suggestion that banks centralize their cyber security monitoring and have a dedicated operations team in place for the same instead of outsourcing such surveillance.
Government Eases Incorporation Services for Companies in India
The Ministry of Corporate Affairs (MCA) recently announced new rules that will simplify and speed up the process for incorporating companies in India. Currently, the incorporation process takes about four weeks.
By Pritesh Samuel
India’s central bank, the Reserve Bank of India (RBI) made a statement on October 3rd that will allow startups to accept foreign currency loans of up to US$ 3 million a year under the external commercial borrowing (ECB) route. Startups will now be able to raise the amount either in Indian rupees or any convertible foreign currency or a combination of both. Guidelines are expected to be issued at the end of the month.
Earlier in February, the RBI allowed startups to raise Indian rupee loans through the ECB route. Another advantage of allowing startups to borrow in foreign currency would be to cut down conversion costs. However, they will need to comply with guidelines like locking in foreign exchange rules. Prior to this easing of borrowing rules, in July, the Indian securities regulator – Securities and Exchange Board of India (SEBI) – introduced easier regulations for startups that wished to raise funds from the equity markets.
By Dezan Shira & Associates
Companies determining their market entry strategy in India should be aware of regulations related to FDI, foreign exchange, security and corporate law, as well as direct and indirect taxes. All companies entering the market must be in compliance with the Companies Act of 2013 as well as other acts related to the Securities and Exchange Board of India (SEBI), if it is listed.
By A&A LAW
In an era of ubiquitous technology and information, protecting Intellectual Property becomes a key task, especially when a firm or individual innovator opts for fundraising through the publicly driven strategy of ‘Crowdfunding’.
Government Approves Merger of Railways and Union Budgets, Contemplates Advancing Budget Presentation
After a long period of consultation and deliberation among government ministries, key stakeholders, and experts, the Cabinet decided to approve the merger of the railway and union budgets from 2017. This marks the end of a 92 year colonial legacy of presenting the separate railways budget and follows from recommendations by the Niti Ayog, the national policy think tank established under the Modi government. The merger is meant to complement the organizational restructuring recently introduced in the railways ministry by removing it from the deeply political budgetary exercise. Among other benefit, the merger will allow the railways ministry to work under the radar and implement the massive scope of reforms required. Further, the government has clarified that the railways ministry will retain functional autonomy despite its proposals getting amalgamated within the general budget.