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Sebi planning to tighten depository receipt regulations

The Securities and Exchange Board of India (Sebi) is planning to clamp down on depository receipts (DRs) as part of efforts to check the flow of black money into the stock market. Sources said Sebi planned to make it mandatory for foreign depositories to reveal details of endbeneficiaries holding DRs issued by Indian companies. The new framework will align knowyourcustomer (KYC) requirements for DRs with provisions to prevent money laundering. Many Indian companies issue DRs to raise capital abroad. DRs have shares as an underlying asset and are typically issued byabank, known as the depository bank, on behalf of a company. Sebi has proposed DRs can be exercised by the issuer only if information on beneficial ownership is available. Further, all acquisitions made through DRs resulting inachange in control inalisted company are expected to be governed by Sebi´s takeover rules. For unlisted companies, DRs are permitted only in sectors eligible for investment by registered foreign venture capit…

Cabinet clears draft bill to replace GST ordinances for J&K

The Cabinet today approved a draft bill to replace ordinances that were promulgated to introduce the Goods and Services Tax (GST) in Jammu and Kashmir, a senior government official said.  The Central government had earlier this month promulgated ordinances to make the Central GST (CGST) and Integrated GST (IGST), which deals with inter-state commerce, applicable to the state.  The Cabinet headed by Prime Minister Narendra Modi approved the bill, which will be introduced in Parliament during the current monsoon session.  The Economis Times, New Delhi, 20th July 2017

Pledged assets can be auctioned by insolvency professionals: NCLT

A recent National Company Law Tribunal (NCLT) order has sent corporate lawyers and promoters intoatizzy. The NCLT´s Mumbai Bench has asked for the personal properties of promoters to be auctioned off even when the process of insolvency is pending before the insolvency professional. The petition was filed by Schweitzer Systemtek India, invoking the Insolvency and Bankruptcy Code (IBC) with the NCLT, after it defaulted onaloan of Rs 4.5 crore given by Dhanlaxmi Bank. The suit was initiated by the promoter himself against the asset reconstruction company (ARC) after Dhanlaxmi Bank sold the loan to Phoenix ARC. The NCLT Mumbai Bench said the promoters cannot be granted any relaxation under the IBC and appointed an insolvency professional to go ahead with the auction of the property. “This Code of 2016 has prescribed certain limitations, which are inbuilt and must not be over looked. The ´moratorium´ indeed is an effective tool, sometimes being used by the corporate debtor to thwart or frustrat…

Tax departments keep a close watch on prices post GST rollout

Tax departments across the country are keeping a close watch on prices following the July 1 rollout of the goods and services tax (GST).  Makers of consumer goods and handsets, as well as some restaurant chains, have all got calls from local tax authorities seeking details of invoices before and after GST as part of the exercise.  “In order to study prices under the GST, you are requested to send selling price of your top commodity in the relevant format,” read a notice sent to a company by local tax authorities in Tamil Nadu.  Similar messages have been sent to companies in states such as Maharashtra, Andhra Pradesh and Puducherry. Some have even got phone calls seeking price information, said a person aware of the development.  The government is keen to prevent any spike in inflation due to GST as happened in some countries that implemented the levy. India has opted for a two-pronged solution to make sure this doesn’t happen — a multi-rate GST structure and a proposed anti-profiteering …

GST Network allays fears of data mix-up on new tax portal

The Goods and Services Tax Network (GSTN) on Tuesday allayed fears of mixing up of data of taxpayers or showing details of one tax payer to another on GST portal. GSTN, the company behind building information technology backbone of the portal, has clarified that its software has enough safeguards against any overlapping of data of taxpayers.The Central Board of Excise and Customs has issued several clarifications in this regard.

Business Standard, New Delhi, 19th July 2017

Jaitley rules out lowering GST for textiles sector

The government on Tuesday ruled out cutting rates for the textiles sector, saying a zero per cent GST on fabrics will break the input tax credit chain for the domestic industry and make imported items cheaper. Amid protests in Gujarat by traders who are demanding rollback of 5 per cent GST on fabrics, Finance Minister Arun Jaitley said it was not correct to say that the sector was never taxed in independent India. "In fact, during 2003-04, the sector was subjected to central excise duty,” he said in a written reply in the Rajya Sabha.

Business Standard, New Delhi, 19th July 2017

Sebi asks banks to report divergence in bad loans

The Securities and Exchange Board of India (Sebi) on Tuesday asked listed banks to make disclosures if the provisioning and non-performing assets (NPAs) assessed by the RBI had exceeded 15 per cent of their published financials.

“The banks shall disclose to the stock exchanges divergences in the asset classification and provisioning wherever: the additional provisioning requirements assessed by the RBI exceed 15 per cent of the published net profits after tax for the reference period; and/or the additional gross NPAs identified by the RBI exceed 15 per cent of the published incremental gross NPAs for the reference period,” Sebi said in a circular.

The Sebi’s directive follows an RBI circular on April 18 that asked banks to disclose divergence in the asset classification and provisioning. Divergence in the provisioning came in light after the RBI observed the numbers declared by the banks were not tallying with its own estimates. “There have been instances of material divergences in ban…