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Top 10 Business, Tax and Finance News Today: There have been several developments in the field of business and finance with regard to the Indian currency market, minerals industry, compliance, tax and investment.
The recent developments have involved steps taken by the Reserve Bank of India to combat speculation against the Indian Rupee, demands for recognition of the Indian mica industry as a critical minerals industry, changes in tax compliance issues, and awareness campaigns by SEBI for investors. Other developments have included the SBI Green Rupee Term Deposit and INOX Air Products IPO plans.
1. RBI Introduces Measures to Prevent Speculative Bets against Indian Rupee
Reserve Bank of India (RBI) has made some interventions to control speculation in the foreign exchange market and pressure on the Indian Rupee. Fluctuations in currency markets might impact the cost of imports, international trade, foreign investment, and the overall financial situation.
Such steps are said to include dollar sales to the oil marketing companies and some requirements with respect to dollar purchases by some banks. Oil marketing companies are large players in the foreign exchange market since they need dollars to pay for imported crude oil and other energy products.
The involvement of the RBI in the foreign exchange market is aimed at controlling liquidity and speculative deals in the market. The sharp rise in the demand for dollars could put pressure on the rupee. Such fluctuations could raise the price of imports and create uncertainties in international transactions. Intervention in the currency market could have an impact on the activities of market participants; however, its impact will depend on many factors.
2. India’s Mica Industry Asks for Critical Mineral Status
India’s mica industry is lobbying for mica to be declared a critical mineral. This is aimed at strengthening the Indian mica industry and improving its standing in the supply chain of the mineral.
Mica is an industrial mineral that is used in many industrial products such as electrical products, paints, cosmetics and building materials. Its heat-resistant nature makes it very useful in industries. It is claimed that the industry is lobbying for certain policies to be put in place. These include an export duty of 30% and incentives. This would lead to more processing taking place in India as opposed to letting the minerals out of India without any value addition.
3. Company Strike-Off Process Under Section 248 Explained
Organisations that have ceased to operate could qualify for removal of their name from the Register of Companies in accordance with Section 248 of the Companies Act, 2013, provided they meet the relevant conditions under the law.
The strike-off procedure offers a proper mechanism for the eligible organisations to cease their corporate existence in case there is no necessity to remain operational. One should realise that simply ceasing operations does not automatically bring about dissolution of an organisation or statutory obligations.
The procedure usually requires submission of Form STK-2 together with necessary documentation through C-PACE (Centre for Processing Accelerated Corporate Exit). An organisation will have to qualify for strike-off by meeting relevant conditions and furnishing the required information and declarations.
It is advisable that, prior to making such an application, an organisation takes into account any outstanding liabilities, pending legal suits, tax matters and all other relevant statutory requirements. In addition, organisations will have to confirm that their application will not come under prohibited cases for strike-off.
4. ITAT Chandigarh Examines Penalty Under Section 271BA
The Income Tax Appellate Tribunal (ITAT), Chandigarh, has considered the case of a penalty levy issue under Section 271BA of the Income Tax Act in relation to the deletion of Section 92BA.
Section 271BA allows a penalty under certain conditions where there is a failure to file a report under Section 92E. The reporting obligation is in connection with certain specified international and domestic transactions which are governed by the transfer pricing regulations.
Section 92BA relates to certain domestic transactions. Deletion of this section raises some legal issues as regards the handling of cases relating to this section and the penalties involved. Consideration by the tribunal of this issue may be of interest to businessmen and tax practitioners involved in transfer pricing reporting and penalty issues. Such cases depend on the particular statutory provisions involved, the assessment year and the facts of the case.
5. GST Clarifications Cover Toys, Seeds and Tyres
Goods and Services Tax (GST) classification remains a significant compliance issue for manufacturers, wholesalers, retailers and importers. New clarifications have been provided regarding the classification and taxation of various items including toys, seeds and tyres.
Classification is important due to the fact that GST rates and other compliances may vary in accordance with the nature of a product, its composition, its intended use and even classification by the laws. The businesses which are using incorrect classification might encounter disputes and additional demands of taxes, interest, and penalties depending on the situation.
It is necessary for businesses engaged in the manufacture and sale of toys to consider the relevant classification in accordance with the nature of the product and tariff classification. In turn, seeds and tyre-related products are supposed to be classified and taxed in accordance with their nature and classification. The businesses are recommended to study relevant notifications, circulars and other clarifications prior to changing their invoice systems and GST rate.
6. Tax Technology Can Help CFOs Reduce Compliance Risks
Technology is increasingly becoming an essential part of tax management and financial reporting. With automated tax systems, CFOs are better placed to enhance their compliance processes, limit human errors, and bolster the documentation process during audits. In traditional tax compliance processes, information from multiple departments is collected, records are reconciled, invoices are checked, and reports are compiled. The manual process makes it hard for finance teams to get things done efficiently.
Technology in taxation enhances automation of tasks such as collection of information, reconciliation of accounts, monitoring of transactions and preparation of compliance reports. Integration with accounting software also ensures that business entities are better positioned to have consistent records. Another advantage that comes with technological solutions in tax management is the enhanced ability of finance teams to handle audits. Transactional records and documentation processes become easier to handle in digital systems.
7. SEBI Promotes Investor Awareness Through ‘Samajh Se Investing Simple’
The Securities and Exchange Board of India (SEBI) has continued its efforts towards raising investor awareness through campaigns that help simplify investment information. As mentioned in the case above, SEBI initiated the ‘Samajh Se Investing Simple’ campaign, which aims at promoting financial literacy among investors.
It is especially critical for individuals to be aware of the nature of investments like shares, mutual funds and other market-linked financial products. These products have both potential benefits and risks, and investors should understand them.
Campaigns can help investors understand various aspects of investments such as risk, diversification, market volatility and the importance of doing proper verification before investing. Investor education by the SEBI will help them rely on credible information rather than making decisions based on any guarantee or pressure.
8. SBI Green Rupee Term Deposit: Tenures and Important Details
The State Bank of India (SBI) provides a Green Rupee Term Deposit scheme for the purpose of financing eligible projects related to green finance. The deposit scheme aims at diverting finances for eligible projects based on applicable green finance criteria.
Some of the available tenures for the Green Rupee Term Deposit Scheme include 1,111 days, 1,777 days and 2,222 days. The applicable interest rate will depend on the respective tenure as well as the customer category. Therefore, investors should look up the current interest rate schedule of SBI for the Green Rupee Term Deposit Scheme. Green deposits are also linked to the greater effort of financing environmentally sustainable projects. Applicable green finance projects may belong to the categories specified by the bank under its applicable green-finance program.
Investors should look into the eligibility criteria, premature withdrawal provisions, applicable modes of interest payment and taxation treatment for green deposits before investing. Interest earned from bank deposits is usually taxable based on the depositor’s applicable tax status, according to applicable provisions. Eligible bank deposits are insured by the DICGC up to ₹5 lakh per person per insured bank, including principal and interest, according to the applicable provisions.
9. INOX Air Products Files DRHP for an IPO of 7.72 Crore Shares
INOX Air Products has filed a Draft Red Herring Prospectus (DRHP) in connection with an offer for sale of about 7.72 crore shares in an upcoming initial public offering.
An offer for sale is a situation wherein the existing shareholder can sell their shares to the public investor. An offer for sale is different from a fresh issuance of shares as the latter generates a new capital infusion for the company, whereas the former will not result in any direct new capital generation for the company.
DRHP is the document where the investor gets key information regarding the company, financial position, performance, risks and ownership of the company. The DRHP filing marks an early stage in the initial public offering process and must not be considered as a definitive statement indicating the completion of the initial public offering process.
It is important for the investor to study the financial statements, business model, customer concentration, competition and risks associated with the company in relation to the proposed initial public offering. The details of the price band, issue dates and allocation details should be seen once those are released.
10. GST Treatment of Scrap Transactions and Second-Hand Vehicles
There are also some special GST compliance provisions with respect to transactions involving scrap and sale of certain second-hand vehicles. It is important for the businesses engaged in such sectors to know the instances when reverse charge provisions, Tax Deducted at Source (TDS) requirements and input tax credit provisions would be applicable.
Based on the relevant legal provisions, scrap bought by a registered buyer from an unregistered supplier could be taxable under the reverse charge provisions. The exact provision depends on the relevant legal provisions, classification of goods and the conditions prevailing.
The sale of scrap between registered businesses could also be subject to TDS requirements under the relevant GST provisions. It is necessary for the business to determine if the transaction falls under the relevant category and relevant conditions have been satisfied. With respect to the sale of certain second-hand vehicles, there are special provisions relating to valuation and input tax credit.